How to set a Wholesale Price

Years ago I created a product to be sold wholesale. I spoke to numerous successful business owners trying to avoid obvious errors. I was repeatedly told that marketing was the biggest expense. When working on my wholesale price, I tried to add in that cost and I miserably failed. Hopefully I can help you if that is what you are needing.

There is a very delicate balance in creating a wholesale price. I've run across numerous formulas each claiming to create a wholesale price. I've learned that there is no magic pill to create a wholesale price  but the price you set is very important. If it is too low you may lose money and if it is too high you won't sell your product(s) fast enough.


Every article will tell you that you need to look at:

Cost of Goods- Price paid for the product (actual)
       - Shipping cost to get the product to you
Overhead Expense

      - Allocate a percentage of operating your business (no personnel costs in this)
Labor Cost

      - Include taxes, insurance, etc.

You are to add the costs together to find the break-even price for one item. This is the lowest price you can charge to cover your operating expenses. To this number you add to make a profit to grow your line.

Are you manufacturing the product(s) or are you distributing them? If you are distributing them with very little direct involvement other than sales, warehouse and shipping, use a multiplier anywhere from 2 to 2.5 times your Cost. If what you do is more labor intensive your number may increase up to 3.5 times. Remember though that the retailer will also mark the product up somewhere between 2.0-2.5 times. That is not a negotiable formula for most small businesses. The products I am thinking about are not prestige products where name recognition or status plays a part.

As a wholesaler you will direct the course of your business. If you get feedback about price, don't ignore it. As much as retailers may love your product it must be able to "retail" at a price the buying public will accept.

Wholesale Consultantcy Opens

For over thirty years, Mabyn Kean Shingleton has been advising, coordinating, and creating programs which help business owners reach their goals. For the first twenty years she worked with retailers, financial companies and large corporations with all of their advertising and marketing needs.  For over ten years she has worked as a manufacturer's representative, both independently and through a showroom. Her skill sets complement each other.

"One of the most frustrating things I have encountered is manufacturers not giving sales reps what they need, when they need it." Knowing what to arm a sales representative with and how often to communicate is vitally important since it completes the marketing circle. Just having a sales rep or showroom is not enough. Depending on what you are selling, they need specific things. If you feel like you are not getting all you should from your sales team or rep group, call Mabyn at 866-353-4287. You have nothing to lose and everything to gain.