Method and assumptions
Retailer margin is normally expressed as a percentage of retail price. Confirm whether your buyer instead negotiates a markup on wholesale cost.
Wholesale price = retail price × (1 - retailer margin). Supplier profit = wholesale price - supplier unit costs.
Worked scenario
Start with the intended retail price and the retailer gross-margin requirement, then calculate the implied wholesale price. Enter supplier product, packaging, handling and sales costs to see supplier contribution. Test minimum order quantities and discounts separately instead of hiding them in the base wholesale price.
How to interpret the result
Retailer margin normally uses retail price as the denominator; markup uses wholesale cost. Confirm the buyer terminology before negotiating. The supplier also needs enough contribution to cover account management, samples, freight terms, returns, allowances and payment delay.
Input reference
- Currency
- Example default: USD
- Suggested retail price
- Example default: 60
- Retailer margin target
- Example default: 45%
- Supplier product cost
- Example default: 15
- Packaging per unit
- Example default: 1.5
- Freight per unit
- Example default: 2
- Wholesale quantity
- Example default: 500
Common mistakes
- Confusing retailer margin with markup.
- Ignoring freight terms, rebates and return allowances.
- Using a high list retail price that the market does not realize.
Before using the result
- Confirm the buyer margin definition and expected retail price.
- Calculate supplier contribution after account-specific costs.
- Test volume discounts against incremental economics.
Questions to check before deciding
Is retailer margin the same as markup?
No. Margin uses retail price as the denominator; markup uses wholesale cost.
Should freight be included?
Include freight paid by the supplier. Exclude it when the buyer pays freight separately.
Independent calculator. Not affiliated with or endorsed by the platforms mentioned.