If you’re just starting your small business journey, getting a handle on wholesale vs. retail pricing is one of the first and most important steps. Your pricing decisions directly affect your profit margins, competitiveness, and long-term sustainability. But don’t worry, this guide will walk you through everything you need to know to price with confidence. Let’s dive in.
Wholesale Price vs. Retail Price: What’s The Difference?
In the simplest terms, the wholesale price is what you pay, and the retail price is what your customer pays. The space between those two numbers is your profit, but also your cushion for covering expenses, paying yourself, and growing your business.
Wholesale Price
In the traditional retail world, wholesale pricing refers to the discounted cost that businesses pay to purchase products in bulk directly from a manufacturer or supplier. This lower price reflects the volume of the order and the fact that the buyer (that’s you) is expected to resell the product at a higher price.
In any of these cases, your “wholesale price” is essentially your cost of goods sold (COGS)—what it costs you to offer that product, including production, shipping, packaging, and any platform fees.
Retail Price
Retail pricing is the final price a customer sees and pays. In a brick-and-mortar setting, that’s the price tag on the shelf. In an online store, it’s the price listed on your product page. It reflects not only your cost but also your profit margin, operational expenses, and positioning in the market.
For first-time online sellers, setting a retail price can feel like a shot in the dark. But it’s not! When you understand your wholesale cost, typical markup strategies, and how your pricing compares to others in your niche, you’ll start to make pricing decisions with a lot more confidence.
What Does Wholesale Only Mean?
Some businesses operate as wholesale-only sellers, offering bulk pricing exclusively to other retailers rather than selling directly to consumers. This model focuses on high-volume sales and long-term relationships with stockists or resellers, making it a great fit for those who prefer B2B transactions over managing individual customer orders.
Wholesale profit margins work a bit differently from retail margins. While the per-unit profit is usually smaller, wholesalers often make up for it through larger order sizes and consistent, repeat business from retail partners.
For those interested in this type of business, learning how to price wholesale products is essential. It’s not just about covering your costs, it’s about offering enough value to attract retailers while still leaving room for them to earn a profit, too.
How Much Should Retail Price Exceed Wholesale Price?
There’s no one-size-fits-all answer here, but getting your retail price right is a big part of your overall strategy. It can take a few tries to land on the sweet spot that keeps your business profitable and competitive. Be prepared to test, adjust, and learn as you go, it’s part of the process.
Understanding Typical Retail Markup Ranges
Another difference between wholesale price and retail price is that the markup rates can vary widely depending on your industry, product type, and selling platform. Why? Because each category comes with different expectations for profit margins, competition levels, and perceived value. For example, a handmade necklace and a mass-produced phone charger have very different pricing wiggle room, both in terms of what customers are willing to pay and what it costs to make or source the product.
Here are some typical retail markup ranges to give you a general sense of what’s common across various types of businesses:
- Apparel: 100% (wholesale price × 2)
- Jewelry: 100–300%
- Electronics: 5–20%
- Beauty products: 50–80%
- Handmade items: 200–400%
- Home goods: 30–100%
- Dropshipping: 20–50%
- Print-on-demand: 30–70%
As you can see, the markup varies widely based on the business, so it’s important to price your wholesale products intelligently..
Factors That Influence Retail Markup
Several things can affect how much you mark up your product:
- Cost of Goods Sold (COGS)
The more your product costs to make or buy, the higher your retail price needs to be to stay profitable. - Operating Expenses
Rent, website hosting, shipping supplies, marketing, and labor all eat into your margins. - Industry Norms
Some industries (like jewelry) allow for higher markups, while others (like electronics) are price-sensitive. - Product Uniqueness
Exclusive or custom items can support a higher markup due to perceived value. - Target Audience
Luxury shoppers are often willing to pay more, while budget-conscious buyers may not. - Sales Channel
Selling through your own site often allows for a higher margin compared to marketplaces or wholesale platforms. - Competitor Pricing
Your price has to make sense in the context of what similar businesses are charging.
Understanding these factors can provide a clearer understanding of the wholesale price vs. the retail price for your products.
Avoiding the Pitfalls of Overpricing and Underpricing
New business owners often worry about charging too much and scaring away buyers, or too little and barely breaking even. Overpricing can make your product seem unrealistic or drive traffic elsewhere. Underpricing might attract customers, but hurt your bottom line.
The truth? You’ll probably make a few pricing mistakes early on, and that’s okay. Each one teaches you something. The key is to pay attention to how your audience responds and adjust as needed.
How Do You Calculate Wholesale Price From Retail Price?
A great way to land on your own pricing strategy is to reverse-engineer it. Take a look at your competitors, especially ones in your niche, and estimate how much they’re marking up their products. This gives you a benchmark and helps you stay within range of market expectations.
In practice, this could look like browsing their product catalog, finding similar items, and researching what those products typically cost wholesale (using supplier directories or B2B platforms). From there, you can estimate their markup and decide what’s realistic for your own pricing model.
The Easiest Way To Apply the Wholesale vs. Retail Price Formula
If you’re still getting comfortable with pricing, one of the easiest ways to handle wholesale vs. retail price calculations is to use tools like calculators or pricing software. These take out the guesswork and save you time, especially if you’re adjusting prices across lots of products.
The Wholesale Pricing Now app from Website On Demand is specifically designed to help new and long-time Shopify store owners stay on top of their pricing. It includes a built-in markup tool to streamline the wholesale-to-retail price process. It also has tools for tiered pricing to boost bulk sales and automatically updates whenever you change your pricing rules.
Instead of spending hours fiddling with spreadsheets or double-checking formulas, you can automate and optimize your pricing in just a few clicks. Download Wholesale Pricing Now and start pricing smarter today.
