How To Calculate Wholesale Product Pricing (2026)

Starting a wholesale business is a great way to move large volumes of products with little effort, at least in theory. But calculating wholesale product pricing is a key strategy for your success. 

Finding the right pricing determines whether volume turns into cash flow that you can reinvest to grow. If the price is too high, you lose potential customers. If the price is too low, you’ll have little or no profit left. 

With US sales reaching $714 billion in November 2025—that’s an increase of 5.2% year over year—you don’t want to miss out on wholesale opportunities over something as small as pricing. Understanding the core formulas and methods behind wholesale pricing can help you price products consistently, protect profit margins, and scale over time.

In this guide, learn how to calculate wholesale product pricing, and some steps you can take to create successful pricing strategies.

What is wholesale pricing?

Wholesale product pricing is what you charge retailers who buy products in large volumes. These product prices are lower than retail prices because wholesalers rely on economies of scale to make money. 

The goal of a wholesale strategy is to earn a profit by selling goods at a higher price than what they cost to make. For example, if it costs you $5 in labor and materials to make one product, you may set a wholesale price of $10—which gives you a $5 per unit gross profit.

Wholesale vs. retail pricing

Wholesale and retail are two fundamentally different processes. Wholesale involves moving goods from manufacturing to distribution, and retail involves acquiring and selling goods to customers. 

Producers or distributors charge retailers wholesale prices. Then, the retailer charges consumers for that same product at a higher price—the retail price.

In retail, profit margins are typically higher, though it usually takes more work and money to make a sale. Comparatively, wholesale might have smaller profit margins, but you’re selling bulk quantities. It’s less effort to sell 100 units wholesale than to sell 100 units direct to consumer, but it’s also less profitable. 

How to figure out wholesale pricing

Wholesale pricing is determined by totaling all production costs and adding a desired profit margin, which can range from 15% to 50%. The steps below explain how to calculate your wholesale price. 

1. Research your market
2. Calculate your product costs
3. Set your profit margin
4. Consider additional costs
5. Calculate your break-even point
6. Use the wholesale pricing formula

1. Research your market

Before you set any wholesale product pricing, determine your market segment and where you fit in. For example, are you a discount brand, a contemporary brand, or a luxury brand? These different categorizations determine how your audience perceives you.

Similarly, if your target customers are more budget-conscious or looking for a high-quality, high-end product, consider these factors when conducting market research. Most customers expect to pay a premium for higher-quality products.

It’s also helpful to consider broader market trends as they relate to your business. Historical sales data, for example, reveals seasonal demand patterns. If you know when retailers’ peak buying seasons happen, you can offer early-bird volume discounts.

You can also look at broad economic indicators, like consumer spending. This helps you better understand what retail partners are willing to pay before their own margins are squeezed. If a lower price point is your competitive advantage against other wholesalers, keep that in mind while researching.

Tip: Retail pricing analytics let you settle on an optimal product price that maximizes profits while remaining competitive in the market. Shopify gives you these tools with native analytics. View inventory, customer, and order data from everywhere you sell—all in one place.

2. Calculate your production costs

Cost of goods manufactured (COGM) is the total cost of making or purchasing a product. This includes materials, labor, and any additional costs necessary to get the goods into inventory and ready to sell, like shipping and handling.

A product’s COGM can be determined with the following calculation:

Total Material Cost + Total Labor Cost + Additional Costs and Overhead = Cost of Goods Manufactured

Say, as an example, you produce a skin care product. Your cost breakdown per unit would look like this: 

• Raw ingredients: $4.50
• Labor time (15 minutes at $20/hour): $5.00
• Packaging (bottle, label, and shipping box): $2.00
• Overhead and shipping: $1.50
• Total COGM: $13.00

If you work with a third party, consider third-party logistics, or 3PL. Your labor costs would be replaced by their service fees, which typically include offerings like pick-and-pack fees and allocated storage and receiving. 

Wholesalers can overlook labor time and specialized packaging when calculating prices, but accounting for them is important for protecting your margins. 

3. Set your profit margin 

Your target profit margin will help you determine how to price your product objectively. If you’re unsure how to do this, you can use Shopify’s wholesale price calculator. Play around with the numbers to see different scenarios. 

When you sell wholesale, you’re likely selling a higher quantity in each order, which allows you to sell the products at a lower price. Aim for between 15% and 50% profit margin for each product to ensure you make money after accounting for expenses.

These targets don’t apply to every wholesaler in the same way. Your ideal profit margin depends on your industry and your brand’s market position. For example, a luxury brand may command much higher margins than a high-volume commodity supplier.

To help gauge where you stand, here are gross margin industry benchmarks based on January 2026 data from NYU Stern School of Business:

• Apparel: 56.88%
• Soft beverages: 54.74%
• Household products: 51.04%
• General electronics: 26.76%
• Auto parts: 15.84%
• Food wholesalers: 15.44%

4. Consider additional costs 

While you might make $2 profit per item, it might cost you more than $2 in overhead to sell that item—in which case you’ll need to adjust your wholesale pricing to make more profit. 

To factor these additional costs into your wholesale price calculation, you’ll need to know your costs of goods sold (COGS) and your overhead costs. Common overhead expenses include:

• Rent for warehouse spaces
• Utilities and internet
• Ecommerce platform fees and software subscriptions
• Insurance premiums
• Administrative salaries

Calculate your cost of goods sold and the sum of any overhead costs. Once you have those two numbers, combine them to create your cost price for the wholesale price formula.

For example, if your COGS for a production run of 1,000 units is $10,000 ($10 per unit) and your monthly overhead costs total $5,000 ($5 per unit), your cost price would be $15 per unit.

5. Calculate your break-even point

The break-even point is the moment your revenue equals your expenses. It’s where you officially aren’t losing money, but you haven’t started making a profit yet. 

Use the following formula:

Break-Even Point = Fixed Costs / (Wholesale Price per Unit – Variable Cost per Unit)

Say for example your fixed costs are $2,000 per month. If you sell each unit for a wholesale price of $50 and your variable costs are $30 per unit, your calculation would be:

2,000 / ($50 - $30) = 100 units

In this case, you’d have to sell 100 units every month to cover your costs. Once you know your break-even point, set minimum order quantities (MOQs) for every wholesale order to cover its share of overhead and contribute to your profitability. 

6. Use the wholesale pricing formula

Profit margin is the retailer’s gross profit on an item sold. The higher this is, the better—but wholesalers have a lower ceiling for adding profit. They make their money by selling cheaper products in bulk.

When setting your wholesale product pricing, first multiply your cost of goods by two. This will ensure your wholesale profit margin is at least 50%. 

For example, if your total cost price for a product is $25, your calculation would look like this:

$25 (Cost Price) x 2 = $50 (Wholesale Price)

Wholesale buyers will add their markup when selling them through retail. Apparel retail brands, for example, typically aim for a 30% to 50% wholesale profit margin, while direct-to-consumer retailers aim for a profit margin of 55% to 65%. 

Wholesale pricing strategies and examples

Many different wholesale product pricing strategies are available, but it’s not necessary to learn all of them if you’re new to selling wholesale. Instead, here are a few tried-and-true methods you can start with. 

Cost-plus pricing strategy

The cost-plus pricing strategy is simple. You add a percentage of profit—known as markup—to the unit cost of your product. Every sale covers your expenses and contributes to your target profit goals. 

How to apply the cost-plus pricing formula:

Wholesale Price = Cost Price + (Cost Price x Percentage Markup)

For example, if your cost price is $20 and you want a 40% markup, you’d calculate the markup as so:

$20 + ($20 x 0.4) = $28.

This is a good strategy for: businesses with consistent production costs, or those selling commodity products where margins are relatively stable.

The one limitation of cost-plus pricing is that it ignores competitor pricing and market demand. If your costs rise but retail partners won’t pay a higher price, you’d lose sales. 

Value-based pricing strategy

Value-based pricing means setting prices based on customers’ perceived value of your product. This approach looks at costs, of course, but also what the market will bear. It focuses on the prestige and benefits your brand offers partners and the end consumer. 

Rocky Xu, founder of beverage brand Rocky’s Matcha, emphasizes that this strategy relies on brand education. “Sometimes people don’t understand why something costs what it does. But then it’s our job to sort of tell that story,” Rocky explains. “What you’re paying for is the craftsmanship and the attention to detail and the hours that that person spent making whatever that object is, as well as just time spent perfecting their craft.”

Value-based pricing has no set formula. But you can figure it out by following these steps:

1. Research your audience to see if they view your brand as a luxury, contemporary, or budget-friendly option.
2. Look at what competitors with a similar status are charging.
3. Set your price based on the unique attributes that make your product special, like high-end materials or brand popularity.

The limitation in pricing based on value is that it’s hard to measure. You have to stay on top of customer terms, and if you overestimate how much people value your brand, you can end up with a price that is too high for retailers to move. 

Keystone pricing method 

The keystone pricing method is fairly straightforward. It involves setting the retail price of a product at double the wholesale price—essentially, the retail price is 100% markup over the wholesale cost. 

Here’s the formula to calculate wholesale prices:

Wholesale Price = Retail Price / 2

This is arguably the most straightforward wholesale product pricing approach you can take. It’s simple retail math and doesn’t depend on any advanced calculations.

However, keystone pricing doesn’t account for factors like competition, demand, or perceived value. This approach may not always provide enough profit margin to cover operating expenses and generate profits. 

You also need to know the end retail price before you can set the wholesale price, which limits your buyers on how they can price your products for their customers. 

Absorption pricing method 

Absorption pricing refers to factoring in all the associated costs, including fixed costs and profit margins, when determining your price. It’s called “absorption” because all costs are absorbed into the product’s final price. 

Absorption pricing differs from cost-plus pricing, which adds a markup to production costs, because it ensures each unit accounts for a portion of all fixed and variable overhead costs. 

The formula for absorption wholesale pricing is:

Wholesale Price = Cost Price + Profit Margin

This wholesale strategy is easy to use and requires no training or complicated formulas. Your profits are almost guaranteed. If you can account for all expenses, you’ll likely turn a good profit.

However, pricing gaps are frequent. This formula also doesn’t consider competitor pricing or value perception. You could charge too much, sending potential buyers to other providers.

Differentiated pricing method 

Differentiated pricing is a wholesale product pricing method that optimizes return on investment (ROI) by calculating the demand for a product. It accounts for different buyers paying different prices for the same product in different situations. It’s based on the idea that buyer acceptance determines the price on any given market condition. 

For example, you can sell seasonal items at a higher price than the average market value during peak seasons. The price of bathing suits can rise quickly at the beginning of the summer season, and then come back down after the demand drops. This also applies to areas with less competition where customers typically buy products at a higher price, such as a beach resort or an airport. 

The differentiated wholesale pricing method can deliver maximum ROI. It takes advantage of market scenarios in real time, keeps you competitive, and allows you to gain data on buyers. 

However, keep in mind that there’s a fine line between maximizing profit and the perception that you’re overcharging wholesale customers. The latter can hurt your brand’s reputation. 

💡Tip: Analyze customer behavior by unifying what you’ve already collected into a single commerce platform. Shopify is the only platform to natively build POS, ecommerce, and business to business (B2B) on the same platform, giving you a centralized business “brain” to make smarter pricing decisions based on data—not guesswork. 

Tips to set wholesale prices

Streamline your method for setting wholesale prices with these tips.

Set a manufacturer’s suggested retail price

A suggested retail price (SRP), also known as a manufacturer’s suggested retail price (MSRP), is the price a manufacturer or wholesaler recommends retailers set for their product. It prevents resellers from undercutting you or your retail partners.

Calculate your recommended retail price using this formula:

Wholesale Price / (1 - Markup Percentage) = Retail Price

Research your market to see how other comparable brands or retailers set their prices. Then, you can work backward to see if your target retail price is feasible based on the costs you incur to produce your products.

For example, imagine that your target retail price is $60. If you want to give your wholesalers a 55% retail margin and yourself a 50% wholesale margin, you can use this pricing formula to work backward and calculate the wholesale price:

$60 (Retail Price) x (1 - 0.55) = $27 (Wholesale Price)

Consider a dual pricing strategy 

A dual pricing strategy means you’ll create two prices. First, an external retail price for your products listed on your website that your direct customers see, and second a separate wholesale price you share with B2B customers. This strategy ensures that you’ll still profit regardless of where you sell. 

Here’s where the formulas come in handy. You can do the math to determine your margins and set wholesale product pricing and suggested retail prices for your products.

For example, if you design and manufacture swimsuits and sell them via wholesale and retail, you’ll need to look at the following numbers:

• Cost of goods sold (COGS): $15 to make one swimsuit
• Wholesale price: $30
• Suggested retail price (SRP): $75

Then, you’ll be able to calculate your wholesale and retail margin percentages:

• Wholesale margin: ($30 Wholesale - $15 COGS) / $30 Wholesale = 50%
• Retailer’s margin with SRP: ($75 Retail - $30 Wholesale) / $75 Retail = 60%
• Retail margin selling DTC: ($75 Retail - $15 COGS) / $75 Retail = 80%

With the above wholesale and retail pricing strategy, you’re making a gross profit margin of 50% on your wholesale orders and 80% on DTC orders.

💡 Pro tip: Shopify merchants can create a B2B storefront from the same commerce platform that powers their ecommerce store and retail stores for one unified shopping experience.

Think about sales volumes

When setting your wholesale product pricing, consider how much your retailer customers order. Lower wholesale prices for bulk orders can incentivize larger retailers. On the other hand, if you anticipate smaller order volumes, you may need to adjust your wholesale prices to maintain profitability.

Strategically align your pricing with expected sales volumes to balance competitive pricing and sustainable profit margins. 

Minimum order quantities (MOQs) come into use if you need to sell a specific number of products to turn a profit. That might mean a minimum order quantity of, for example, 50 units—wholesalers must exceed this threshold to place an order.

💡Tip: Use Shopify’s B2B commerce functionality to set MOQs for wholesale customers who self-serve through your online storefront. 

Review wholesale prices regularly 

New competitors, cost-effective suppliers, and fluctuations in customer demand can all impact your wholesale product pricing strategy. That’s why it’s important to regularly audit and review your prices to ensure profitability and maintain a competitive edge.

Consider a price review whenever:

• The cost of your raw materials or shipping goes up
• Your competitors make big changes to their own prices
• Your profit margins have been steadily declining over a few months 
• The season changes or the general economy changes 

If you’re worried a price change will not align with retail partners, test the new rates first:

• Try a new price with a small group of new accounts before rolling them out to others. 
• Show the new price structure to a few of your most trusted partners to get their feedback.

Common wholesale pricing mistakes

Pricing mistakes rarely look like mistakes at first—they look like reasonable decisions that you later discover don’t scale.

Keith Eshelman, founder of Parks Project, found that early production choices can lead to a pricing dead end. “We started with very small batch production right in our backyard with a close network of suppliers here in Los Angeles, soon to realize that the whole pricing structure was just not sustainable,” says Keith. “We could not build a business contributing money to park projects with really quality material and screen printed here in LA.”

Avoid a similar outcome by keeping an eye out for these common mistakes:

• Treating discounts as the default. It’s tempting to offer a discount to close a deal, but this leads to net price erosion. A 2025 pricing survey showed that 34% of executives reduced discounts to improve profitability, and those that increased discounts only did so because of competitive pressure.
• Failing to pass cost increases. Prices have to follow rises in production costs. Bain’s 2025 research found that 45% of companies struggle to match their own cost hikes with price increases. 
• Letting price leaks spread. If two similar buyers are paying different prices without a good reason, you have price leakage. Zilliant’s 2024 B2B report highlights this as a major reason companies lose money. 
• Not cleaning your data. Small errors in quotes, price lists, or invoices can lead to revenue loss that stacks up quickly when you sell in high volumes.
• Forgetting about carrying costs. 2025 benchmarks show that storing your inventory for a year costs about 10% of its value. If your wholesale margins and MOQs don’t account for these warehouse and insurance costs, you aren’t realizing a profit.

Manage wholesale product pricing with Shopify 

Now that you better understand the formulas used to calculate product pricing, it’s time to build your own wholesale pricing strategy.

Use the formulas above to create a costing chart you can plug numbers into each time you need to define pricing for a new product. You’ll be able to calculate financial metrics like the cost of goods, wholesale price, wholesale margin, retail price, and retail margin.

Shopify’s unified commerce platform makes wholesale and direct-to-consumer sales (DTC) from the same operating system easier than ever. Create a password-protected storefront to show your wholesale price lists for approved B2B buyers through their account login. You can use the same inventory data that powers your DTC storefront.

“On Shopify Plus, our team has the liberty and the space to build relationships with customers, instead of just transacting with them,” says Nicolas Lukac, director of emerging channels at Brooklinen. “We spend more time understanding our customers and less on manual inputs. This allows us to provide exceptional experiences for our DTC, B2B, and retail customers alike.”