The formulas behind the calculator
Wholesale price is based on margin, not markup: wholesale price = unit cost ÷ (1 − target margin). Suggested retail price is the wholesale price times the retailer’s multiplier: MSRP = wholesale price × multiplier. Profit per unit is wholesale price minus unit cost.
Worked example: your fully loaded unit cost is $12 and you want a 50% margin on wholesale. $12 ÷ (1 − 0.50) = $24 wholesale. With keystone (2x), the suggested retail price is $24 × 2 = $48. You make $12 per unit, and the retailer makes $24 per unit, also a 50% margin on their selling price.
The same math works in reverse when you start from a retail price you know shoppers will pay. If comparable products sell for $40 and retailers apply keystone, your wholesale price is $20, and at a 50% margin your unit cost needs to stay at or below $10. If it cannot, rework the product or the margin before you print the line sheet.
Margin vs markup
Margin is profit as a share of the selling price. Markup is profit as a share of the cost. They describe the same profit with different denominators, which is why mixing them up leads to underpricing.
In the example above, selling at $24 something that costs $12 is a 50% margin and a 100% markup. If you meant a 50% margin but applied a 50% markup instead, you would charge $18, which is only a 33% margin.
- Margin = (price − cost) ÷ price.
- Markup = (price − cost) ÷ cost.
- A 2x multiplier always equals a 100% markup and a 50% margin.
Keystone pricing, and when to deviate
Keystone means doubling the price at each step: the brand often sells at roughly twice its cost, and the retailer typically sells at roughly twice the wholesale price. It is a convention, not a rule, and it is the reason a product usually needs to cost well under half of its shelf price for both sides to make money.
Some categories typically run above keystone. Retailers in jewelry, accessories, gifts and beauty often use multipliers somewhere around 2.2x to 2.5x, and some go higher, because of shrinkage, display costs or slower turns. Higher priced or commodity goods may sit below 2x. Ask a few of your retailers what they usually apply, and set the calculator to that.
If your keystone retail price lands above what shoppers will pay for comparable products, the fix is on the cost side (materials, production run, packaging) or on positioning, not on squeezing the retailer’s margin. Retailers who cannot make their usual margin tend not to reorder.
Costs people forget to include
The calculator is only as good as the unit cost you type in. Use a landed, fully loaded cost per unit, not just the price of materials or the factory invoice.
- Packaging, labels, hang tags and inserts.
- Freight-in: shipping, duties and customs fees to get goods to you.
- Payment processing fees on the invoices you collect.
- Samples sent to buyers and reps, and trade show inventory.
- Sales rep or showroom commission on the orders they bring in.
- Damages, returns and units you cannot sell.
A note on MSRP and MAP
MSRP is a suggested retail price: retailers may choose to sell above or below it. A MAP (minimum advertised price) policy is different: it limits the lowest price retailers may advertise, usually online, and is typically used to protect the brand from discounting wars.
If you plan a MAP policy, write it down, apply it consistently to all retailers and check the rules where you sell, since resale price policies are regulated differently from country to country. This calculator only suggests prices; it is not legal advice.
From price list to orders
Once you know your wholesale prices, you will probably want more than one list: standard wholesale, distributors with a deeper discount, or a special price for a key account. Keeping those lists in separate spreadsheets is how wrong prices end up on invoices.
In LINK each buyer opens the same catalog link and sees their own price list, with order minimums and case multiples applied in the cart. You pay a flat subscription, with no commission on orders, and payment and shipping are agreed directly with your buyer.