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How to set wholesale prices and terms: a simple guide
Wholesale pricing feels scary until you see the math. Here's how to price on purpose: what each product costs you, what you keep, what the store keeps, and the terms buyers ask about first. Plus a free AI prompt that does the math and never guesses a cost.
- The three numbers every product needs
- Margin vs markup, in plain words
- How to set your prices, step by step
- Write your terms once
- Mistakes to avoid
The three numbers every product needs
When you sell to stores, you need "two price points for each of your products: a retail price and a wholesale price" (Faire). Behind both sits a third number only you know.
| Number | What it means |
|---|---|
| Landed cost | What one unit costs you, all in: making it, freight, duties and packaging |
| Wholesale price | What the store pays you |
| MSRP (suggested retail price) | What the shopper pays the store |
Keystone pricing is the usual starting point. Faire explains it simply: "the wholesale price of a product is 50% of the retail price," and it's "the most common benchmark retailers expect." Faire also notes that some categories use different ratios (Faire). So think of 2x as a starting point, not a law. Decide on purpose.
Margin vs markup, in plain words
These two are easy to mix up, and the mix-up can leave your prices too low.
- Margin is the share of the price you keep: (price − cost) ÷ price.
- Markup is how much you added on top of the cost: (price − cost) ÷ cost.
| Cost | Price | Markup | Margin |
|---|---|---|---|
| $24 | $48 | 100% | 50% |
As Faire puts it, "A product with a 100% markup does not have a 100% margin. The margin will always be lower" (Faire). When this guide says margin, it means margin.
How to set your prices, step by step
Step 1. Write down your landed cost (30 minutes)
One row per product in a spreadsheet: product, landed cost, wholesale price, MSRP. Pull costs from your real invoices. If you don't know a cost yet, type MISSING. Don't guess, and don't let an AI guess for you.
Step 2. Pick your target margin (5 minutes)
This is your call, not the AI's. Pick the margin you want to keep on each wholesale sale, for example 50%. Write it at the top of your sheet.
Step 3. Let AI build your margin table (10 minutes)
Open ChatGPT, Claude or Grok Bot, attach your sheet, and paste:
For each product, show: landed cost, wholesale price, my margin in dollars and %, MSRP, the store's margin in %, and MSRP divided by wholesale. Flag any product where my margin is under [target]% or MSRP is under 2x wholesale.
If landed cost or a price is missing, write MISSING and ask me for it. Do not estimate costs. Show the formula you used for margin.
Asking for the formula helps you catch a margin vs markup mix-up right away.
Step 4. Look at your options for each flagged product (15 minutes)
For [product], give me three options to fix the margin: raise wholesale, raise MSRP, or keep the price and accept a lower margin. Show the numbers for each. Don't recommend one; just lay them out.
The AI lays out the math. You make the choice, because you know your shoppers and your stores.
Step 5. Check by hand, then save
Work out two products yourself with a calculator. If the math matches, copy your final prices back into your master spreadsheet, so your line sheet and your shop use the same numbers.
"Tidewren Knits," an invented sweater brand, set a 45% target. The table flagged two products. The Tide Rib Beanie cost $7.80 landed and sold for $14 wholesale and $26 MSRP: a 44% margin and only 1.86x. The Cove Wrap Scarf had a fine margin but an MSRP of just 1.71x wholesale. The founder moved the beanie to $15 wholesale and $32 MSRP (48% margin, 2.13x) and the scarf MSRP to $68 (2.0x). The Ridge Crew Sweater, at $21 landed, $48 wholesale and $98 MSRP, already passed.
Write your terms once
Terms are the rules for ordering from you. Write them once, put them on page 1 of your line sheet, and you'll stop answering the same emails.
| Term | Example answer |
|---|---|
| Case pack | 4 per style |
| Opening order minimum | $300 |
| Reorder minimum | $150 |
| Payment terms | Prepay the first order, then net 30 (the store pays within 30 days of the invoice) |
| Lead time | Ships in 2 to 3 weeks |
| Shipping | Who pays, and from where |
| Returns and damages | What you'll replace, and how fast they need to tell you |
A few notes from Faire's guide to minimums (Faire):
- A case size, also called minimum order quantity (MOQ), is "the fewest number of a given product that you'll sell." Stores order in multiples of it.
- Faire suggests keeping case sizes under 10 "so retailers of all sizes will find your line accessible."
- You can set a lower minimum for reorders than for opening orders, as a thank-you to stores that come back.
Then let AI tidy your terms into a short block for your line sheet:
Turn these terms into a short "Wholesale terms" block for my line sheet: 6 lines or less, plain English, no legal language. Don't add any term I didn't give you. Then list any common term I left out (for example returns, damages, or who qualifies for net terms) as questions for me.
My terms: [paste your table]
In the Tidewren example, the AI noticed returns were missing and asked about them. That's exactly what you want: questions, not made-up answers.
Mistakes to avoid
- Letting AI guess a cost. A guessed number looks just as real as a true one. Use MISSING.
- Mixing up margin and markup. Ask for the formula when numbers look off.
- Treating 2x as a rule. It's a starting point. Some categories differ.
- Keeping terms in your head. If they aren't written on your line sheet, every buyer has to ask.
- Fixing prices in one place only. Update your master spreadsheet, then rebuild your line sheet from it.
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