Wholesale vs retail price: how to price for shops
Wholesale vs retail price for small producers: the shop's margin, keystone pricing, margin vs markup, and how a consignment split compares, with worked numbers.
The wholesale price is what a shop pays you. The retail price is what its customer pays. The difference between the two is the shop’s margin, and getting it right is most of what pricing for shops means: too thin and no shop will stock you, too fat and you are working for nothing.
The usual mistake runs the other way from what people expect. Small producers rarely over-price their wholesale. They start from a retail price they like the sound of, take a bit off for the shop, and end up with a wholesale price that does not cover the jar.
So start at the other end.
Start from what one unit costs you
Before any shop is involved, work out what one unit costs to make and get to a counter. For a jar of preserves:
| Item | Per jar |
|---|---|
| Fruit, sugar, pectin | MX$14 |
| Jar, lid, label | MX$11 |
| Your time, at an hourly rate you would accept | MX$8 |
| Fuel and the trip, spread across a route | MX$2 |
| Cost per jar | MX$35 |
Your time and the trip are the two lines people leave out, and they are the reason a product that “sells well” can still lose money.
Wholesale: double your cost, at least
A wholesale price of twice your cost is a common floor. It covers the jars that break, the batch that does not set, the shop that pays late, and leaves something to grow on.
MX$70
wholesale, from a MX$35 cost
Twice the cost per jar. Lower than this and one bad batch or one slow shop wipes out the month.
Retail: keystone, and when not to use it
Keystone pricing means the retail price is double the wholesale price. A jar the shop buys at MX$70 goes on its shelf at MX$140, and the shop keeps half of every sale.
Keystone is the convention in gift shops, galleries and concept stores, where stock turns slowly and each item has to pay for a lot of shelf. Food shops — delis, cafés, a corner shop or grocery — often work on a thinner margin, because what they sell turns over faster. Ask the shop what margin it works on rather than guessing; most owners will tell you.
Then check the retail price against reality. If MX$140 is far above what comparable jars sell for on the same shelf, the answer is not to cut the shop’s margin. It is to look again at your cost, your jar size, or whether this is the right shop.
Margin is not markup
This catches nearly everyone once.
- Margin is profit as a share of the selling price. Buy at 70, sell at 140: margin is 70 ÷ 140 = 50%.
- Markup is profit as a share of the cost. Buy at 70, sell at 140: markup is 70 ÷ 70 = 100%.
Same jar, same shop, two numbers. When a shop says it “needs 40%”, it almost always means margin. If you hear markup and set your wholesale price at retail ÷ 1.4, you have given the shop a 29% margin and it will come back to you about it.
Consignment: a split instead of a margin
On consignment the shop does not buy the stock, so there is no wholesale price as such. There is a consignment split: either a fixed amount per unit that sold, or a consignment percentage of the retail price that the shop keeps as its fee.
Because the shop has paid nothing and risks nothing, its share is usually smaller than a wholesale margin. Gift and craft shops commonly keep somewhere around a quarter to 40% of retail. On our MX$140 jar, a shop keeping MX$40 pays you MX$100 for each one that sold.
A month on consignment at MX$100
- On the shelf last visit
- 24
- Still there today
- 9
- Sold
- 15
- Price per jar
- MX$100
- Owed
- MX$1,500
Fifteen sold, MX$1,500. Had the shop bought all 24 outright at MX$70, you would have had MX$1,680 on the day. The higher consignment price only wins when enough of the shelf sells — here, 70 ÷ 100, so 70% of it. Is consignment worth it works through that break-even, and the calculator runs the sum on your own counts.
If someone else sells for you
Some producers pay a person to find shops and keep them stocked, on commission. That commission comes out of the same gap — between what the shop pays and what one unit costs you — so it has to be priced alongside the wholesale price, not after it. A MX$70 wholesale price with a MX$35 cost leaves MX$35 a jar to split between you and whoever sells it. The commission calculator works out what a rate or a tier schedule pays at a given volume.
The short version
- Cost per unit first, including your time and the trip.
- Wholesale at twice cost or more.
- Retail at twice wholesale for gifts and crafts; ask food shops what margin they work on.
- Consignment at a smaller split than wholesale, because the shop carries no risk — and check the sell-through you need before you agree it.
- One retail price everywhere, including your own market stall and website.
Common questions
- What is the difference between wholesale and retail price?
- The wholesale price is what a shop pays you for each unit. The retail price is what the shop's customer pays. The gap between them is the shop's margin, and it pays for its rent, staff and the risk of stock that does not sell.
- What is keystone pricing?
- Doubling the wholesale price to get the retail price. A jar the shop buys at MX$70 goes on the shelf at MX$140, which gives the shop a 50% margin. It is a common starting point for gifts and crafts; food shops often work on less.
- What is the difference between margin and markup?
- Margin is profit as a share of the selling price; markup is profit as a share of the cost. Buying at MX$70 and selling at MX$140 is a 50% margin and a 100% markup. Mixing them up is the most common way producers under-price.
- How should I price wholesale if a shop wants consignment?
- Agree either a fixed amount per unit sold or a consignment percentage of the retail price. Because the shop carries no risk on consignment, its share is usually smaller than a wholesale margin — around 25–40% of retail instead of about half.
- Should my own retail price match the shops'?
- Yes. If you sell the same jar for less at a market or online, you are undercutting the shops that stock you, and they will notice. Keep one retail price everywhere.