Updated September 2026 · 6 min read
Short answer: The wholesale price is what a retailer pays the brand or supplier for a product, and the retail price is what the shopper pays the retailer. The seller usually sets the wholesale price from its costs and target profit, and the retailer sets the retail price, often at about double the wholesale price.
Understanding wholesale price vs retail price helps whether you’re buying products for a shop or selling your own products to stores. The gap between the two numbers is where the retailer earns its profit, and it has to be big enough to cover rent, staff, and everything else.
This guide explains who sets each price, how they’re calculated, how the numbers fit together, and a few rules to know.
Wholesale price vs retail price: what’s the difference?
| Wholesale price | Retail price | |
|---|---|---|
| Who pays it | A retailer or other business buyer | The end customer |
| Who sets it | The brand, maker, or distributor | The retailer (often guided by a suggested price) |
| Order size | Usually by the case or with a minimum order | Usually one item at a time |
| Based on | Production cost plus the seller’s profit | Wholesale cost plus the retailer’s markup |
| Sales tax | Often exempt for resale with a valid certificate | Usually charged to the shopper, depending on the state |
| Typical level | Often about half of retail (varies by industry) | The full shelf price |
A third number often shows up too: the MSRP, or manufacturer’s suggested retail price. It’s the brand’s recommended shelf price. Retailers often follow it, but it’s a suggestion, not a rule.
How is the wholesale price set?
Brands and makers usually build the wholesale price up from their costs. The goal is a price that covers everything, leaves the seller a profit, and still leaves room for the retailer.
Common ways to set a wholesale price
- Cost-plus. Take the full cost per unit and add a markup. Many small brands aim for around 2× their cost.
- Work backward from retail. Start with the price shoppers will pay, then divide by the retailer’s typical markup.
- Market-based. Look at what similar products wholesale for and position yours against them.
- Tiered. Offer lower prices for bigger orders to reward volume.
Our step-by-step guide on how to calculate wholesale price walks through each method with examples.
How is the retail price set?
Retailers start with what they paid, add a markup, and then adjust for their market.
- Keystone. Double the wholesale cost. It’s a common starting point in gifts, apparel, and home goods.
- Follow the MSRP. Many shops use the brand’s suggested price to stay consistent with other sellers.
- Adjust for the market. Local competition, shopper expectations, and product type can push the price up or down.
- Cover landed cost. Freight and fees get added to the wholesale price before the markup, so the margin isn’t eaten by shipping.
It’s easy to mix up markup and margin here. A 100% markup (doubling the cost) gives a 50% margin. See markup vs. margin for a full conversion chart.
How do wholesale and retail prices fit together?
Here’s how a product moves from the maker to the shopper, with example numbers.
At a glance: From maker to shopper
1
Maker’s cost. It costs the maker $5 to produce one unit.
2
Wholesale price. The maker sells it to stores for $10 (2× cost).
3
Retail price. The store sells it for $20 (2× wholesale).
4
Shopper pays. The customer pays $20, plus any sales tax.
Retail price = wholesale price × retailer markup
Wholesale price = retail price ÷ retailer markup
Example: Retail $20, retailer uses a 2× markup. Wholesale = $20 ÷ 2 = $10.
The retailer’s gross margin = ($20 − $10) ÷ $20 = 50%. The maker’s gross margin = ($10 − $5) ÷ $10 = 50%.
What if there’s a distributor in the middle?
When a distributor is involved, there’s one more markup. For example, the maker might sell to a distributor at $7, the distributor sells to the store at $10, and the store sells at $20. The maker earns less per unit but reaches more stores without doing the selling. Plan for this from the start, or your price may not leave room for everyone.
2×
Common keystone markup from wholesale to retail
~50%
Typical wholesale price as a share of retail (varies by industry)
100% = 50%
A 100% markup equals a 50% margin
Why does the same product have different retail prices?
Two stores can buy a product at the same wholesale price and still charge different retail prices. That’s normal. Each retailer has different costs and customers.
- Overhead. A shop on a busy main street pays more rent than an online seller working from home.
- Freight. A store far from the supplier may pay more to get the product in.
- Volume. Bigger buyers may earn tier discounts that lower their cost.
- Positioning. A gift boutique with strong service and display may price above a discount-focused store.
- Promotions. Sales and clearance events lower the price for a limited time.
What rules affect wholesale and retail pricing?
Pricing is mostly up to the seller, but a few rules apply. This is general information, not legal advice. Talk to a business attorney about your specific situation.
Treating wholesale customers fairly
The Robinson-Patman Act, enforced in part by the FTC, can make it illegal for a seller to charge competing business buyers different prices for the same goods when that harms competition. There are defenses, such as price differences that reflect real cost savings (like some volume discounts) or that meet a competitor’s price in good faith. The safest habit is a clear, written price list and discount tiers that apply the same way to every buyer.
Suggested prices and advertised prices
A brand can suggest a retail price. Some brands also have minimum advertised price (MAP) policies that limit how low a retailer can advertise a product. Agreements that fix the actual resale price are treated more carefully under antitrust law, and some states are stricter than federal law. Our guide to MAP pricing policies explains the details.
Checklist: Setting prices that work for both sides
- ✅ Know your full cost per unit, including freight
- ✅ Set a wholesale price that leaves room for the retailer’s markup
- ✅ Check that your MSRP fits what shoppers will pay
- ✅ Publish one wholesale price list with clear volume tiers
- ✅ Plan for a distributor markup if you might use one later
- ✅ Review prices at least once a year as costs change
FAQ
Is the wholesale price always half the retail price?
No. Half is a common starting point in many consumer goods, but some categories use higher or lower markups. Jewelry, for example, often carries a higher markup, while grocery items often carry less.
Can a retailer sell below the suggested retail price?
In most cases, retailers set their own prices. Brands may have MAP policies about advertised prices, and breaking them can cost a retailer its account.
Why is the wholesale price lower than the retail price?
Because the retailer takes on costs and risks, including rent, staff, marketing, and unsold stock. The gap between wholesale and retail pays for all of that.
How do I find the wholesale price of a product?
Ask the brand or supplier for a line sheet or wholesale price list. Most require proof of a business before they share it.
Bottom line
In the wholesale price vs retail price question, the wholesale price is what stores pay and the retail price is what shoppers pay. Sellers build wholesale prices from cost plus profit, and retailers typically double that for retail. Make sure your numbers leave room for everyone in the chain, and apply your wholesale pricing the same way to every buyer.
Wholesale Handbook 
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