Wholesale Pricing for Importers: Setting Your Price Tiers From Landed Cost
If you sell only direct to consumers, pricing is one calculation. The moment you sell wholesale as well, it becomes three, and they have to agree with each other. Your wholesale price has to leave your stockist enough margin to want the product. Your own retail price has to sit at a level that does not undercut them. And both have to start from a landed cost that includes everything, not just what the factory invoiced you.
Get the stack wrong at the start and it is very hard to fix later, because raising a wholesale price with existing stockists is a much harder conversation than setting it correctly the first time.
Start from landed cost, never factory cost
The most common and most expensive mistake is building the price stack off the unit price on the proforma invoice. That number excludes freight, duty, insurance, brokerage, port charges and often packaging, and those together routinely add 20 to 40 percent.
Price off USD 12.50 when your true landed cost is closer to USD 17, and every tier above it is wrong by the same proportion. At wholesale margins that is often the difference between a healthy line and one you are subsidising.
Work out the real per-unit number first. The free landed cost calculator includes duty, freight, insurance and fees, with live currency conversion. Open the free calculator
How the tiers stack
A conventional three tier stack looks like this.
- Landed cost: everything it costs to get one unit into your warehouse, ready to sell.
- Wholesale price: what you charge a stockist. Typically two to two and a half times landed cost.
- Recommended retail price: what the stockist sells it for. Typically two to two and a half times the wholesale price.
Doubling at each step is known as keystone pricing, and it is a starting point rather than a rule. Worked through: a landed cost of 17 gives a wholesale price around 34 to 42, and an RRP around 70 to 100. If that RRP is far above what the market will pay, the problem is not your pricing, it is your cost, and no amount of arithmetic will fix it at the last tier.
Margin and markup are not the same number
This trips up more people than any other part of pricing, and it matters most in wholesale where you are quoting margins to buyers.
Markup is calculated on cost. Margin is calculated on the selling price. A 100 percent markup, doubling your cost, is a 50 percent margin. A 50 percent markup is a 33 percent margin. Retail buyers almost always talk in margin, because that is how their business is measured, so when a buyer asks whether there is enough margin in your product they are asking about the selling price, not your cost.
If a buyer says they need 55 percent margin, they mean the wholesale price must be no more than 45 percent of the retail price. Quote them a markup figure by mistake and you will look like you do not know your own category.
Convert between markup and margin and set wholesale and retail prices from your landed cost with the free margin and pricing calculator. Open the free pricing calculator
What margin each tier actually needs
There is no universal number, but there are ranges that hold across most product categories.
Your wholesale margin needs to cover more than you think. Out of the gap between landed cost and wholesale price comes your overheads, sales costs, samples, the stock that does not sell, returns, and your profit. A wholesale margin around 50 percent is common. Below about 40 percent, one bad season removes the profit for the year.
Your stockist's margin needs to make the product worth their shelf space. Typical retail margin expectations run from 50 to 60 percent in most consumer categories, higher in fashion where markdowns are certain. If your product only offers a buyer 35 percent, they will usually pass, however good it is, because the maths does not support the risk of holding it.
Your own direct margin will be higher than wholesale, and that is where the tension lives, which brings us to the next point.
Selling direct and wholesale at the same time
If you also sell direct, you are competing with your own stockists. Handle it badly and you lose the stockists.
The basic discipline is to sell direct at the RRP, not below it. It feels counterintuitive to leave margin on the table when you could undercut, but a stockist who finds your site cheaper than their shelf will not reorder. Your direct margin is already far better than your wholesale margin at the same price, so you are not losing anything by holding the line.
Where you want to be more aggressive, do it in ways that do not undercut the price: bundles, exclusive colours or styles, or end of season clearance timed after the wholesale season has run.
The discounts that quietly destroy the stack
Most wholesale margin is not lost at the pricing stage, it leaks afterwards.
- Volume discounts agreed without recalculating. A 10 percent discount on a 50 percent margin removes a fifth of your profit on that order, not a tenth.
- Freight to the stockist absorbed as a courtesy. On low value, bulky products this can be several percent of the order.
- Early payment discounts stacked on top of volume discounts, so the effective price is well below what you modelled.
- Samples and marketing support given free across many accounts, which never appears in any per-unit calculation.
- Currency movement between when you set the price and when you pay the factory, which is the one nobody plans for.
That last one deserves attention if you buy in a different currency from the one you sell in. A five percent move against you between quoting the season and paying the balance comes straight out of margin you have already committed.
Set the stack once, then check it against reality
Rebuild the calculation at the end of a season using what actually happened rather than what you planned: the real landed cost including the freight you actually paid, the real average selling price after discounts, and the real sell-through. It is common to find that the line you thought was your best performer was your worst once discounts and freight were accounted for.
The bottom line
Build every tier from a landed cost that includes duty, freight and fees. Know the difference between margin and markup, and quote buyers in margin because that is how they think. Leave your stockists a margin worth carrying the product for, hold your direct price at RRP, and watch the discounts, because that is where the money actually leaks. Price the stack properly at the start and the season looks after itself. Price it off the factory invoice and you will be working out in March why a strong sell-through made no money.
Related guides
- Markup vs Margin: How to Price Imported Products
- MOQ and Lead Times: What They Mean and How to Negotiate Them
- How to Calculate Landed Cost: A Complete Guide for Importers
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