Wholesale Pricing: What Remains After the Retailer Margin?

Check your own costs before agreeing to a retailer's requested margin. This worksheet is for makers and small brands considering a wholesale order. It starts from a hypothetical shelf price and works backwards to the money left for the supplier.

Put both businesses on the same price ladder

The example assumes a fully taxable product, 10% GST on sales and recoverable GST on eligible costs. All cost comparisons exclude that assumed recoverable GST. These are model inputs, not a ruling about your product. Food, mixed supplies and other classifications need their own tax check.

Assumptions: Fictional Australian-dollar management-costing example. Amounts exclude GST that is assumed recoverable; any non-recoverable tax is already included in costs. These assumptions do not establish your GST entitlement. Contribution is before unallocated overheads and income tax.

Stage	Calculation	Amount
Consumer retail price	Illustrative total including GST	$110
GST component	$110 ÷ 11	$10
Retail revenue excluding GST	$110 − $10	$100
Assumed retailer gross margin	40% × $100	$40
Wholesale revenue to supplier	$100 − $40	$60
Maker product cost	Materials and making cost	−$28
Wholesale packing and freight	Per-unit allocation	−$5
Expected returns loss	Illustrative net allowance	−$2
Supplier contribution	$60 − $28 − $5 − $2	$25

Original ASBG worked example. All businesses, amounts and scenarios are fictional. The table contains the same figures as the visual.

The $40 is the retailer's gross margin before its own rent, staff and other operating costs. The supplier's $25 is contribution before unallocated overhead and income tax. Neither is take-home profit.

The retailer's 40% margin is fictional, not an Australian industry benchmark. At a 50% margin on the same $100 retail revenue, wholesale revenue falls to $50 and supplier contribution falls to $15 if supplier costs stay unchanged. At 35%, it rises to $30. Take those alternatives into the price discussion.

Compare direct sales with their own costs

Assumptions: Fictional Australian-dollar management-costing example. Amounts exclude GST that is assumed recoverable; any non-recoverable tax is already included in costs. These assumptions do not establish your GST entitlement. Contribution is before unallocated overheads and income tax.

Per unit	Direct sale	Wholesale sale
Revenue excluding assumed GST	$100	$60
Product cost	$28	$28
Packing and freight	$12	$5
Payment fees	$2	$0 separately modelled
Expected returns loss	$3	$2
Acquisition cost	$20	$0 incremental assumed
Contribution before unallocated overhead	$35	$25

Original ASBG worked example. All businesses, amounts and scenarios are fictional. The table contains the same figures as the visual.

The direct sale earns $10 more contribution in this example, but requires the assumed advertising spend, individual dispatch and customer handling. Wholesale has no separately modelled payment or acquisition charge here; add account fees, sales commissions, samples and retailer onboarding if you incur them. A zero assumption isn't a statement that those costs never exist.

Compare the likely volume and time as well. Ten direct sales and a hundred-unit wholesale order use different amounts of stock and cash. A slower-paying retailer can create a cash problem even if the per-unit contribution is acceptable.

Ask what else comes out of the wholesale price

List carton quantities, freight responsibility, payment terms, damaged-stock handling, promotional contributions, returns and discounts. If a $200 sample pack supports an expected 100-unit first order, the first-order economics include another $2 per unit unless that cost is recovered elsewhere. Avoid spreading it over imaginary future orders to make the first one look better.

Use actual contract terms and a qualified adviser for unusual deductions or return obligations. The table shows how to cost an agreed arrangement; it doesn't create a right to impose one. Likewise, the hypothetical shelf price is a scenario, not an instruction to control the retailer's resale price.

Business.gov.au's pricing guide provides the broader pricing framework. Customer-facing prices need their own ACCC display check; the tax-exclusive internal ladder isn't ready-to-publish consumer advertising.

Where to get help

Check landed cost first if you buy the product, and volume tiers before accepting a quantity discount. For your own shop, see starting an online store. Find the connected worksheets in the pricing and profit hub.