What is wholesale price?
A wholesale price is the price charged by businesses for products when sold in large volumes. Usually, businesses sell products to large trade or distributor groups at the wholesale price.
What you need to know?
- The wholesale price is relatively lower than the retail price due to the lower operating costs involved.
- Wholesale pricing is based on the principle of selling in bulk with a lower markup.
- Wholesale pricing largely depends on key factors like suppliers, labor costs, and overhead expenses.
How's wholesale price calculated?
Using the popular absorption pricing method, wholesale price is calculated based on the cost price and the necessary profit margin.
Overhead expenses + Administrative cost
Total number of unit
( 1 - Profit margin )
What's the difference?
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A wholesale process involves movement of goods from manufacturing to distribution.
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Distributors or producers charge retailers a wholesale price for products.
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Contrastingly, a retail process involves acquiring goods and selling them to consumers.
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Retailers charge consumers a retail price for products.
The average retail price is set to a minimum of 1.66 times the wholesale price as a standard. This minimum standard is to cover higher advertising expenses and elevated profit margins.
