Wholesale vs. Retail Pricing

How to price wholesale products for resale is a frequent question we get. It might feel daunting when you set prices on new products in your retail store. How do you set a price high enough to make a profit but not so high it turns customers off? On the flip side, some shop owners want to price lower than their competition in hopes of getting more sales, a method that can quickly devalue the goods you offer and eventually hurt your sales. Not to worry, in this article, we will explore a simple baseline formula that can help you start consistently pricing products in your store.

So, how do you set your prices?

Do you look at competitors’ pricing and set comparable prices, or maybe set your prices lower? Do you factor in the wholesale price you paid, shipping costs you incur, and any profit you want to make? Do you set prices low in fear that pricing higher will mean selling less?

It’s a good idea to set prices on what an item is worth instead of what you think a customer is willing to pay. Setting prices too low undercuts other sellers in your niche market, but more importantly, it undercuts your own business. Comparing prices with similar stores, with similar products, is a good starting point but in no way should it be the only factor in determining your final prices.

A simple formula for establishing a suggested retail price.

There are some different ways of calculating retail prices but we suggest the example of marking up the cost of goods 2 or 2.5 times. Remember though, the cost of goods isn't just what the item cost you. Things like shipping costs and warehousing fees may need to be factored into your item cost.

When you capture other costs in your pricing formula, like shipping that can sometimes seem high (see, How Do Shipping Rates Get Calculated?), it allows you to continue making money.

What types of products are easy to sell and make the most money?

The location and/or market you are in will determine what items sell better for your situation. Fortunately, CTW carries products and product variations in a variety of price points. In addition to our diverse assortment of wholesale home décor items, CTW offers Flat Rate Shipping on orders $300 or more which helps reduce shipping cost and may allow you to ask a higher price on the item you offer your customers. If you are new at running a retail business, you may need to test out various products and the formula markup to see what works for your business to be successful.

Final Thoughts

Pricing items for your shop doesn’t have to be stressful or mysterious. You can use the simple formula above to get started. As you grow your business and your knowledge of running a retail store, you can explore other methods for calculating prices. Just make sure you have fun while you make money with your dream store.

— CTW Home Collection

CTW Home Collection is a unique designer, importer, and distributor of retro, BOHO, farmhouse, and vintage-inspired wares for the home. One of our goals is to offer great wholesale home decor and gift items at competitive prices and to help our retail partners succeed in their retail businesses.