Wholesale margin is the difference between the price a brand sells a product to a retailer for (the wholesale price) and the cost of producing that product. Common synonyms include: trade margin, and margin on cost.
Why Wholesale Margin Matters
Wholesale margin is a core measure of commercial viability in a wholesale‑led business. It helps teams understand:
- How profitable each product is before it reaches the retailer
- How much room exists for negotiation on terms and pricing
- Whether production costs are aligned with market expectations
- How sustainable the wholesale model is across categories
- How much cash the business retains after fulfilling retailer demand
Healthy wholesale margins give brands the stability to invest in product, marketing, and growth.
How Wholesale Margin Works
Wholesale Margin = (Wholesale Price−Cost of Goods Sold)/Wholesale Price
Key drivers include:
- Cost of goods: materials, labour, manufacturing
- Wholesale price: what retailers pay
- Volume commitments: larger orders may reduce margin
- Terms and allowances: returns, discounts, co‑op marketing
- Market positioning: premium vs value‑led brands
Example: If a product costs £20 to make and the wholesale price is £40, the wholesale margin is 50%.
Common Use Cases
- Pricing strategy: setting wholesale prices that protect profitability
- Range planning: prioritising products with stronger margins
- Negotiation: managing retailer terms and discounts
- Cost engineering: reducing COGS to improve margin
- Forecasting: modelling revenue and profit scenarios
- Channel strategy: balancing wholesale vs direct‑to‑consumer economics
Related Terms
- Wholesale
- Sell‑In
- Cost of Goods Sold (COGS)
- Gross Margin
- Trade Terms
- Pricing Strategy
What Wholesale Margin Really Tells Us
Wholesale margin quietly reveals how well a brand understands the economics of its own product. It shows whether the story the brand wants to tell, about quality, value, craftsmanship, or innovation, is supported by a cost structure that makes the business sustainable.
A strong margin often reflects discipline: thoughtful design, efficient production, and a clear sense of where the product sits in the market. A weak margin often reflects tension: rising costs, competitive pressure, or a mismatch between what the product costs to make and what retailers are willing to pay.
Wholesale margin also exposes the trade‑offs a brand is making. Sometimes a lower margin is a strategic choice, to win a key retailer, enter a new market, or build momentum behind a hero product. Other times it’s a warning sign that the economics are drifting out of balance.
At its heart, wholesale margin is a measure of resilience. It shows how much room a brand has to absorb shocks, cost increases, currency shifts, retailer demands, without compromising its identity or long‑term health. When teams read wholesale margin not just as a percentage but as a story about how the product came to be, they gain a clearer sense of what’s working, what’s fragile, and where the next smart decision needs to be made.
