Calculating your wholesale margin helps to determine the profitability of each of your products. Without regularly assessing your margins, you may make less profit in the long term. Use our wholesale margin calculator to monitor your profit margins regularly.
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What is Wholesale Margin and How to Calculate It
What is a Wholesale Margin?
Wholesale margin is the difference between the product cost from a supplier or manufacturer and the price at which it is sold to a retailer or another intermediary in the distribution or supply chain. It represents the profit a wholesaler earns on each unit of product sold.
Wholesalers typically purchase large quantities from manufacturers or suppliers at a discounted price. The wholesale margin is the percentage added to the cost of acquiring the products to determine the selling price to retailers.
Wholesale margins can vary depending on the industry, product type, market conditions, competition, and the negotiating power of the parties involved. Wholesalers rely on these margins to cover operational costs, generate profits, and provide value-added services to their customers, such as packaging, and logistics.
QuickBooks Wholesale Margin Calculator
Our wholesale margin calculator automatically calculates your margin, shown as a percentage. Simply input the cost price of the product per unit, input your current selling price, and your wholesale margin will be calculated.
Selling price
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Gross margin dollars
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Wholesale Margin Formula
The formula for calculating the wholesale margin is easy. Simply determine your wholesale margin by working out your selling price and cost price using the formula below:
Wholesale Margin = (Selling Price - Cost Price) / Cost Price x 100
Alternatively, you can use our wholesale profit margin calculator to implement the formula using your selling and cost price automatically.
How to Calculate Wholesale Margin
To calculate the wholesale margin, you need to know the cost price (or acquisition price) and the selling price. Here's a step-by-step calculation example:
- Determine the cost price: This is the price at which you acquire the product from the supplier or manufacturer. Let's say the cost price is $10 per unit.
- Determine the selling price: This is the price at which you sell the product to the retailer or another intermediary. Let's say the selling price is $15 per unit.
- Substitute the values into the formula to calculate the wholesale margin.
Wholesale Margin = ($15 - $10) / $10 x 100
Wholesale Margin = $5 / $10 x 100
Wholesale Margin = 0.5 x 100
Wholesale Margin = 50%
Therefore, in this example, the wholesale margin is 50%.
How QuickBooks Can Help
Regularly monitoring your wholesale margins is essential for profit-making. Without adapting your sale price depending on your cost price, your business will find it increasingly difficult to generate enough revenue to survive.
QuickBooks accounting software allows you to manage expenses by recording the cost of acquiring products from suppliers when you create purchase orders or enter bills. You can also enter the cost price per unit for each product, ensuring accurate cost tracking, and allowing your business to change selling prices depending on data.
QuickBooks expense tracking software also enables you to monitor sales transactions and record the selling price per unit when invoicing customers or entering sales receipts. This data is crucial for calculating wholesale margins.
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