Pricing Your Wholesale Dream 💰

The Maker’s Biggest Mistake: Why Pricing to Survive Will Kill Your Wholesale Dream

The moment you decide to offer wholesale, a terrifying question pops up:

"If I sell this for 50% off, am I going to lose money?"

It's a valid fear. Makers are often conditioned to price their work based on what feels "fair" or what the artist next to them charges.

But when you start calculating your wholesale prices, you’ll likely feel a jolt of panic: the numbers seem too high.

Here’s the tough truth: Underpricing is the single fastest way to kill your wholesale business. It's far worse than overpricing.

Why? Because when your prices are too low, you signal to professional buyers that your brand is either unstable, low quality, or—most importantly—that you don't allow them enough margin to make money.

The goal isn't just to make some money; it's to create a sustainable price that allows both you and your retail partners to thrive.

The Golden Rule: The 2x Multiplier

To be profitable and professional in wholesale, you must build your price from the ground up using the industry-standard multiplier.

This is non-negotiable.

Step 1: Calculate Your True Cost of Goods Sold (COGS)

This is the foundation of everything. COGS includes every tangible and intangible expense that goes into creating a single product.

$$COGS = (Materials + Packaging + Labour)$$

Crucial Point on Labour: You must pay yourself or your manufacturer/ outsourcer! If your product takes 3 hours to make and you value your time at $25 per hour, your labour cost is $75. Never skip this step.

Step 2: Set the Wholesale Price

Your wholesale price must be high enough to cover your COGS and pay for your overheads (rent, electricity, software, management wage (that'll be you when you outsource) and profit.

The standard formula used by professional brands is:

$$\text{Wholesale Price} \geq COGS \times 2$$

Step 3: Set the Retail Price

Your Retail Price is what the customer pays in the store. For shops to make money and cover their own costs (rent, salaries, utilities), they must have a 50% margin.

The standard formula is:

$$\text{Retail Price} = \text{Wholesale Price} \times 2$$

If a boutique can’t double its money on your product, they simply won't stock it.

Why You Can’t Use Your "Hobby Math" Anymore

Transitioning to wholesale introduces new costs that you must factor into your pricing—costs a retail-only maker never considers.

1. The Cost of Freight and Packaging

You can no longer ship one item in a padded envelope. Wholesale requires high-quality, durable bulk shipping (boxes, insurance, pallet fees). You may also have to absorb the cost of shipping for new accounts to secure the deal. Your COGS needs wiggle room for shipping supplies.

2. The Cost of Payment Terms

When a retail partner orders $1,000 worth of goods, you might offer them Net 30 terms—meaning they have 30 days after receiving the goods to pay you. You have to buy all the materials, create the goods, and ship them before you see a cent. Your prices must be high enough to cover your cash flow needs during that 30-day waiting period.

3. The Cost of Marketing Leverage

The 50% discount you give a store is essentially a marketing fee. That store is doing the costly work of finding the end customer, paying rent, and managing the display. That discount isn't a "loss"; it's a strategic investment that buys back your time and scale.

The Pricing Test: Are You Charging Enough?

Before you launch your wholesale line, check your final price with these two simple tests:

1. The "50% Off" Gut Check

Take your Retail Price and cut it in half. Now look at that Wholesale Price. If seeing that number makes you feel anxious, stressed, or angry, your starting COGS is too high, or your final Retail Price is too low. Your price should leave you feeling calm and confident. If you're stressed, the business is unsustainable. Prices must always be win-win from wholesaler to retailer.

2. The Competitor Test (Used Wisely)

Do not compare your prices to the new maker on Etsy. Instead, find 3–5 established, successful brands whose products are sold in the same type of beautiful boutiques you want to be in. How do their Retail Prices compare to yours?

If your calculated retail price is significantly lower than the successful, established competition, buyers will wonder why. They might assume low quality.

Be the premium brand that belongs on their shelf, not the budget filler.

Pricing is confidence. When you price your product correctly, you are ensuring that your business is not just surviving, but built to scale for years to come.

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