Wholesale Pricer#

A wholesale price is a balance. Too high and retailers do not stock you or do not promote you. Too low and your direct channel looks worse every time a retailer discounts. Design the price tiers to make the retailer want volume without letting the cheapest channel race your own DTC margin to the bottom.

Quick Reference#

DecisionStrongAcceptableWeakStarting discount off MSRP50% off MSRP (a standard keystone)45–50%<40% (retailer under-margin, complains immediately)Tier steps3 tiers with ≥20% unit-count gaps and 2–3 pt discount per step3 tiers with uneven steps7 tiers with 0.5 pt steps (nobody can remember)MOQAligned to case pack (12, 24, 48 units)Open units but with a small-order surchargeNo MOQ, every order costs you to pick-and-packPayment termsPrepay for new, Net-30 on approval, Net-60 only for top 10% accountsNet-30 baselineNet-90 across the board (working capital crisis)MAP policy10% below MSRP floor, enforced with 2-warning removal15% MAP, loosely enforcedNo MAP (price race ensues)FreightFree on $1k+ orders, otherwise pass throughFree on $2k+Free on all orders (eats 3–5 pts margin)First-order promo5% first-order discount, one-timeSample pack at costFree samples unlimited

Problems this skill solves#

1. Retailer margins too thin so your product ends up on the "slow shelf" instead of the feature display.
2. DTC undercut by retailer flash sales because you never set or enforced MAP.
3. Volume tiers nobody hits because the break point was set too high, so everyone stays at the worst tier.
4. Net-90 across the board eating working capital — you're financing your retailers' business rather than growing yours.
5. Hodgepodge pricing where each account has a custom deal nobody can reproduce, and you can't tell if a new account is profitable.
6. Free shipping on small orders that makes every pick-pack a loss.
7. No first-order incentive for new accounts, so reps have nothing to close with.

Workflow#

Step 1 — Start from MSRP and work down#

Write down the target MSRP (what the consumer pays at retail full price). Keystone is the industry default: wholesale = MSRP × 0.5. So if MSRP is $40, baseline wholesale is $20. Validate that $20 is ≥2× your landed COGS.

Step 2 — Set a 3-tier schedule#

Three tiers is enough to reward scale without becoming a spreadsheet. Recommended structure:

• Tier 1 (opener): MOQ = 1 case, discount = 50% off MSRP.
• Tier 2 (growing): 5+ cases, discount = 52–53% off MSRP.
• Tier 3 (key account): 20+ cases or $10k+ order value, discount = 55% off MSRP.

Keep unit-count steps ≥20% apart so moving up a tier is a decision, not a rounding accident.

Step 3 — Align MOQ to your case pack#

Wholesale orders must be picked in whole cases. If your case is 12 units, MOQ = 12 (not 10, not 15). This lets the warehouse pull full pallets and avoids repacking. Anything else adds labor cost you are not charging for.

Step 4 — Set payment terms by account maturity#

• New account, unrated: prepay or credit card only.
• Account with 2+ paid invoices and clean credit: Net-30.
• Top 10% of revenue or a major chain: Net-60 maximum; use trade credit insurance if offered.
• Never Net-90 unless the retailer pays 2% early-pay discount for Net-10.

Step 5 — Publish and enforce MAP#

MAP (Minimum Advertised Price) policy sets the lowest price retailers may publish. A typical floor is 10% below MSRP. Publish the policy in plain English, list the enforcement mechanism (two warnings then account suspension), and actually enforce it. Use a MAP monitoring service once you have >20 accounts.

Step 6 — Design the freight split#

Free freight above a threshold that makes the order profitable after shipping. Rule of thumb: threshold = the point where freight is ≤1.5% of order value. For small SKUs that is usually $1,000. Below the threshold, pass through carrier rates at cost + 10% handling.

Step 7 — Give new accounts a credible first order#

A 5% first-order discount (on top of Tier 1) gets the rep through the "I'll think about it" with minimal margin damage. Offer a sample pack at cost, not free, so the retailer's buyer has skin in the game. Put an expiry on the first-order promo (30 days) so the rep can reclose.

Example 1 — Candle brand onboarding indie retailers#

MSRP $28 candle, landed COGS $6.50, case pack 6.

• MSRP: $28. Wholesale keystone: $14.
• Tier 1: 1 case (6 units), $14/unit. Retailer margin = 50%, which is standard.
• Tier 2: 6 cases (36 units), $13.30/unit (52.5% off MSRP). Retailer margin = 52%.
• Tier 3: 24 cases (144 units), $12.60/unit (55% off MSRP). Retailer margin = 55%. Offer this only to accounts that commit to 4 annual orders.
• MAP: $25.20 (10% off MSRP). Two warnings, then a 30-day suspension, then termination.
• Freight: Free above $1,200. Below, UPS Ground rate + 10%.
• First-order promo: 5% off Tier 1 on first case, expires in 30 days.
• Payment: Prepay first order; Net-30 from order 2 on clean credit.

Unit economics: Gross margin at Tier 1 = ($14 − $6.50) / $14 = 54%. At Tier 3 = ($12.60 − $6.50) / $12.60 = 48%. Still healthy; volume makes up for the margin compression.

Example 2 — Kitchen tool, national chain request#

MSRP $32 kitchen tool, landed COGS $9, case pack 12. National chain asks for a $12 cost with 90-day terms.

• Keystone baseline is $16. $12 is a 62.5% discount, far below the published Tier 3 (55%).
• Run the math: at $12 with 90-day terms, 10,000 units/yr, working capital cost 12%:
  • Gross margin: ($12 − $9) / $12 = 25%. This is not healthy at the line-item level.
  • Working capital drag on Net-90: $12 × 10,000 × (90/365) × 12% = $3,550/yr.
• Counter: $13.50 (58% off MSRP) with Net-60, or $12 with prepay. Offer a $5k MDF (marketing development fund) per calendar year in lieu of further discount.
• If the chain insists on $12 Net-90, walk away or negotiate a separate endcap / promotional commitment that lifts the volume to justify the terms.

The discipline: know your floor, walk from the deal when the numbers don't work, and offer non-price concessions (MDF, co-op advertising, exclusive SKU) when you can't meet on price.

Common mistakes#

1. Starting from COGS instead of MSRP. Retailers buy discount-off-MSRP, not cost-plus. Quote in their frame.
2. Too many tiers. Seven-tier schedules confuse reps and retailers and get ignored; 3 tiers is plenty.
3. No MAP policy or unenforced MAP. Every race-to-the-bottom starts here.
4. Letting a big retailer dictate terms without running the working-capital math on Net-90.
5. Freight on every order — it is not a gift when it makes the pick-pack unprofitable.
6. Customizing pricing per account until no two reps quote the same price and you cannot reconcile retailer chargebacks.
7. Ignoring freight class. Heavy or bulky products have very different real shipping costs than your small gift-boxed SKUs.
8. First-order discount bundled with free shipping — stacked incentives compound margin loss. Pick one.
9. No case-pack alignment. Ordering 13 units of a 12-pack forces a split case and destroys margin on that order.
10. Paying returns freight without a reason code. Retailers expect to return slow movers; pay freight only on defective-unit returns.

Resources#

• references/output-template.md — Wholesale price sheet template to hand to new accounts.
• references/tier-math.md — Worked pricing math for a 3-tier schedule with different case packs.
• references/map-policy-template.md — Minimum Advertised Price policy template and enforcement workflow.
• references/payment-terms-guide.md — Payment terms, credit checks, and working-capital math.
• assets/wholesale-checklist.md — Pre-onboarding checklist before accepting a new wholesale account.