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Retail vs. Wholesale: What They Mean & How to Set Your Prices

Hey, product-based businesses! Do you sell your products as retail, wholesale, or both?


Selling retail versus wholesale can feel like an entirely different ballgame, and your pricing can vary greatly between the two. Here’s how to determine which avenue you should take in your business and how to set your prices for each type of selling.


What’s the Difference Between Retail and Wholesale?


As a product-based business, you have two options for selling your goods: selling to the consumer or selling to a distributor.


Retail means you sell your products directly to the consumer. Think of an Etsy shop or independent maker. They make the product, market it, and then sell it to the consumer through their own online or brick-and-mortar store.


Wholesale means you sell your products to a distributor who then sells to consumers. Think of a local boutique that sells work from multiple artists or a clothing store that employs “shoppers.” These businesses curate a line of items, market them, and sell them for more than they purchased them for.


If you make your own products, you can go either route (or both!). It just depends on the vision you have for your business.


Should You Sell Retail or Wholesale?


Most small product-based businesses focus on one or the other. That being said, there’s nothing wrong with doing both!

If you want to experiment with marketing and building an audience, try retail! This will allow you to represent your products yourself and create a personal brand. This means that a lot of your time will be spent working on the business side of things as opposed to the actual production side. Still, it’s rewarding to see your products all the way from idea to production to sale.


If you’d rather focus on production and want to sell in bulk, try wholesale! You will still have to network with distributors and sell your products to them, but you won’t have to market to the general public. Instead, you’ll spend most of your time developing new products and fulfilling bulk orders. Most wholesalers develop lasting relationships with a few key distributors and keep long-term contracts with them.


If you’re unsure which route to go, I highly suggest starting with retail and working up to wholesaling. In retail, you interact directly with the consumer and therefore get a better sense of what they want and need. It’s a great way to improve your sales skills and your products.


How to Price Your Products


Pricing differs between wholesale and retail. Here’s how to calculate the two.


How to Calculate Wholesale Prices


For product-based businesses, I recommend this simple formula for figuring out your wholesale pricing:


COST (how much it costs you to acquire/make the product)


+ LABOR (any labor required to create the product and get it to your customer)


+ PACKAGING (boxes, labels, wrapping paper, stickers, etc.)


+ SHIPPING


Multiply this total by 2 for your wholesale price.


How to Calculate Retail Prices


To calculate your retail price, simply multiply your wholesale price by two. Easy as that!


Go Forth & Sell!


Now that you’ve calculated your wholesale and retail prices, you’re ready to start selling! Wholesalers, check out online marketplaces like Faire and Handshake to find distributors. Retailers, build your own online store with a program like Shopify so you can sell directly to your ideal customers.


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