Wholesale: Definition and Calculation

The wholesale price is the price at which a manufacturer or wholesaler sells a product to a business that will resell it, before that business adds its retail markup. It is called the “wholesale price” in English. It is based on a price schedule—which is the same for a given category of customers—and is then adjusted based on volume discounts, payment terms, and negotiated benefits. The actual price paid—the net price—is therefore often lower than the listed price. The wholesale price is distinct from the retail price, which the reseller sets freely for the end consumer.

The wholesale price is paid by a professional who resells the product; the retail price is paid by the end consumer. The former is set by the manufacturer or wholesaler, while the latter is set by the retailer, who adds a markup to cover costs and generate a profit. The difference between the two is the retail markup, which is often expressed as a Gross margin , or a coefficient. A single product therefore has at least two prices in the distribution chain, not counting the manufacturer’s suggested retail price.

"Wholesale" is the English term for bulk sales—that is, sales between businesses—as opposed to "retail," which refers to sales to the end consumer. The “wholesale price” is therefore the price at which goods are sold to other businesses. In the fashion industry and selective distribution, the term “wholesale coefficient” is also used: this refers to the multiplier that a brand applies to its cost of goods sold to set its wholesale price. By extension, the term also refers to the activities of wholesalers and the sales channel to resellers, as distinct from direct sales in stores or online.

A wholesale price is most often calculated based on the cost of goods sold, multiplied by a factor that covers the manufacturer’s expenses and profit margin. This calculation yields the price schedule. It must then be evaluated against market conditions: the retailer must be able to apply its own profit margin while remaining in line with the suggested retail price or the prices of competing products. The wholesale price is therefore also calculated in reverse, starting from the target retail price and the margin expected by the retailer. The two approaches must align.

No, the retailer is not required to adhere to the suggested retail price: they are free to set their own retail price. The principle of price freedom is enshrined in the Commercial Code, and imposing a minimum resale price is prohibited. The manufacturer may recommend a price, but cannot penalize a retailer who deviates from it. The wholesale price, however, remains an indirect lever: if it leaves too little margin relative to the recommended price, the retailer will raise its price or reduce the product’s shelf space. The recommended price is only viable if the wholesale price allows for it.

You need to manage the discount structure, not just the pricing schedule. Volume discounts, sales incentives, and special terms accumulate on a customer-by-customer basis, often without an overall review. The result is well known: two customers with the same profile end up with net prices that are vastly different. Regularly comparing the net prices granted to comparable customers reveals these discrepancies. Segment-specific discount rules, with approval thresholds for exceptions, then limit these discrepancies without taking away sales representatives’ ability to negotiate.

Wholesale prices may vary by channel, but any discrepancies must be justifiable. Selling to a wholesaler, an independent retailer, or a marketplace involves different volume levels and service requirements, which justifies different terms. The risk arises when these differences become apparent downstream: a retailer who discovers the same product cheaper elsewhere, even though they purchased it at a higher price, will question the business relationship. Consistency across channels is judged by the final net price—including discounts—not by the listed price.

Wholesale prices are generally adjusted once a year, when the price schedule is updated and commercial negotiations take place. A significant increase in production costs or raw material prices may justify an adjustment during the year, within the limits specified in the contracts. Discounts and special terms warrant more frequent monitoring—quarterly, for example—since this is where discrepancies tend to arise. Each adjustment must be simulated before it is announced: its impact on retailers’ margins will determine how it is received.