How the calculator works
The calculator follows the standard way small brands price for wholesale: start from your full cost per unit, add your margin to reach the wholesale price, then multiply the wholesale price to reach the retail price.
- Cost per unit: everything it costs to make one sellable unit, including materials, packaging and labor.
- Wholesale price: set either by a target gross margin (what percentage of the wholesale price is profit) or by a markup on cost.
- Retail price (MSRP): the wholesale price times a retail multiplier. Keystone is 2x, which gives the retailer a 50% margin.
The formulas
| To find | Formula |
|---|---|
| Wholesale from target margin | wholesale = cost ÷ (1 − margin) |
| Wholesale from markup | wholesale = cost × (1 + markup) |
| Retail (keystone) | MSRP = wholesale × 2 |
| Your margin | (wholesale − cost) ÷ wholesale |
| Retailer margin | (MSRP − wholesale) ÷ MSRP |
Example: a candle costs $7.00 to make. With a 50% target margin, wholesale = $7.00 ÷ 0.5 = $14.00. Keystone retail = $14.00 × 2 = $28.00. You earn $7.00 per unit (50% margin) and the store earns $14.00 per unit (50% margin).
What is keystone pricing?
Keystone pricing means the retail price is double the wholesale price. It is the default expectation in gifts, fashion, jewelry, home goods, beauty and stationery sold through independent stores, because it gives retailers the 50% margin they need to cover rent, staff and profit. Some categories differ: grocery and beverages often work with lower retailer margins, and high-ticket items such as furniture or fine jewelry often use a lower multiplier. The calculator lets you set a custom multiplier for those cases.
Common pricing mistakes
- Leaving labor out of cost. If you make the product, your time is a cost. Price it at a realistic hourly rate.
- Confusing markup with margin. A 50% markup is only a 33% margin. See the markup calculator to convert.
- Setting retail first and squeezing wholesale. Work out your cost and margin first; if the resulting MSRP is too high for the market, fix the cost or the positioning rather than wholesaling at a loss.
- Forgetting distributors. If you plan to sell through distributors, they need margin too, usually below your store wholesale price.
Read our full guide to pricing products for wholesale for worked examples, distributor tiers and when to break keystone.
Next step: publish your prices
Once your numbers work, put wholesale and MSRP side by side on a line sheet or a price list so buyers can see their margin at a glance.