Set your wholesale and retail (MSRP) prices from your unit cost and target margins — the pricing ladder for selling to stores.
Wholesale price is set so your margin equals the target percent of that price (price = cost ÷ (1 − margin)). Retail uses a markup multiple — 2× wholesale is the classic "keystone." Stores need room to mark up, so wholesale must leave healthy retail margin. General information only.
Selling to stores means two prices: your wholesale price (what the store pays, giving you your margin) and the retail price the store charges shoppers. The retail price is typically a markup on wholesale — 2× is the classic "keystone." Work up from your unit cost so both you and the retailer make money.
Wholesale = cost ÷ (1 − your margin) · Retail = wholesale × markup
Selling through stores means living with two numbers at once. The wholesale price is what the retailer pays you, and it has to leave your margin. The retail price is what the shopper pays, and it has to leave the retailer's. The two are linked, and the direction of travel matters: you build up from your unit cost, but the market judges you at the top of the ladder. A pricing structure that works perfectly on paper fails the moment the retail figure it implies is more than shoppers will pay. Note the two different kinds of percentage in play here — your wholesale figure is set as a margin (a share of the wholesale price, so you divide), while the retail step is a markup multiple applied to wholesale (so you multiply). Mixing those two up is the most common arithmetic error in the whole exercise.
The defaults are a unit cost of $8, a 50% wholesale margin, and a 2× retail markup — the classic keystone. Wholesale is $8 ÷ (1 − 0.50) = $16.00. Check it: your profit is $16 − $8 = $8.00, and $8 ÷ $16 is 50% of the wholesale price, which is what a margin means. Retail is $16 × 2 = $32.00, so the store makes $16 on the unit, which is a 50% retail margin — keystone gives both tiers the same margin percentage, which is exactly why it became the default. The last output is the sanity check: $32 ÷ $8 = 4× your cost. That multiple, not either percentage, is the number to test against reality first.
Push one input and watch the ladder move. Ask for a 55% wholesale margin instead and wholesale becomes $8 ÷ 0.45 = $17.78, which at keystone puts retail at $35.56 — a $3.56 jump at the till for $1.78 more in your pocket. Every dollar you add at the bottom of the ladder is multiplied on the way up, which is why wholesale pricing punishes an inflated cost far harder than direct-to-consumer pricing does.
Keystone is a convention, not a law, and it varies by category, region and channel — some retailers work on thinner multiples on higher-ticket goods, and some ask for more than 2× on items they expect to discount. Treat the 2× default as a starting assumption to confirm with the actual buyers you are pitching, not as a number you can rely on. The rule that does hold: work out the retail price the market will bear first, then divide backwards to see what wholesale and what unit cost that implies. If the cost you can actually achieve does not fit under that ceiling, no arrangement of margins fixes it — the answer is a cheaper way to make the thing, a different product, or not selling through stores at all.
The most expensive is an incomplete unit cost. Materials are the part everyone remembers; packaging, shipping in, the failure and returns rate, payment fees, and above all your own labour are the parts that get left out, and every one of them is multiplied by four by the time it reaches the shelf. The second is undercutting your own stockists: if you sell direct at the same $32 retail while a store is also carrying it, you are earning a 75% margin on that unit against their 50%, and a retailer who notices will usually stop reordering rather than compete with their own supplier. Agree a direct-selling position before it becomes a conversation. The third is treating wholesale as a lightly discounted version of your direct price. It is a different business with different economics — larger orders, longer payment terms, and often the cost of carrying stock until the invoice clears — and the margin has to be set for that reality rather than borrowed from your online store.
One product with one cost is a calculator's job. A range is not: the moment you have a dozen items, two channels, and a cost per unit that moves with each production run, you need every SKU on a row with its true landed cost, both prices and the margin each channel actually returned. That is what our Etsy Seller COGS & Profit Tracker is built to hold, and it is the point at which the pricing question turns into a bookkeeping one.
Doubling the wholesale cost to set retail — a 2× markup, or 50% retail margin. It's the traditional default in many retail categories.
If wholesale is too high, the store can't mark it up enough to be worth stocking. Both tiers need to work, which is why you start from a low enough cost.
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