How to price for wholesale without giving your margin away

Wholesale is tempting: bigger orders, regular income, one delivery instead of fifty customers. It's also the quickest way to halve your margin without noticing for six months. The fix is to set the wholesale price from your costs, not as a discount off retail.

Why "retail minus 30%" doesn't work

Knocking a percentage off your retail price tells you what the café pays, but nothing about whether you still make money. If your retail price was already tight, a 30% discount can put you below cost on some products and leave you working for free.

Step 1: Know your true cost per item

Start with the ingredient and packaging cost per item (see how to cost a recipe). Then add what wholesale specifically costs you: delivery time and fuel, invoicing, and any extra packaging a café needs, like individual wrapping or labels.

Step 2: Decide your floor

Your floor is the lowest price you'll accept. A simple way to set it is a multiple of ingredient cost. Many small bakers and food makers use about 2 to 2.5 times ingredient cost for wholesale and 3 to 4 times for retail, but the right multiple depends on how much hands-on time a product takes. A brownie you can make 40 of in an hour can carry a lower multiple than a hand-decorated biscuit.

Example: a brownie costs 45p in ingredients and 5p in packaging. At 2.5 times, the wholesale floor is £1.25. If the café sells it at £3.50, they make a healthy margin too, which keeps them ordering.

Step 3: Check it against what the café can charge

Cafés typically want to sell at around two and a half to three times what they pay. If your floor is £1.25 and similar cafés sell brownies at £3.25 to £3.75, there's room for a price both of you can live with. If your floor is above what they could ever charge, that product may not suit wholesale. That's fine: offer the products that do.

Step 4: Agree terms, not just a price

• Minimum order. A minimum per delivery (for example £40) stops a drive across town for six cookies.
• Order deadline. For example, orders by noon two days before delivery, so you can plan and buy.
• No sale or return. If unsold stock comes back to you, you're carrying their risk.
• Payment terms. 14 days is common for small suppliers. Put it on every invoice.
• Price reviews. Say up front that prices are reviewed when ingredient costs change, with a few weeks' notice.

Keep three prices, built from one cost

Most small food businesses end up with three price lists: retail, wholesale and catering. Build each from the same ingredient cost rather than from each other, so when butter goes up, all three can be checked at once. More on that in retail vs wholesale vs catering pricing.

Review it when your costs move

A wholesale price is only right at today's costs. When a supplier puts prices up, check your wholesale margin first: it's the thinnest, so it's the first to go negative. A small, regular increase with notice is much easier for a café to accept than a big jump after a year of losses.

MakrPrep keeps a separate price list for each type of customer, suggests a minimum price from your costs, and warns you when a price drops below it. Try it free for 14 days.