Retail Price / Wholesale Price
Retail price and wholesale price are pricing categories used in apparel and in fabric and trim transactions, where retail price refers to the retail price at the time of sale and wholesale price refers to the price sold to business partners.
Contents5 sections
Definition and Overview
Retail price refers to the price at which goods are generally sold to consumers and is used for price tags and product planning. Wholesale price refers to the wholesale price presented to business partners such as manufacturers, wholesalers, and retailers.
However, the price referred to as the wholesale price may vary depending on the position of the party in the transaction. The wholesale price for an apparel manufacturer purchasing fabric is not the same amount as the wholesale price for a brand that wholesales finished products to retail stores.
Situations Where It Is Used in Fabric Transactions
When procuring fabric and trims, the wholesale price in bolts, meters, yards, and other units is checked on quotations, purchase orders, and during negotiations. This price is included in cost calculations and is considered together with sewing costs, processing fees, logistics costs, and other expenses to determine product cost.
When a reference retail price is shown for the fabric itself, it is treated as reference information assuming sales to the final consumer. Its purpose and pricing basis differ from the wholesale price, which indicates the actual purchase price, whether processing is included, order quantity, and delivery terms.
- Unit price and unit of measure for fabric and trims
- Minimum order quantity and unit price by quantity
- Additional costs such as dyeing, processing, and cutting
- Whether freight, packaging costs, and payment terms are included
Pricing and How to Read the Numbers
The relationship between retail price and wholesale price is sometimes expressed as a markup rate. It is the ratio obtained by dividing the wholesale price by the retail price, or a method of calculating the wholesale price by applying a certain percentage to the retail price, but it is always important to confirm which figure is being used as the basis.
There is no industry-wide fixed benchmark for markup rates or profit margins. They vary depending on product category, sales channel, quantity, return conditions, and whether or not there is a sale, so it is important at the planning stage to estimate product cost separately from the expenses required for sales.
Key Points to Check and Cautions
When confirming prices, clearly indicate whether tax is excluded or included, the unit for the unit price, quantity conditions, and the validity period. To avoid misunderstandings, also confirm whether the retail price is a suggested retail price or a price assuming actual sales, and whether the wholesale price is before or after discount.
"Cost" and wholesale price are not the same thing. Cost may include not only material costs but also sewing, processing, inspection, transportation, and planning-related expenses. Also, labor cost refers to the cost of processing and sewing work and is distinguished from the wholesale price of the product or fabric.
Frequently Asked Questions
Is the difference between retail price and wholesale price profit?
It is not necessarily profit itself. From the difference between retail price and wholesale price, the selling side pays logistics costs, store operating costs, sales commissions, and the burden of discounts and returns. On the wholesale price side as well, material costs, labor costs, processing fees, and other expenses must be covered, so profit cannot be determined from the difference alone.
What should be checked in a fabric quotation?
Check not only the unit price, but also the pricing unit such as meters or rolls, tax handling, unit price differences by order quantity, processing fees, freight, delivery time, and payment terms. Conditions may also change depending on the number of colors or whether it is a special order, so keep the quotation conditions in writing.
Are markup rate and profit margin the same?
They do not mean the same thing. A markup rate is a transactional percentage that shows the price relationship between retail price and wholesale price. Profit margin, on the other hand, is the percentage of profit after subtracting cost and necessary expenses from sales. Because the two are sometimes confused in conversation, confirm the calculation formula and the amount used as the basis.
