Wholesale prices mean lower margins but higher volumes. You buy in for resale to other businesses, so your margin is limited by what the market is willing to pay. Yet you can still be profitable by calculating smartly with volumes and efficiency.
What is wholesale and how does margin work?
With wholesale you sell to other businesses who resell your products to end customers. Think of restaurants buying your sauces, or cafés selling your baked goods. Your selling price needs to be low enough so they can still make a profit.
💡 Example wholesale chain:
You make pasta sauces:
- Your production costs: €2.50 per jar
- Wholesale price to restaurant: €4.00 per jar
- Restaurant sells to customer: €8.00 per serving
Your margin: €1.50 per jar (37.5%)
Calculate your minimum wholesale price
Your wholesale price needs to cover all your costs plus deliver profit. But you have fewer marketing and sales costs than with direct consumer sales.
⚠️ Watch out:
Don't calculate with ingredient costs alone. Also add: packaging, labor, overhead, transport and your desired profit.
The formula for wholesale pricing:
Minimum wholesale price = (Production costs + Overhead + Desired profit) / Expected volume
💡 Example calculation:
Monthly costs for 1000 jars of pasta sauce:
- Ingredients: €1,500 (€1.50 per jar)
- Packaging: €300 (€0.30 per jar)
- Labor: €800 (€0.80 per jar)
- Overhead: €400 (€0.40 per jar)
- Desired profit: €500 (€0.50 per jar)
Minimum wholesale price: €3.50 per jar
Research market prices
Check what comparable products cost in the wholesale market. Your customers (restaurants, shops) have alternatives. If your price is too high, they'll choose another brand.
- Look at catalogs from wholesalers in your sector
- Ask potential customers what they currently pay
- Check online B2B platforms for price comparisons
- Calculate what customers can pay maximum and still make profit
Balance volume vs. margin
With wholesale it often applies: lower margin per unit, but much higher volumes. This can be more favorable than selling small quantities at high margin.
💡 Retail vs wholesale comparison:
Scenario 1 - Direct to consumer:
- 100 jars per month at €8.00
- Revenue: €800, costs: €300, profit: €500
Scenario 2 - Wholesale to restaurants:
- 1000 jars per month at €4.00
- Revenue: €4,000, costs: €3,000, profit: €1,000
Wholesale: double profit despite lower margin per unit
Efficiency becomes crucial
With lower margins you need to work more efficiently. Every euro of waste counts heavier. Focus on:
- Producing larger batches (economies of scale)
- Less waste in production
- Smarter purchasing of raw materials
- Automated processes where possible
⚠️ Watch out:
With wholesale you often have payment terms of 30-60 days. Factor this into your cashflow planning.
How do you calculate wholesale margin? (step by step)
Calculate all production costs
Add up: ingredients, packaging, labor, overhead and transport. Don't forget hidden costs like energy, depreciation and administration. This is your cost price per unit.
Research market prices
Check what comparable products cost in the wholesale market. Ask potential customers what they currently pay and calculate what they can pay maximum to still make profit.
Determine your desired profit margin
Choose a realistic margin between cost price and market price. Common for food wholesale: 25-50% margin. Test different prices and volumes to find your optimal balance.
✨ Pro tip
Start with one or two large wholesale customers instead of many small ones. This gives you more volume certainty and makes your operation more efficient.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
What is a normal profit margin in wholesale?
For food products wholesale margin often ranges between 25-50%. This depends on your product, competition and volumes. Fresh products often have lower margins than shelf-stable products.
How do I prevent customers from asking for too much discount?
Make your cost price calculation transparent and show the value of your product. Offer volume discounts instead of general discounts. Focus on quality and service as differentiating elements.
Should I use different prices per customer?
Yes, that's normal in wholesale. Larger buyers often get better prices due to higher volumes. Make clear criteria for your pricing structure to prevent discussions.
How do I handle payment terms?
Wholesale customers often expect 30-60 day payment terms. Factor this into your cashflow and consider factoring or credit insurance for large orders. You could also ask for a deposit.
Can I do wholesale and retail at the same time?
Yes, but watch out that your wholesale customers don't compete with your own retail sales. Make agreements about territories or channels, or focus on different products per channel.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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