Key components
Getting your pricing right is one of the most important parts of building a sustainable retail business. Your pricing strategy should support profitability at every stage of the supply chain while remaining competitive and appealing to consumers.
This section covers how to set your wholesale and suggested retail pricing (SRP), understand retailer and distributor margins, budget for trade spend and promotions, and establish pricing policies that protect your brand's value over time.
Example
If your product costs £5.00 to produce and deliver (COGS), you may sell it to a retailer for £10.00 wholesale, who then sells it to consumers at £19.99 SRP. Understanding these pricing layers helps ensure both you and your retail partners achieve healthy margins.
1. Wholesale & Suggested Retail Pricing (SRP)
Your wholesale and retail pricing should be carefully aligned with your category, target customer, and retail channel. When building your pricing model, consider:
- Cost of Goods Sold (COGS): Manufacturing, ingredients, packaging, freight, storage, compliance, and fulfilment costs.
- Market Positioning: Premium, mid-market, and value brands will all have different pricing expectations.
- Competitor Benchmarking: Reviewing similar products helps ensure your pricing remains competitive.
- Consumer Expectations: Customers may be willing to pay more for products that offer superior quality, sustainability, convenience, or unique benefits.
For example:
🍫 Food & Beverage Brand
COGS: £1.50
Wholesale Price: £3.00
SRP: £5.99
✨ Wellness & Beauty Brand
COGS: £6.00
Wholesale Price: £15.00
SRP: £29.99
The goal is to create a pricing structure that works for your business, your retail partners, and your customers.
- Cost of Goods Sold (COGS): Manufacturing, ingredients, packaging, freight, storage, compliance, and fulfilment costs.
- Market Positioning: Premium, mid-market, and value brands will all have different pricing expectations.
- Competitor Benchmarking: Reviewing similar products helps ensure your pricing remains competitive.
- Consumer Expectations: Customers may be willing to pay more for products that offer superior quality, sustainability, convenience, or unique benefits.
For example:
🍫 Food & Beverage Brand
COGS: £1.50
Wholesale Price: £3.00
SRP: £5.99
✨ Wellness & Beauty Brand
COGS: £6.00
Wholesale Price: £15.00
SRP: £29.99
The goal is to create a pricing structure that works for your business, your retail partners, and your customers.
(AUTO-CALCULATES WHOLESALE + SRP + PROFIT)
2. Retailer Margins & Trade Spend
Retailers and distributors need margin to operate profitably, so understanding their expectations is essential when setting your wholesale price.
Typical Retail Markups
🥤 Food & Beverage
Retailers commonly apply a 30 - 50% margin.
Premium and independent retailers may require higher margins.
🧴 Wellness & Beauty
Retail margins often range from 40 - 70%.
Luxury and prestige retailers may require even greater margins.
📦 Distributors
Distributors typically require 20 - 35% margin before selling to retailers.
These requirements should be built into your pricing model from the beginning to avoid margin pressure later.
Trade Spend Considerations
As your brand grows, retailers may expect additional commercial support, including:
- Volume-based discounts
- New product listing fees
- Promotional funding. Joint marketing campaigns
- In-store activations, sampling, and demonstrations
Planning for these costs early will help prevent unexpected impacts on profitability.
Typical Retail Markups
🥤 Food & Beverage
Retailers commonly apply a 30 - 50% margin.
Premium and independent retailers may require higher margins.
🧴 Wellness & Beauty
Retail margins often range from 40 - 70%.
Luxury and prestige retailers may require even greater margins.
📦 Distributors
Distributors typically require 20 - 35% margin before selling to retailers.
These requirements should be built into your pricing model from the beginning to avoid margin pressure later.
Trade Spend Considerations
As your brand grows, retailers may expect additional commercial support, including:
- Volume-based discounts
- New product listing fees
- Promotional funding. Joint marketing campaigns
- In-store activations, sampling, and demonstrations
Planning for these costs early will help prevent unexpected impacts on profitability.
3. Accounting & Financial Planning
Having a clear understanding of your finances is just as important as having a great product. When approaching and in conversation with retailers, you'll want confidence that your pricing is profitable, your cash flow is healthy, and your business is financially prepared to scale.
📊Key areas to understand include:
- Bookkeeping and monthly financial reporting
- Cash flow management and forecasting
- VAT registration and obligations
- Profit and loss (P&L) reporting
- Corporation tax or self-assessment requirements
- Payroll (if employing staff)
- Preparing financial information for funding or investment
- Understanding the financial impact of retail growth
For example: Landing a large retail order is exciting - but if you need to pay your manufacturer 30 days before the retailer pays you 60 days later, you'll need enough working capital to bridge the gap. Good financial planning helps you prepare for these growth opportunities.
💡 Retail Stack Top Tip: Plan for Growth, Not Just the Win
It can be tempting to say "yes" to every store a retailer offers, but before agreeing to a rollout, take the time to build a simple financial plan.
Consider how much stock you'll need to produce, when you'll need to pay your suppliers, when the retailer's payment terms begin, and whether you have enough working capital to support the rollout.
If the numbers don't quite stack up, don't be afraid to negotiate. It's perfectly acceptable to suggest launching in a smaller number of stores first - for example, 20 stores instead of 100 - before expanding once demand has been proven.
Retail buyers are often open to phased rollouts if you can demonstrate that it will help you maintain product availability and deliver a high level of service. A sustainable launch is far better than overcommitting and struggling to fulfil orders.
Remember: a successful retail partnership is built on long-term reliability, not simply launching into the highest number of stores possible.
📊Key areas to understand include:
- Bookkeeping and monthly financial reporting
- Cash flow management and forecasting
- VAT registration and obligations
- Profit and loss (P&L) reporting
- Corporation tax or self-assessment requirements
- Payroll (if employing staff)
- Preparing financial information for funding or investment
- Understanding the financial impact of retail growth
For example: Landing a large retail order is exciting - but if you need to pay your manufacturer 30 days before the retailer pays you 60 days later, you'll need enough working capital to bridge the gap. Good financial planning helps you prepare for these growth opportunities.
💡 Retail Stack Top Tip: Plan for Growth, Not Just the Win
It can be tempting to say "yes" to every store a retailer offers, but before agreeing to a rollout, take the time to build a simple financial plan.
Consider how much stock you'll need to produce, when you'll need to pay your suppliers, when the retailer's payment terms begin, and whether you have enough working capital to support the rollout.
If the numbers don't quite stack up, don't be afraid to negotiate. It's perfectly acceptable to suggest launching in a smaller number of stores first - for example, 20 stores instead of 100 - before expanding once demand has been proven.
Retail buyers are often open to phased rollouts if you can demonstrate that it will help you maintain product availability and deliver a high level of service. A sustainable launch is far better than overcommitting and struggling to fulfil orders.
Remember: a successful retail partnership is built on long-term reliability, not simply launching into the highest number of stores possible.
4. Promotional Budget 📣
Promotional activity is often an important part of securing listings and driving sales, particularly during product launches and seasonal campaigns.
Common promotional investments include:
- Slotting Fees: Payments for shelf placement or launch support.
- Temporary Price Promotions: Discounts, multi-buy offers, or seasonal campaigns.
- Retail Marketing Contributions: Joint digital, social, email, or in-store campaigns.
- Sampling & Demonstrations: Product trials that encourage customer purchase.
As a general guide, many brands allocate 10–20% of revenue towards promotional and trade marketing activity.
For example:
A brand generating £100,000 in annual retail sales may reserve £10,000 - £20,000 to support promotions, retailer campaigns, and product sampling initiatives.
While promotions can reduce short-term margins, they often play a critical role in increasing visibility, driving trial, and improving sell-through.
Common promotional investments include:
- Slotting Fees: Payments for shelf placement or launch support.
- Temporary Price Promotions: Discounts, multi-buy offers, or seasonal campaigns.
- Retail Marketing Contributions: Joint digital, social, email, or in-store campaigns.
- Sampling & Demonstrations: Product trials that encourage customer purchase.
As a general guide, many brands allocate 10–20% of revenue towards promotional and trade marketing activity.
For example:
A brand generating £100,000 in annual retail sales may reserve £10,000 - £20,000 to support promotions, retailer campaigns, and product sampling initiatives.
While promotions can reduce short-term margins, they often play a critical role in increasing visibility, driving trial, and improving sell-through.
💬 From the Voices Behind the Contents
"Many categories operate with established promotional mechanics (e.g. multi-buys, 3 for 2, seasonal deals), which must be factored into pricing, margin planning, and overall commercial strategy."
5. MSRP & MAP Policies
As your retail network grows, clear pricing guidelines help protect both your brand and your retail relationships.
MSRP (Manufacturer's Suggested Retail Price)
The recommended retail price you would like retailers to sell your products at.
Benefits:
✔️ Creates consistency across sales channels.
✔️ Supports brand positioning.
✔️ Helps consumers understand product value.
MAP (Minimum Advertised Price)
The lowest price retailers can publicly advertise your product.
Benefits:
✔️ Prevents excessive discounting.
✔️ Protects perceived value.
✔️ Reduces pricing conflicts between retailers.
✔️ Supports healthy long-term margins.
These policies are particularly important for brands operating both wholesale and direct-to-consumer (DTC) channels, helping ensure retail partners don't feel undercut by the brand's own pricing strategy.
💬 From the Voices Behind the Contents
"Margin expectations are often misaligned, with many additional hidden costs including trade spend, promotions, logistics, listing fees, and distribution charges."
MSRP (Manufacturer's Suggested Retail Price)
The recommended retail price you would like retailers to sell your products at.
Benefits:
✔️ Creates consistency across sales channels.
✔️ Supports brand positioning.
✔️ Helps consumers understand product value.
MAP (Minimum Advertised Price)
The lowest price retailers can publicly advertise your product.
Benefits:
✔️ Prevents excessive discounting.
✔️ Protects perceived value.
✔️ Reduces pricing conflicts between retailers.
✔️ Supports healthy long-term margins.
These policies are particularly important for brands operating both wholesale and direct-to-consumer (DTC) channels, helping ensure retail partners don't feel undercut by the brand's own pricing strategy.
💬 From the Voices Behind the Contents
"Margin expectations are often misaligned, with many additional hidden costs including trade spend, promotions, logistics, listing fees, and distribution charges."
Final Thoughts
A strong pricing strategy is about more than choosing a number - it's about creating a sustainable commercial model that supports growth, profitability, and long-term retail success. By understanding your costs, planning for retailer expectations, budgeting for promotions, and establishing clear pricing policies, you'll be better positioned to scale confidently while maintaining healthy margins and strong retail partnerships.
💬 From the Voices Behind the Contents
“Start with good margins because they will get eroded - aim for cost of production to be no more than 25% of RRP, even if not achievable at the outset until scale is achieved, because there are various costs to factor in.”
💬 From the Voices Behind the Contents
“Start with good margins because they will get eroded - aim for cost of production to be no more than 25% of RRP, even if not achievable at the outset until scale is achieved, because there are various costs to factor in.”
