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What is a Wholesale Price?

Buyers are often offered wholesale prices at farmer's markets because the costs added by distributors are not included.
So called "big box" stores can offer wholesale prices because they buy in bulk from foreign manufacturers.
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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 15 December 2014
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A wholesale price is the price offered to purchasers of manufactured goods or to commercial sellers in many cases. Sometimes, small warehouse stores like Costco offer wholesale prices to some of their customers who own businesses. These prices are usually about half the price of something that could be purchased at retail value. Sellers or producers of other goods (like restaurants) confer a higher price to the retail customer, often at a 100% or more mark-up.

Goods don’t just have to be manufactured; they can also be grown. A farmer for instance, offers a wholesale price to a grocery store or a produce buying company. The produce buying company may spend money to package or repackage goods for sale, usually in smaller lots. These are then sold at a retail price that is much higher than if you were to purchase the goods from the farmer on your own.

Part of the reason that manufacturers of goods or growers can offer wholesale is because they sell their goods in bulk. A grocery store doesn’t buy just one tomato from a farmer; it buys several tons of tomatoes. This way the farmer, though selling the goods at a lower price than what they would cost in a grocery store, is assured a larger sum payment for the goods, and is able to get rid of his produce.

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The same applies to any manufactured item. Retailers don’t go looking for one manufactured item, unless it’s exceptionally large or special ordered. Instead they buy thousands of the item and are assured a lower price. Larger retailers, who make very large purchases of the same item and have the ability to offer these items at a high number of stores, may be able to get better prices than would a small independent store that can only purchase a small number of a single good. Purchasing volume is important when determining wholesale.

Wholesale price reflects a number of things. It must account for the cost of manufacture, materials, any packaging and storage. This is why we see so many items in the US made in foreign, and often developing, countries. Manufacturing, storage, and even the cost of materials may be much cheaper in India, Mexico, Indonesia or China (to name just a few countries) than it is in the US.

What’s somewhat ironic is that many of the things purchased at wholesale price from manufacturing companies outside the US are given considerable mark up. Slap a designer name on a T-shirt that cost a dollar at wholesale, and you can sell it for $30 US dollars (US) if not more. Did these things really cost that much more when they were sold at wholesale? The answer is probably not, but they are marketed to brand conscious Americans who are willing to pay considerably more money at retail price if they get a “brand name” product.

Due to the fact that wholesale price for goods can be so much lower than retail markup, there’s often considerable price flexibility on certain items, particularly clothing and furniture. Generally, even when a company offers sales or clearances they may still make a profit, though not as high a one as they’d get if they sell things at full price. Consumers wise to this price flexibility tend to wait for sales to shop. They know that prices can be flexible when markup is high, and there’s no point purchasing something at full retail price when you can purchase something at a price much closer to wholesale.

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anon335599
Post 13

This article seems to be useful in gaining information related to wholesale prices. With this article I found it easy to make purchases related to wholesale vehicles.

anon282250
Post 10

The wage and benefits gap between rich and poor is too high in America. Why shouldn't CEO's earn a bit less like Japanese CEOs and why not pay hourly workers a bit more like the Germans do (shorter work weeks and higher wages than American hourly workers).

The Japanese and Germans have less wealth inequality than the US and they are very productive economies. Perhaps we could learn something from them.

anon269722
Post 9

@anon231413: "Who needs a cynic who knows the price of everything and the value of nothing?" - Oscar Wilde

Have you tried selling an item before? Do you make a living by selling a product or your time in exchange for money? How much is your time worth? Do you think your time is worth much more than the other guy who bought your product?

If you have a job, why do you think your employer is paying you the amount you are receiving and not 10X more or 2X less? Would you have asked for only $100K a year if your time and experience is worth more even though you could pretty well live with $50K comfortably?

While I get your point that $1B is a lot of money and not many have them, but is it wrong to accumulate wealth? Is it so untrue to our human nature to do that?

I am sure you have to pay for your internet connection that allows you to post stuff online such as this. Do you think the ISP charged you a fair price? Do you think you have been overcharged? Is there some other provider that is cheaper? Of course there is. But are you going to switch if it saves you a mere $10 a year? All these are science and not a figure that you just pull out of your bunghole! Next time try posting something that helps.

@anon90358: If you paid $15 wholesale per piece, you need to include shipping, packaging, customs duty, marketing costs, storage and finally tax over it to get the retail price (RRP). Don't forget this RRP multiply by the total amount you target to sell will have to cover the cost of your time and administrative cost (i.e. staff wage, your time, rental, maintenance).

Most wholesalers or distributors have a RRP for their product but it is up to you to determine your markup because everyone has a different cost structure. Hope that helps.

anon249821
Post 6

"If it cost you exactly $8.41 to make that necklace..."

I highly doubt a necklace, including materials, time and overhead (and I mean, you can even forget about profit margin for the sake of my response) would cost $8.41. If I were to assume your $8.41 price tag was based on materials only, which is foolish, and that necklace takes an hour to make, you are suggesting the seller should earn only $.42 an hour? Children in Chinese shoe factories make more an hour than that!

anon231413
Post 5

I am writing this just for fun. To answer the question of anon90358: Basically, you take the wholesale price ($15.00) and multiply it by a number you more or less pull out of your butt.

What's funny about that is I'm being serious. Small business/Mom and Pop vendors are atrociously bad at their maths. More often than not, they don't even fully know how much it cost them to procure or produce a particular item in the first place, much less how to fairly price it for resale.

Add things into it such as 'Shelf Space Pricing' and all the other crap 'concepts' marketers have come up with, and you find that the 'Wholesale Price' (which is also often complete crap.) has gone up anywhere from 200 percent to 1000 percent. To those not mathematically inclined: that means a multiplication factor of 2-10.

Humans are idiots. The majority of them will buy a piece of jewelry for $150.00 that actually only cost about $5 to produce. The truth about the economic system, my fellow apes, is that it is not the Big Banks, Hedge Funds, or even governments that completely obliterate the world's economy; it's average humans just like you.

Take, for example, the most common example: Any item, regardless of 'what' it is, is usually produced for a paltry (insignificant) sum. That item is given to retailers who, literally, multiply the cost by 2, 3, 4, or 10, and then proceed to resell the item to idiotic customers, most of which will not even question the item's high cost, and will just buy it without thinking.

What does this mean? This means an item with a true value of, say, $2.31, is now inflated to $20 (866 percent markup). Of course, the economy is a complete joke. Of course, the disparity between uber-rich and poor is ridiculous. You can't take a thing that is worth almost nothing, and sell it to the masses for a huge chunk of money and expect the economy will just 'be okay'.

Remember, this happens on a larger scale than any human is even able to comprehend. We see the number $1,000,000,000 (1-billion dollars) and we think "Wow, that's a lot."

No, that's a crapload, my friend. You don't quite get it. Let me put that number in perspective (humans like perspective). For an average human (working at $8.00 an hour, 40 hours a week, for 60 years), they will have obtained $921,600. Guess what? That is equal to 0.000922 of 1 billion dollars.

What is 0.000922? Well, my friend, that means to have worked for 60 years at $8 an hour, for 40 hours a week, every week (with no expenses), you will have obtained a pathetic 9 percent of 1 percent of a billion dollars. You didn't even get 1 percent of a billion. You didn't even get 10 percent of 1 percent -- you only managed 9 percent of 1 percent.

To put it another way, 1,000,000,000 (1 billion dollars) is 108,506 percent more than you make in your lifetime. That is 1-hundred-and-eight-thousand, 5-hundred-and-6 percent more than you will ever make in your life. In other words, the billionaire could buy a $500,000 house two thousand times (outright) in a single year, while you could buy 1.8 (not even 2) of them in your lifetime.

Now, consider this: There are humans on this planet who make 1 billion dollars every year. Does everyone understand what a billion is now? Have I related it enough for everyone to comprehend?

What's the moral of this story? Stop being idiots. Stop wondering: "How can I flim-flam other humans out of their money even more than I already am?" Stop believing that it's "okay" to mark up your products by 200 percent, 300 percent, or 1000 percent -- it's really not okay.

Who's at fault for there being so many poor humans on this planet? The average human. Who's responsible for there being so few rich humans on this planet? The average human.

Be moral. Be fair. Be reasonable. Stop trying to 'make a profit' at any cost. If it cost you exactly $8.41 to make that necklace (your time and cost of materials), then why not sell it at a mere 5 percent markup ($8.83)? Yeah, you'll actually have to work in your life, but at least you can sleep well at night.

Well, that or you can just forget you read this and carry on as you are most likely doing.

Remember that episode of South Park where the 'evil heart' of Wal-Mart was a mirror (in other words, you). Well, basically the whole tragedy of the world's economy is also completely because of you. Well, you and the other 6-7 billion chimpanzees on the planet.

Note to the reader: I apologize to any of the one or two particular humans who are 'truly' good-natured and intelligent (not ignorant). This post was not meant to target you. For the rest of you, please know you may consider yourself 'good', and you may be; but remember: Ignorance is not an excuse anymore. Humans are too widespread, too disruptive, and too stupid to play the "I just didn't know any better!" card any more. Human 'accidents' account for the destruction of entire ecosystems (all of which you care nothing about because it isn't 'yet' the human ecosystem directly).

To put it simply: Know that you are making mistakes on a minute-by-minute basis. That flat-screen TV, or that apple you bought in the store makes a difference to the earth's resources. It's not like you live in some fairyland where everything you have is just magicked into existence. Well, that was fun.

P.S. I'm well-aware this post isn't 'directly' related to the topic. However, all things are interconnected, and under that logic, I share this with you all.

anon90358
Post 4

say i buy costume jewelery at $15.00 wholesale. how much could i sell the pieces for at retail price?

anon43662
Post 1

A friend in Argentina would like me to act as a distributor/wholesaler of her clothing in the US. What mark-up would I add to what I pay for the clothing to get the wholesale price, i.e. the price I charge to retailers?

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