How to Figure Out a Wholesale Multiplier

Businesses sell products to consumers at retail prices.

Businesses often make money through buying products at wholesale prices and selling them at retail prices. Wholesale prices are cheaper because businesses are able to buy products in bulk straight from the manufacturer. The manufacturer benefits from moving a large amount of product, and the business benefits from the lower cost. The business then uses a value known as the wholesale multiplier to convert the wholesale price into the retail price for consumers.

Instructions

1. Locate the wholesale price of a product. This price will be provided by the manufacturer or distributor.

2. Locate the retail price of the product. This is the price at which the business sells the product. The manufacturer may also provide a suggested retail price, or MSRP.

3. Divide the retail price by the wholesale price to find the wholesale multiplier. For example, if the retail price is $2.50 and the wholesale price is $1.75, then the wholesale multiplier is $2.50/$1.75, or 1.43.

References

• Computer Companion: How to Set Your Retail Pricing to Meet Your Financial Goals