Short answer
The two formulas
Wholesale price = unit cost × (1 + wholesale markup)
Retail price = wholesale price × (1 + retail markup)
Markups are written as decimals in the formula, so a 100% markup is 1.0 and a 50% markup is 0.5.
Unit cost must include everything it takes to make one item:
- Materials used in that one item, worked out from what you paid for the pack
- Labour: the time it takes × your hourly rate
- Overheads per item: packaging, labels, and a share of other running costs
Leave labour out and your "wholesale price" is really just a markup on materials. That is an easy way to end up working for nothing.
Why retail is built on wholesale
A shop that buys from you at wholesale needs its own margin to cover rent, staff and its profit. Craft Professional's wholesale guide says shop owners who buy on a wholesale basis typically expect to pay about half of the retail price. That traditional method is called keystone pricing: retail is double wholesale.
If you set retail as a markup on your cost instead, and then give a shop half of that, the shop's price may not leave you any profit at all. Building retail from wholesale keeps the chain in order: you cover your costs and earn your markup at wholesale, and the shop earns its markup on top.
This matters even if you only sell direct today. If you ever want to sell through shops, your retail price needs to be high enough that half of it still pays you.
Prices handmade items by itemizing every material, your time, overheads and markup.
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Handmade Pricing Calculator works in exactly this order. It adds itemised materials, your time at a named hourly rate and overheads into a break-even unit cost, applies your wholesale markup to that, and applies your retail markup to the wholesale price. The app states inline that retail marks up from wholesale. Saved products keep all of it, so you can come back to a price later and see how it was built.
Worked example: a scented candle
| Item | Working | Cost |
|---|---|---|
| Wax | 1 kg for $10.00, used 180 g | $1.80 |
| Wick | pack of 100 for $8.00, used 1 | $0.08 |
| Jar | pack of 12 for $14.40, used 1 | $1.20 |
| Fragrance oil | 500 ml for $20.00, used 12 ml | $0.48 |
| Materials | $3.56 | |
| Labour | 15 minutes at $20.00 an hour | $5.00 |
| Overheads | label and box | $0.84 |
| Unit cost | $9.40 |
Now apply the formulas with 100% at each step:
- Wholesale: 9.40 × (1 + 1.0) = $18.80
- Retail: 18.80 × (1 + 1.0) = $37.60
These figures are an example. Your materials, time and rate will give different numbers.
Markup is not margin
The two words are often mixed up, and the difference changes the price.
Investopedia defines markup as the percentage by which the cost of a product is increased to arrive at the selling price. Margin is the share of the selling price that is left after the cost of goods. The U.S. Small Business Administration uses a related idea, the contribution margin, which it describes as the difference between a product's price and what it costs to make.
- Markup = (price - cost) ÷ cost
- Margin = (price - cost) ÷ price
For the candle at wholesale, the profit is 18.80 - 9.40 = 9.40.
- Markup = 9.40 ÷ 9.40 = 100%
- Margin = 9.40 ÷ 18.80 = 50%
Same sale, two different percentages. A 100% markup always equals a 50% margin.
| Markup | Margin |
|---|---|
| 25% | 20% |
| 50% | 33.3% |
| 100% | 50% |
| 150% | 60% |
| 200% | 66.7% |
To convert: margin = markup ÷ (1 + markup). If a shop tells you it needs a 50% margin, that means it will double your wholesale price.
Working back from a retail price
Sometimes you start from the other end. You already sell at a price, or you know what similar items sell for, and you want the wholesale price.
With keystone pricing:
Wholesale price = retail price ÷ 2
Then check it against your unit cost. Suppose you sell the candle direct at $24. Half of that is $12. The candle costs $9.40 to make, so wholesaling at $12 leaves you $2.60 per candle. That is a 27.7% markup, far below the 100% in the example above.
This check tells you something important: at $24 retail, wholesale is barely worth doing. Your options are to raise the retail price, lower the unit cost (cheaper jars, faster making, buying in larger packs), or keep selling direct only.
Setting your wholesale markup
There is no single correct markup, but the formula only works if:
- Labour is in the unit cost. Otherwise the markup is paying your wages, not your profit.
- The wholesale price covers more than break-even. Profit lets you replace tools, survive a slow month and grow.
- The resulting retail price would sell. If a shop doubles your wholesale and the item stops selling, the wholesale price is too high for that market, or the unit cost is.
A 100% wholesale markup and a 100% retail markup, the usual double and double again, is a reasonable starting point to test, not a rule.
Common mistakes
- Pricing from materials only. Your time is a real cost, even if no one invoices you for it.
- Marking up retail from cost. Then a shop's keystone price leaves you little or nothing.
- Confusing markup and margin. If a shop asks for "50%", check which one it means. A 50% margin is a 100% markup on your price.
- Forgetting per-order costs. Labels, boxes and protective packaging add up across a wholesale order.
Run your own numbers in our free handmade price calculator. For how labour and materials work in practice, see how to price crochet items and how to price handmade jewelry.
