What should I charge a store for my product?
Start at the price you want on the shelf and work back. A retailer typically needs somewhere around a 35 to 40 per cent margin, and a distributor takes a cut before that. Your wholesale price has to leave both of them whole and still cover your cost of goods with room to live on. Most first line sheets are priced from cost upward, which is how makers end up unable to afford their own success.
The stack, in the order it actually works
There are three or four prices in play and only one of them is chosen freely. Shelf price is set by what the category bears. Retailer margin is set by the retailer. Distributor margin, if you use one, is set by the distributor. Your wholesale price is what falls out of those, and your cost of goods decides whether what falls out is a business.
- Shelf price — what a shopper pays, set by the category not by you
- Retailer margin — commonly around 35 to 40 per cent of the shelf price
- Distributor margin — another cut when you sell through one rather than direct
- Your wholesale price — what is left
- Your cost of goods — ingredients, packaging, labour, the share of the run that goes wrong
Work an example backwards
Say the shelf price you want is $9.99, because that is where comparable products sit. A retailer on a 38 per cent margin pays about $6.19 for it. If you sell direct to that shop, $6.19 is your wholesale price and everything has to work inside it.
Add a distributor taking 25 per cent and the picture changes: the distributor sells to the retailer at $6.19 and pays you about $4.64. Same shelf price, a third less to you. This is why 'we got a distributor' is not automatically good news, and why the conversation about margin has to happen before the conversation about volume.
Cost of goods is more than ingredients
The number most makers carry in their head is ingredients per unit. The number that matters includes packaging, the label, the case, your time at a real hourly rate, and the yield loss from a batch that did not go perfectly.
Get that number per unit from a real batch rather than a spreadsheet estimate. The difference between the two is usually where a maker's margin quietly went.
What buyers ask that pricing has to answer
A category manager will ask for your case pack, your case cost, your minimum order and your lead time in the first message. If any of those are vague, the conversation slows down. If your case cost cannot support their margin at the shelf price they have in mind, the conversation ends.
Having those four numbers ready, consistent across every conversation, is most of what a professional line sheet is.
The trap of the first big order
An order large enough to matter is also large enough to hurt if the price is wrong. Makers routinely take a first chain order at a price that works at ten cases and loses money at two hundred, because the ingredient cost assumed a small-batch supplier and the labour assumed evenings.
Price the order you want to be filling in a year, not the one in front of you.
Common questions
Check this yourself
This is general information for U.S. food businesses, not legal advice, and rules change. Check it against the sources below and against your own state's rules before you rely on it.