Wholesale Pricing: Work Back From the US Shelf Price

Distributor margin, trade terms and Net 60: what is left of $24.99, and how much can you spend to land it?

Brands that move from online sales into US stores often ask us:

"A distributor wants our wholesale price sheet. What number do we put on it?"

"The buyer accepted our price. Why is the first payment smaller than the invoice?"

The short answer: wholesale pricing for US retail starts at the shelf price and works back, through each partner's margin and each trade term, to the most you can spend to land one unit. In our example, a $24.99 product sold through a distributor to a specialty beauty retailer leaves the brand $7.86 per unit. For a 30% margin, landed cost has to stay at or under $5.50.

Our post on what each channel leaves took the same $24.99 product to about $9.40, the distributor's buy price, before promotions, chargebacks, returns and payment terms. This post adds those lines.

Wholesale price vs retail price: who keeps what

The retail price is what the shopper pays. The wholesale price is what the retailer or distributor pays you, after it keeps its margin. Two formulas do the calculation:

Retailer buy price = shelf price x (1 minus the retailer margin)
Your price to a distributor = the distributor's selling price x (1 minus the distributor margin)

Both margins are a share of the selling price, not a markup on cost. The pricing strategy post explains the difference.

Industry sources put retailer margin at these levels:

Specialty beauty retailers: 50 to 60% of the retail price (Femfounded)
Independent health and beauty stores: commonly 40 to 50% (Mr. Checkout, a distributor)
Conventional grocery: 30 to 38% on shelf-stable products, and natural and specialty grocers 35 to 45% (Opener)
National mass: 30 to 38%, by one broker's estimate (The Big Box Broker)

A distributor keeps 15 to 25% of its selling price according to Femfounded, about 25% in specialty and natural according to The Big Box Broker, and 20 to 30% in independent retail according to Mr. Checkout.

These are industry estimates. Plan with them, then replace them with your buyer's own number.

Do not read a retailer's annual report as its ask. Ulta reported gross profit of 39.1% of net sales for fiscal 2025. Sprouts reported a 38.8% gross margin and Target 27.9% for 2025. Each figure averages the whole company across all categories. It is not the margin a buyer asks of a vendor.

1. From a $24.99 shelf price to a $9.37 invoice

Take the product from our earlier posts: a $24.99 beauty item with a $7.00 landed cost. It goes to a specialty beauty retailer through a distributor.

Shelf price: $24.99
At a 50% retailer margin, the retailer buys at $12.50.
The distributor keeps 25% of its $12.50 selling price: $3.13.
Your invoice to the distributor: $12.50 - $3.13 = $9.37.

The price-by-channel post rounds the same step to about $9.40. That post also took out $0.75 of retail logistics. In this example the distributor picks up at your US warehouse, so there is no freight line. If you deliver to its distribution center, subtract that freight before you compare with landed cost.

$9.37 is the gross invoice. Trade terms and payment time come off it next.

2. Trade terms: promotions, MCBs, free fill and deductions

Trade terms are the money a brand gives back to win and keep shelf space. Most of it does not show up as a lower price. It comes off later payments. ScalePoint's CPG glossary defines the main lines:

Off-invoice (OI): a discount taken off the invoice at purchase.
Manufacturer chargeback (MCB): a promotional discount the distributor gives the retailer and then bills back to you.
Free fill: free opening stock, often one case per store per SKU.
Deduction: an amount taken off your invoice before you are paid.
Chargeback: a penalty for a compliance failure, such as a wrong label or a late delivery.

Slotting fees, paid for shelf space for a new item, are a separate cost. Ranges and who pays them are in our post on brokers and distributors.

Published rates for these terms differ. Eightx, a CPG accounting firm, says retailer deductions and chargebacks alone can take 5 to 15% of gross sales. ScalePoint puts unchecked deductions at 3 to 10% of gross. Eightx puts all trade spend at 15 to 25% of gross sales, and total gross-to-net deductions at 30 to 40%. All of these are industry estimates.

Our example takes 15% of the invoice, at the low end of the Eightx trade spend range:

Promotions and MCBs, 10%: $0.94
Deductions, 3%: $0.28
Returns and damages, 2%: $0.19
Total trade terms: $1.41, so the $9.37 invoice becomes a $7.96 net invoice

Get the distributor's full promotion and deduction schedule in writing before you quote a price.

3. Payment terms: the money arrives 60 days or more after you ship

US retailers set the payment clock, and they can take money back before they pay.

Ulta's purchase order terms say it pays within 60 days of receiving a correct and conforming invoice, unless the order says otherwise.
The same terms let Ulta set off any amount you owe it, or its subsidiaries, against what it owes you. Ulta can reject defective goods and return them at your risk and expense, with freight both ways and a full refund within 30 days.
A Walmart supplier agreement filed with the SEC in 2020 gives Walmart the same set-off right. It also lets Walmart return defective, consumer-returned, guaranteed-sale or overstock, and recalled goods. Payment terms sit in each supplier's Business Terms, and current terms may differ.
Bridge, a fintech company, says most Walmart suppliers are on Net 60 to Net 90. That is an industry estimate.

Waiting for payment has a cost. For example, at an 8% yearly cost of money, Net 60 on the $7.96 net invoice costs $7.96 x 8% x 60/365, about $0.10 per unit. That leaves the brand $7.86.

On Net 60, you fund the stock for two months after you ship it.

4. Wholesale pricing worked back to a maximum landed cost

The net per unit is the most you can spend to land one unit at zero margin: $7.86 in the specialty beauty example. At a target margin of 30% of the net, which is an example, the limit is $7.86 x 70% = $5.50.

The second column runs the same steps for a mass chain the brand sells to direct, with a broker. It uses a 35% retailer margin from The Big Box Broker's 30 to 38% range, and a 4% broker commission taken from the ranges in our broker post. Both columns assume FOB your warehouse, 15% trade terms and Net 60.

Step	Specialty beauty, through a distributor	Mass chain, direct with a broker
Shelf price	$24.99	$24.99
Retailer margin (example)	50%	35%
Retailer buy price	$12.50	$16.24
Distributor margin (25% of its selling price)	$3.13	None
Your invoice	$9.37	$16.24
Trade terms (15% of invoice, example)	$1.41	$2.44
Net invoice	$7.96	$13.80
Broker commission (4% of net invoice, example)	None	$0.55
Net 60 at 8% a year (example)	$0.10	$0.18
Net per unit (maximum landed cost at zero margin)	$7.86	$13.07
Maximum landed cost at a 30% margin	$5.50	$9.15
Left at a $7.00 landed cost	$0.86, about 11%	$6.07, about 46%

With a distributor and trade terms, the $7.00 landed cost from our earlier posts no longer works. It leaves $0.86 a unit, about 11% of the net. The $1.65 in the price-by-channel post was a figure before these terms, as that post said.

Real mass terms are often higher than 15%, so read the mass column as an upper bound. To bring landed cost down to $5.50, change product cost, pack size or the channel plan, or set a higher shelf price before launch. Once the shelf price is set, a MAP policy and a discount plan help hold it.

5. What goes on a wholesale price sheet

Case pack: the number of units in one shipping case. In common practice, buyers order in whole cases, so the case pack sets the smallest order that fits a carton.
MOQ (minimum order quantity): the smallest first order you accept.
Price tiers: lower prices for larger volumes. Volume discounts can be justified by lower costs, as the next section explains.
FOB or delivered: under UCC 2-319, FOB the place of shipment means the seller bears the expense and risk until the goods are with the carrier. FOB the place of destination means the seller carries the goods to that place at its own expense and risk. A delivered price includes freight to the buyer's distribution center. Name the place on the sheet.

Your invoice price means little until the sheet says where the goods change hands.

6. Different prices for different buyers: the Robinson-Patman rule

Different prices for different channels are not unlawful on their own. The FTC says the Robinson-Patman Act generally requires a seller to treat all competing customers in a proportionately equal manner. A price difference can be justified by different costs to make, sell or deliver, such as volume discounts, or by meeting a competitor's price. Allowances and services must go to competing customers on proportionally equal terms. 16 CFR 240.9 suggests basing them on the dollar volume or quantity bought in a set period, and not on rates that rise with the amount bought. This is general information, not legal advice. Have a US lawyer review your price sheet and promotion program before you send them.

Four checks before you send a wholesale price

1. What shelf price will the retailer set, and what margin does this buyer ask?

2. Is there a distributor between you and the retailer, and what does it keep?

3. What will promotions, MCBs, free fill, deductions and returns take, in writing?

4. After payment time, is your landed cost under the maximum for your target margin?

Wrap-up

Wholesale pricing in US retail runs backwards. Start at the shelf price, take out each partner's margin, then the trade terms and the wait for payment. What remains is the most you can spend to land a unit. In our example, that is $5.50 for a 30% margin, below the $7.00 the product costs today.

LinkONE supports B2B wholesale sales and US retail placement through professional broker partnerships for brands entering the US.

In the end, the shelf sets your wholesale price, and your landed cost has to fit under what the shelf leaves you.

Frequently Asked Questions

What is the difference between wholesale price and retail price?

The retail price is what the shopper pays, and the wholesale price is what the retailer or distributor pays you after its margin. Specialty beauty retailers keep 50 to 60% of the retail price (Femfounded), so at 50% a $24.99 item sells to the retailer at $12.50. If a distributor in between keeps about 25% (The Big Box Broker), the brand invoices $9.37.

What margin do US retailers take?

Specialty beauty retailers take 50 to 60% of the retail price (Femfounded). Independent health and beauty stores commonly take 40 to 50% (Mr. Checkout), and national mass retailers 30 to 38% by a broker's estimate (The Big Box Broker). These are industry figures. Company-wide gross margins in annual reports are not the margin a buyer asks of a vendor.

What is a manufacturer chargeback (MCB)?

An MCB is a promotional discount that the distributor gives the retailer and then bills back to you (ScalePoint). It arrives as a deduction from the distributor's payment. Under 16 CFR 240.9, allowances like this must go to competing customers on proportionally equal terms.

Can a retailer take money out of my payment?

Yes. Ulta's purchase order terms let it set off any amount you owe it against what it owes you. A Walmart supplier agreement filed with the SEC in 2020 gives Walmart the same right. Industry estimates put deductions and chargebacks at 3 to 10% (ScalePoint) or 5 to 15% of gross sales (Eightx).

How long do US retailers take to pay?

Ulta pays within 60 days of a correct and conforming invoice, unless the order says otherwise (Ulta purchase order terms). Most Walmart suppliers are on Net 60 to Net 90, according to an industry estimate from Bridge. Each supplier's own terms set the actual date.

Sources

Fees and rules in this post are as of October 2026.

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