What Is the Ideal Profit Margin for Wholesale?

How to Price for Profit and Build a Sustainable Handmade Business

The Wholesale Pricing Question I Get All the Time

If you're thinking about selling wholesale, one of the biggest questions on your mind is probably:

💭 "What should my profit margin be for wholesale?"

And the answer? It depends—but I have some general guidelines that will help you price confidently, stay profitable, and keep your handmade business thriving.

What Is a Profit Margin?

Your profit margin is the percentage of revenue left after covering all costs. It’s one of the most important numbers in your business because it determines whether you’re actually making money—or just breaking even.

Here’s the basic formula:

{Profit Margin (%) = [(Selling Price - Cost) ÷ Selling Price] × 100}

For example, if a product costs $5 to produce and you sell it for $12:

(12 - 5) ÷ 12 = 0.58 \text{ (or 58%)}

That means your profit margin is 58%—a solid number for handmade wholesale.

Ideal Profit Margins for Wholesale

Wholesale Products: 40-60% Profit Margin

For handmade products, I aim for a 40-60% profit margin on wholesale orders.

Why? Because this accounts for additional costs like:

✔️ Faire or wholesale marketplace fees

✔️ Sales rep commissions

✔️ Bulk order discounts

✔️ Packaging and shipping supplies

A healthy wholesale margin ensures you're covering your costs while staying competitive.

Retail Markup: 2x to 2.5x the Wholesale Price

Most retailers double or triple the wholesale price when they sell to customers. That means if you sell a product to them for $20 wholesale, they will likely price it between $40-$50 in their store.

📌 Pro Tip: Make sure your wholesale pricing allows for this markup while still keeping the product attractive to consumers.

Why Healthy Margins Matter

If you underprice your products, you won’t have enough left over to sustain your business. A solid profit margin ensures:

✔️ Sustainability – You’re covering your costs and actually making a profit

✔️ Flexibility – You have room for promotions, discounts, or unexpected expenses

✔️ Growth – You can reinvest in marketing, materials, and new product development

How to Improve Your Wholesale Margins

Even if your current margins aren’t great, you can fix that! 

Here’s how:

1. Review Costs Regularly

Look for ways to reduce production, packaging, or shipping costs without sacrificing quality.

📌 Real-World Example: At Orglamix, we outsourced labels for years. However, as costs increased, we pivoted and brought the process in-house—reducing the cost per label from $0.60 to just $0.05. A small change with a big impact. Today, while we still outsource larger runs, we print smaller runs in-house because it's faster and more economical. It's essential to know when to pivot and understand your motivations. Will it save you money, or might it create unnecessary hassles or production delays? Do you have the time and resources to implement a change that truly leads to cost savings? Map it out.

💡 Ask yourself: Are there areas in your business where an upfront investment (like buying equipment or switching suppliers) could lower long-term costs?

2. Increase Prices Strategically

If your material or labor costs have gone up, you may need to adjust your pricing.

How to Raise Prices Without Losing Customers:

✔️ Offer retailers a “last chance” discount before the price increases

✔️ Communicate pricing changes transparently—explain why the increase is necessary

✔️ Show how your product offers great value (handmade, sustainable, limited edition, etc.)

3. Optimize Pricing to Cover ALL Costs

Many handmade sellers underestimate their costs—which eats into margins. When setting prices, consider:

✔️ Raw materials (including shipping costs to get materials to you)

✔️ Labor (yes, your time counts!)

✔️ Overhead (rent, utilities, software, etc.)

✔️ Packaging (boxes, labels, inserts)

✔️ Shipping supplies

Pro Tip: If you haven’t updated your pricing in over a year, it’s time to do a cost analysis and make sure every product is still profitable.

Price Confidently and Profitably

💡 The takeaway? Don’t underprice out of fear.

A healthy margin ensures your business can grow and thrive. Confident pricing shows you believe in your product’s value—and retailers will too!

✨ Got questions about wholesale pricing? Reply in the comments—I’d love to help!