A product that costs $12 and sells for $18 wholesale has a 33.3% gross margin. Sell the same product for $32 retail, and the gross margin becomes 62.5%.
Those are illustrative prices, using the defaults in the wholesale vs retail margin calculator. They show what each channel leaves before the expenses outside product cost.
Calculate each channel separately
The formula is the same for both channels:
Gross margin = (selling price − unit cost) ÷ selling price × 100.
Business Queensland’s financial ratios guide defines gross margin as gross profit divided by revenue. Applying that formula to one unit gives us the channel calculation.
For wholesale, $18 − $12 leaves $6 per unit. Divide $6 by $18 to get 33.3%.
For retail, $32 − $12 leaves $20 per unit. Divide $20 by $32 to get 62.5%.
Fig 1 · 1/2
Gross profit on one unit
Illustrative prices. Both channels use a $12 unit cost.
- Gross profit
| Category | Gross profit |
|---|---|
| Wholesale | $6.00 |
| Retail | $20 |
The $18 wholesale sale leaves $6.
The $32 retail sale leaves $20 before other expenses.
A 50% markup on $12 produces an $18 price. That price has a 33.3% margin because margin divides by the selling price. Use the markup vs margin calculator when you need to work backward from a target margin.
Combine the channels using revenue
Suppose you sell 400 units wholesale and 150 units retail during the same period.
Wholesale brings in 400 × $18 = $7,200, with $2,400 in gross profit. Retail brings in 150 × $32 = $4,800, with $3,000 in gross profit.
Calculator result
Wholesale vs retail margin
- Unit cost
- $12.00
- Wholesale price
- $18.00
- Retail price
- $32.00
- Wholesale units
- 400 units
- Retail units
- 150 units
33.3%
wholesale gross margin
- Retail gross margin
- 62.5%
- Wholesale profit per unit
- $6.00
- Retail profit per unit
- $20.00
Total revenue is $12,000. Product cost is 550 × $12 = $6,600, leaving $5,400 in gross profit. The blended margin is $5,400 ÷ $12,000 × 100 = 45%.
Averaging 33.3% and 62.5% gives about 47.9%, which overstates this sales mix. Wholesale accounts for 60% of revenue, so it needs more weight in the combined result.
Fig 2 · 1/2
What each channel contributes
400 wholesale units and 150 retail units.
Gross profit
Wholesale
$2,400
Retail
$3,000
Wholesale contributes $2,400 in gross profit.
Retail contributes $3,000 despite selling fewer units.
For the broader calculation, see how to calculate gross profit margin.
What if you sell more wholesale units?
Keep both prices and the $12 cost unchanged. Increase wholesale volume to 800 units, while retail stays at 150.
Calculator result
Wholesale vs retail margin
- Wholesale units
- 800 units
33.3%
wholesale gross margin
- Retail gross margin
- 62.5%
- Wholesale profit per unit
- $6.00
- Retail profit per unit
- $20.00
Revenue becomes $19,200, and gross profit becomes $7,800. The blended margin falls to 40.6%, even though gross profit rises by $2,400.
That happens because the lower-margin channel now supplies a larger share of revenue. When comparing channels, look at profit dollars alongside the percentage.
Fig 3 · 1/2
Gross profit as wholesale volume increases
Retail stays at 150 units. Prices and unit cost stay unchanged.
- Combined gross profit
| Category | Combined gross profit |
|---|---|
| 400 wholesale units | $5.4k |
| 800 wholesale units | $7.8k |
The original mix leaves $5,400.
Doubling wholesale units adds $2,400 of gross profit.
Include the cost of serving each channel
This calculator uses one shared unit cost. Freight, returns, commissions, and marketplace fees stay outside the result unless you include them in the inputs. If those costs differ by channel, compare them separately before deciding what a sale leaves.
For example, suppose the retail sale above also needs $5 of variable fulfillment and payment costs. Its $20 gross profit then leaves $15 before fixed overhead, assuming those costs were excluded from the original $12 product cost.
The contribution margin calculator helps with that next step. What is contribution margin? explains which variable expenses belong there.
These examples explain the arithmetic. Actual channel profitability depends on your costs and sales mix; the figures are estimates, not personalized financial advice.