Wholesale Pricing Strategies for Fashion Brands

‍Wholesale Pricing Strategies at a Glance

Mastering wholesale price optimization is essential for long-term success, but with limited historical data and brand recognition, emerging fashion brands often struggle with defining their pricing strategy.

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There are three main fashion wholesale pricing strategies. We’ll break down how to implement these financial formulas to help you pave the way for long-term sustainability and brand success. 

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The three strategies are:

• Cost-Plus Pricing: Where the cost of goods manufactured is combined with a healthy profit margin to define a wholesale price 

• Value-Based Pricing: Where the perceived customer value determines the wholesale price

• Competitor-Based Pricing: Where you benchmark your own price against your competitors' prices

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Know the Difference: Markup vs Margin

Before exploring the different wholesale pricing strategies in more detail, it is important to understand the difference between markup and margin.

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Here’s an example:  A garment has a cost of goods of $50. Its wholesale price is $100. 

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Markup is the amount added to the cost of goods to cover your expenses and generate a profit. So the markup on this garment is 100%.

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Margin is the difference between the cost of goods and the final selling price. The margin on this garment is 50%. 

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Start With Your Costs: COGS and True Unit Cost

To effectively decide on a wholesale pricing strategy, you must first determine your true unit cost. This is the total cost for producing, storing, and shipping an item. 

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Consider the following when calculating your true unit cost:

• Materials
• Labor
• Packaging
• freight, duties
• Rent or mortgage for your office/warehouse 
• Utilities 
• Taxes

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What Is Cost-Plus Pricing?

Cost-plus pricing is a strategy that combines your Cost of Goods Manufactured (COGM) with a markup to give you a profit. When using this strategy, it’s important to consider not only the direct costs of production but also indirect costs such as labor, utilities, rent, technology, systems, and marketing campaigns.

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Cost Plus Wholesale Pricing Formula

Cost of Goods Manufactured + Wholesale Markup = Wholesale Price

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What are the Benefits of Cost-Plus Pricing?

Many fashion brands choose this pricing technique as it’s easy to calculate and offers predictable profits. When communicated correctly, it can also be used to build greater trust and brand loyalty.

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When brands are transparent about what goes into their wholesale price, they not only justify their prices but also gain retailers' trust. It’s also important to consider what wholesale-to-retail margin your retail partner is looking to achieve to ensure your cost-plus pricing results in a reasonable retail price to drive successful sell-through.

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What is Value-Based Pricing?

Value-based pricing is a reflection of what customers are willing to pay for your product, rather than what it actually may cost to produce. Their perceived value will be based on how you market your brand and the level of status and prestige retailers believe it holds.

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Value-Based Wholesale Pricing Formula

Perceived Value = Wholesale Price

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What are the Benefits of Value-Based Pricing?

High-end and luxury fashion brands use this pricing strategy as it allows for higher profit margins. Investing in marketing and an elevated brand positioning can lead to higher perceived value.

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Retailers often also attribute a higher perceived value to trending items and may be willing to pay more to have the latest must-have item in stock in their store.  

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What is Competitor-Based Pricing?

Competitor-based pricing is a strategy where a thorough analysis of the competitive landscape informs pricing decisions.

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A 2025 report by Wunderkind found that 37% of shoppers found being able to compare prices is the main factor in determining where they eventually purchase a product, highlighting just how important it is to be aware of your competitive set in order to score sales.

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Competitor-Based Wholesale Pricing Formula 

Competitor Price = Wholesale Price 

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What are the Benefits of Competitor-Based Pricing?

Many brands use this pricing technique as it allows them to strategically set prices above, below or in line with competitors, depending on their overall brand strategy.

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Pricing is an easy way to differentiate yourself from competitors and stand out from the crowd. Many brands try to gather information from buyers on how their wholesale prices compare to other brands in the market and leverage this insight to inform their pricing strategy.

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Wholesale Pricing Check: Retail Markup and MSRP

Retailers require sustainable wholesale margins to ensure they can cover their operational expenses and turn a profit. The most common way to work out your wholesale markup is known as keystone pricing, where you effectively double a garment’s wholesale cost to establish its selling price.

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It’s a simple way to quickly calculate pieces, but it should be used more as a reference rather than a rule. 

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Common Wholesale Markups and Retail Markups

Wholesale prices typically fall between 40% to 60% of the final retail price, to ensure retailers can turn a profit, while brands can also cover their costs. When pricing your product, take into consideration retailer expectations of profit, but also market demand and perceived product value.

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If your wholesale price is too high, you will fail to attract retailers, as the margin will be unappealing to them. If your wholesale price is too low, this can devalue the product in the eyes of retailers and end consumers. 

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‍Fashion Wholesale Pricing Strategies To Avoid

The two main approaches to avoid in wholesale are underpricing and overpricing. 

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Many new fashion brands are attracted by the idea of underpricing, as they see it as a way to gain new accounts quickly; however, this can signal poor quality to buyers, make it harder to generate a profit and cause issues if you then have to raise your prices at a later stage. 

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Some fashion brands become so intoxicated by the idea of value-based pricing that they set their prices too high from the outset. Unless you have a strong brand image and marketing campaign to match, this can deter retailers from placing orders, confuse customers and hinder overall growth.

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Wholesale vs Retail Pricing: Set a Retail-Friendly Price

One of the easiest ways to ensure you are setting an appropriate price is to follow your Manufacturer’s Suggested Retail Price (MSRP). This acts as a guideline for how your products should be positioned to end customers. Although retailers don’t have to follow your MSRP, many do - especially when it’s clearly presented on line sheets.

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If you’re not using MSRP and prefer to set your own prices instead, ensure you implement a ‘sanity check’ when establishing a cost price to make sure your suggested retail prices will always be realistic in relation to the target market and industry average. 

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In Conclusion

‍Wholesale pricing is all about striking the right balance between profit, competitiveness, and maintaining your brand's perceived value. 

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Brands on JOOR can use customizable linesheets to offer personalized pricing and special discounts to individual retailers, regardless of whether they are using cost-plus pricing, value-based pricing, or competitor-based pricing. 

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Ready to drive profit with your wholesale prices? Book a demo today.

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Wholesale Pricing FAQs

How do I calculate my true cost before setting wholesale prices?

To calculate your true cost of goods, total the amount spent on producing, storing, and shipping your product. Remember to include overheads such as warehouse rent and the cost of labor. Once this figure is calculated, you can then begin to set a wholesale price.

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When should I use cost-plus pricing instead of value-based pricing?

Non-luxury brands targeting customers who are concerned about costs should use cost-plus pricing over value-based pricing. It is the industry standard, commonly used, and easy to implement.

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How do I benchmark competitor prices correctly in fashion wholesale?

To benchmark competitor price correctly, establish who your direct, indirect, and best-in-class competitors are. Understand the context of their pricing and look for opportunities to match, undercut, or exceed these prices depending on your margin and markup potential. 

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How often should I review and update my wholesale prices?

Most fashion brands review their wholesale pricing seasonally to factor in changes in production costs, emerging or dying trends, and evolving market demand. 

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How do you make sure your wholesale price works at retail?

To ensure your wholesale price allows for an appealing retail price, look to your Manufacturer’s Suggested Retail Price for guidance and conduct market research to check your pricing is realistic and in line with consumer demand.