With a retail price you're selling directly to members of the public. What if you would rather sell to other businesses? How much would you sell your product for? Along with setting a profitable retail price, you can also come up with a profitable wholesale price. That way, you're able to sell to other businesses, knowing you'd still be making a profit on each product sold. determining your wholesale price goes through similar steps as coming up with a retail price.

The starting point being knowing your cost, then knowing your market and then setting a retail price. So having come up with a retail price based on the three different methods identified in the calculate your retail price lesson, and knowing your wholesale price has to be lower than the retail price. We now need to come up with a wholesale price that is profitable. Using the same fabric crossbody bag and fabric cosmetic pouch will demonstrate how to come up with a profitable wholesale Price. Using the dollar figure method for the fabric crossbody bag, we have a cost price of $27 and 85 cents. And we're going to add $10 as our profit figure to the cost price, giving us a wholesale price excluding tax of $37 and 85 cents.

Using the target margin method, we're going to increase the cost price by 10%. To get to the wholesale price excluding tax, which becomes $30 and 94 cents. And for the markup method, we're going to add 50% to the cost price, giving us a wholesale price of $41 and 78 cents, tax still needs to be factored into the wholesale price as the government still wants that cut from you. Therefore, the wholesale price inclusive of tax is $41 and 64 cents for the dollar figure method $34 and four cents for Target margin method and $45 and 95 cents for the markup method. Remember in the calculate your retail price method, I mentioned that I live in Australia and the tax rates or the GST goods and services tax is 10%, which is watts has been used here to calculate the wholesale price inclusive of tax when you've calculated the wholesale price.

There is no needs to round these prices, as retail buyers are used to seeing prices that have not been rounded. Next, we're going to check that both the wholesale price and the retail price is profitable for all. We'll do this by calculating the profit figure for each method. There are two things to remember when calculating these profit figures. Firstly, you've got to use the wholesale or retail price excluding tax to calculate the profit figure as tax has to be paid to the government Secondly, the wholesale price inclusive of tax is now the retailer's cost price. So let's calculate the wholesale profit figure for the fabric crossbody bag.

Using the dollar figure method, we have a profit figure of $10, which is a margin rate of 26.4%. Using the target margin method, we have a profit figure of $3 and nine cents, which is a margin rate of 10%. And for the markup method, we have a profit figure of $13 and 93 cents, which is a margin rate of 33.3%. For the retail profit figure for cost price for each method has changed as it is the wholesale price inclusive of tax, that now becomes the cost of price. So for the dollar figure method, the cost price for the retailer is $41 and 64 cents, which gives us a profit figure of $8 and 35 cents, at a margin rate of 16.8%. For the target margin method, the cost price is now $34 and four cents.

This gives us a profit figure of $11 and 41 cents, and a gross margin rate of 26.6%. And for the markup method, our cost price is now $45 and 95 cents, given us a gross margin or profit figure of $13 and 13 cents, and a gross margin rate of 23.6%. I would also like to point out that I am using the rounded retail price that we calculated in be calculate your retail price lesson. Now for the fabric cosmetic pouch using the dollar figure method and adding $2 to the cost price of $4 and 25 cents. We have a wholesale price excluding tax of $6 and 25 cents using the target method where we're in crease the cost price by 15%. We have a whole sell price excluding tax of $5.

And for the market method, we added 100% to the cost base, giving us a wholesale price excluding tax of $8 50. With tax included the wholesale price becomes for the dollar figure method $6 and 88 cents for the target margin method $5 and 50 cents, and for the markup method $9 and 35 cents. Next we're going to calculate the profit figure. Starting with a wholesale profit figure. He's $1 figure method. We have a profit figure of $2 and a margin rate of 32%.

For the target margin method, our profit figure works out at 75 cents. That's actually quite low but a profit as a profit. margin rate of 15%. And using the markup method, we have a wholesale gross margin or profit figure of $4 and 25 cents and a gross margin rate of 50% for the retail profit figure, again here, the cost price would have changed as the cost price is now the wholesale price inclusive of tax. So for the dollar figure method, our cost price is now 688, which gives us a profit figure of $4 and three cents at a margin rate of 43.5%. Using the target margin method, our cost base is now $5 50. giving us a profit figure of $2 and 67 cents, and a gross margin of 34.6%.

And for the markup method or cost price For the retailer is $9 and 35 cents, given us a gross margin figure of $4 and 28 cents as a margin rate of 33.5%. Again here for the retail price, I've used the rounded retail price, as calculated in the calculate your retail price lesson. to come up with a profitable retail price. We started by calculating the cost price using a three step process. Step One was to list out materials. Step two was to attach quantities to each material.

Step three was to add cost to the quantity of each material used. We then went on to identify some additional costs that can be directly or indirectly attributed to each product before we started calculating the rate Retail Price, we conducted a bit of market research to see how much competitors charged for their products. And then we learned three different methods to calculate a profitable retail price. These tasks were all done before we got to the heart of the class, which was calculating the retail price. Here, we calculated potential retail prices for the fabric crossbody bag, and the fabric cosmetic pouch, using each of the three methods from the ways to calculate retail price lesson, we also showed the profit margin in both dollars and as a percentage rate. When we got to the wholesale price, we calculated a profitable wholesale price, which would become the cost price for retailers.

We also checked that retailers would still be in a position to make a profit based on a suggested retail Price