Retail pricing
MSRP, MAP and the wholesale chain.
Enter the margin each level earns on its own selling price. Start from the manufacturer cost to reach MSRP, or from MSRP to work back down. Add a MAP to see the retailer margin there.
Each level's price = its cost / (1 - its margin). A $10 cost with 50% manufacturer, 20% distributor and 40% retailer margins reaches an MSRP of $41.67, a 4.17x multiple of cost.
Your numbers
Result
Worked example
Forward: a $10.00 cost with a 50% manufacturer margin sells to the distributor at 10 / 0.50 = $20.00. A 20% distributor margin gives $25.00 to the retailer, and a 40% retailer margin sets the MSRP at $41.67. Backward: with an MSRP of $100, a 40% retailer margin and no distributor, the retailer pays $60.00; if it advertises at a MAP of $80.00 its margin is (80 - 60) / 80 = 25.00%.
How it works
Margins in a chain are each taken on that level's own selling price. The manufacturer's price is its cost grossed up by its margin; that price is the distributor's cost, and so on up to MSRP. Working back down from MSRP multiplies by (1 - margin) at each step. MSRP is the manufacturer's suggested retail price, and MAP (minimum advertised price) is a price floor for advertising that a manufacturer may set by policy; this tool just shows the retailer's margin at whatever MAP you enter. It does not say what a MAP policy may lawfully require, which differs by jurisdiction, so check that separately.
Sources and basis (retrieved 2026-10): arithmetic on your inputs using the standard textbook definitions of markup (profit / cost) and gross margin (profit / price). No outside data or third-party figures are used.
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Quick reference table
| Manufacturer / distributor / retailer margin | MSRP on a $10 cost | MSRP multiple of cost | Wholesale price to retailer |
|---|---|---|---|
| 30 / 0 / 40% | $23.81 | 2.38x | $14.29 |
| 40 / 0 / 40% | $27.78 | 2.78x | $16.67 |
| 40 / 0 / 50% | $33.33 | 3.33x | $16.67 |
| 50 / 0 / 50% | $40.00 | 4.00x | $20.00 |
| 40 / 20 / 40% | $34.72 | 3.47x | $20.83 |
| 40 / 20 / 50% | $41.67 | 4.17x | $20.83 |
| 50 / 20 / 40% | $41.67 | 4.17x | $25.00 |
| 50 / 20 / 50% | $50.00 | 5.00x | $25.00 |
| 50 / 25 / 50% | $53.33 | 5.33x | $26.67 |
| 60 / 25 / 50% | $66.67 | 6.67x | $33.33 |
Common mistakes
- Mixing markup and margin along the chain. Here every percentage is a margin on that level's own selling price.
- Applying the retailer margin to wholesale cost instead of MSRP. A 40% retailer margin means the retailer pays 60% of MSRP.
- Treating MAP as the price the retailer must charge. It limits the advertised price, and a retailer can price above it.
- Forgetting freight, duty and returns, which come out of each level's margin.
FAQ
How do I calculate wholesale price from MSRP?
Multiply the MSRP by 1 minus the retailer's margin. At a 50% retailer margin, a $100 MSRP means a $50 wholesale price to the retailer.
What is the difference between MSRP and MAP?
MSRP is the suggested retail price. MAP is the minimum price a retailer may advertise under a manufacturer's policy; both are set by the manufacturer.
What is keystone pricing?
Doubling the wholesale cost for the retail price, a 100% markup or 50% margin for the retailer.
Why is the multiple of cost so large?
Each level grosses its cost up by its own margin, and the factors multiply. 1 / (0.5 x 0.8 x 0.6) is 4.17.