What does wholesale mean, and how can companies charge a lower price per item because of it?

Question

What does wholesale mean, and how can companies charge a lower price per item because of it?

In: 3

Answer 1

Wholesale is the price a manufacturer uses to sell products to distributors and/or retailers. It is the base price of raw materials, labor, overhead, and desired profit margin *for the producer*. Retailers and distributors then mark that price upwards to reflect their costs and required profits for onward sale to consumers. There are other ways to determine “retail” pricing, but that’s the basic model.