Wholesale vs Retail Pricing for Bakers
For bakers selling to cafes and shops. Explains trade tiers and margins, mapping straight onto the public and trade price tiers in the app.
The short answer
Wholesale should carry a lower margin than retail, because the volume is higher and the selling effort is lower, but it must still clear the full cost of the item. Many UK bakers target around 40 percent on trade against 60 or more direct, and measure each against its own target rather than one blanket figure.
Step by step
- Cost the item once. The cost does not change because the buyer is a cafe. Only what you keep changes.
- Set a separate trade target. A trade tier judged against a retail target will always look like it is failing, so real problems get lost in the noise.
- Strip out what trade does not need. Retail packaging, ribbon and individual boxing often disappear on a trade order, which lowers the cost as well as the price.
- Set a minimum order. Below a certain quantity a trade price earns less than selling direct and takes the same hours.
- Keep trade prices off your public list. Publish retail only, or retail customers will ask for trade rates.
The same brownie tray, retail and trade
A tray of 16 brownies costing £9.60 to make, £0.60 a piece.
| Line | Amount |
|---|---|
| Retail, boxed individually | £0.35 packaging each |
| Retail cost per brownie | £0.95 |
| Retail at 60% margin | £2.38 |
| Trade, bulk trayed | £0.06 packaging each |
| Trade cost per brownie | £0.66 |
| Trade at 40% margin | £1.10 |
Trade earns £1.10 against £2.38, but on a standing order of 200 a week rather than 16 at a market. The mistake is quoting the trade price while still packing each one in a retail box.
Why it matters
Wholesale is where margin is most often lost, because the price is agreed once and then never revisited while costs move underneath it. Measuring the trade tier against its own target is what makes that erosion visible instead of invisible.