10 Wholesale Fashion Pricing Strategies to Maximize Your Profit

Let’s be honest—wholesale fashion pricing strategy probably isn’t the first thing that excites you when starting a fashion brand. Creating daring lines? Yes. Choosing prices? Well, not really. However, there is one very smart long-term move: make sure you have the right wholesale prices. In this guide, B2Bridge.io will ensure you learn 10 pricing strategies to boost your profits.

Understanding Wholesale Fashion Pricing Strategy

What is Wholesale Fashion Pricing Strategy?

Wholesale fashion pricing strategy refers to how a fashion brand calculates the price at which it will sell its products to retailers. It lies between what you pay to manufacture your product and the retail price consumers pay for it. It defines your profitability, the way retailers will view your brand and how competitive you will be in the market. Wholesale pricing involves more than simply adding a markup since it is a careful, well-planned process that considers costs, market demands, brand value, and long-term objectives.

Why is it Important?

Charging an appropriate wholesale fashion price has a direct impact on your bottom line. Overpricing products might make the retailers reluctant to stock your products. They should not be too low as that will thin your margins and diminish the perceived value of your brand.

An effective wholesale fashion pricing strategy establishes credibility with retailers, enables sustainable growth, and makes your fashion brand financially fit as it continues to grow.

Core Principle

The key to any successful wholesale fashion pricing strategy is a basic yet fundamental thesis: you have to strike a balance between what the market can afford and what your real input costs are. It implies that you should know precisely what it takes to manufacture your product, raw materials, and overhead, and match that with pricing that reflects your fashion brand positioning and delivers to retailers’ expectations.

When you nail that balance, you are not only selling clothes, but you have built a profitable and scalable fashion business.

Key Factors Influencing Wholesale Price Determination

Understanding All Costs

• Cost of Goods Manufactured (COGM): COGM entails all of the direct expenses of making your product – including raw materials, labour, packaging, and factory costs. Properly computing COGM will make sure you are not selling your products below the market price and unwittingly losing money on every order.
• Other Costs & Overheads: In addition to COGM, you must also take into consideration the overheads such as rent, utility, design and development costs, marketing, logistics and warehousing, and salaries. Although they might not be mapped to a particular unit, they have an impact on the financial welfare of your business and must be considered in pricing to achieve sustainable margins.
• Calculating Total Production Expenses: In order to obtain a real view of your cost base, you will need to add your direct costs to your indirect costs to determine your total cost of production. This whole approach enables you to charge not only for what it costs to produce but on the entire expense of operating your brand.

Market Dynamics and Positioning

• Desired Profit Margin: After the costs have been covered, you should establish the margin that will make your business viable. A typical wholesale profit margin is between 30-50 percent, depending on what product you sell, which market you sell in and what you aim to accomplish with your business.
• Market Demand: The high demand will warrant higher prices, slow moving categories might need lower prices. Knowing the tastes of the people and the current trends in the retail market will enable you to price your product in a manner that is in line with what the market is purchasing.
• Competitor Pricing: Pricing of your competitors at wholesale and retail levels will place your brand strategically. Your pricing should be at least similar to make the same retailers or customers buy the same product when they have an alternative. Otherwise, there should be a stronger perceived value, higher quality or design features that make the prices different.
• Perceived Value and Brand Positioning: Perceived value is a combination of your brand story, aesthetic and quality. A luxury or sustainable fashion brand, for instance, can command a higher price point due to craftsmanship, ethical sourcing, or exclusivity. Wholesale should be priced to complement the market positioning of your brand.
• Retailer Markup Expectations: Retailers normally mark up their wholesale price by 2.0x or 2.5x. This implies that your prices should not be so tight that they are unable to make a profit as well. Setting your price too high, retailers may skip it, too low, and you have a chance of hurting your brand or the bottom line. Being aware of such expectations allows the development of win-win relationships.

>> You may be interested in: How to Calculate Your Wholesale Pricing

10 Common Wholesale Pricing Strategies

Cost-Based Strategies

Cost-based strategies are among the most common wholesale fashion pricing strategies used in the wholesale fashion industry, especially for emerging brands that need clarity and structure in their pricing. This practice is based on a single important concept: all the costs incurred in making a garment are estimated and a markup is added to make a good profit margin. It does not necessarily consider market dynamics and how the customers perceive it but it creates a strong base of financial sustainability and expansion.

Cost-Plus Pricing

Cost-plus pricing is one of the most direct ones on this list. A brand in this strategy determines the total cost of goods manufactured (COGM) inclusive of raw materials, labor, packaging, as well as direct operational costs and then a fixed percentage markup is added. For example, if it costs $35 to produce a blazer, and the brand applies a 60% markup, the wholesale price becomes $56. This strategy is appealing since it is simple to execute and enables the brands to make sure that their costs of production are never met. 

However, it fails to consider what customers are willing to pay and how competitors are setting prices on similar items; hence, it may cost an opportunity to overcharge on high-value products or overprice basics which can be easily obtained elsewhere.

Want to apply cost-based pricing automatically at scale? Use B2Bridge – B2B All-in-One app to set custom pricing rules for each customer group and streamline your wholesale strategy.

Absorption Pricing

Absorption pricing is a more elaborate variation in that, besides the direct costs, a percentage of the fixed overhead costs, including rent, utilities, wages paid to the design personnel, and equipment depreciation is added to the calculation of cost. These overheads are shared among the number of produced units, which gives a more detailed picture of real cost per unit. 

As an example, a brand that has monthly fixed costs of $10,000 and makes 1,000 garments would add an extra 10% of overhead cost to each unit. If the COGM is $35, the total unit cost becomes $45. Applying a 60% markup results in a wholesale price of $72. This wholesale fashion pricing strategy is particularly helpful for fashion businesses with significant ongoing operational expenses, ensuring they don’t underprice products and lose profitability in the long run. 

Keystone Pricing

Keystone pricing is another conventional approach and is popular both in wholesale and retail markets. It is basically the doubling of the cost of production to arrive at the wholesale price and doubling it once more to arrive at the retail price. So, if it costs $30 to make a garment, the wholesale price would be $60 and the retail price $120. 

Keystone pricing is simple to implement, and maintains an equal value across collections, but may be too inflexible in the wide and ever-changing fashion market. Luxury goods that have the reputation of being high-end may become underpriced and basic goods that are low cost may become overpriced in the market.

Cost-based pricing approaches in a sense provide a realistic and effective starting point. They keep brands financially stable and make sure that they do not sell at a loss. Applied wisely, these approaches can precondition sustainable development and long-term profitability.

Market-Based Strategies

Whereas a cost-based strategy considers internal measures, a market-based pricing strategy brings the magnifying glass to the outside world- consumer behavior, competitor pricing, and retail realities. These strategies are designed to bring your wholesale prices to meet market expectations and be able to pay, and in many ways can be more flexible and more strategic in positioning than fixed cost formulas. This may become the one thing keeping fashion brands relevant and competitive in saturated or trend-sensitive markets. 

Backward Pricing

Backward pricing is one of the common practices under this category. Instead of basing it on the cost of production, this strategy bases it on the cost that the customers will probably pay which is the retail price, and then it works backward to come up with the acceptable wholesale and production cost. Retailers typically use markup multiples (e.g., 2.2× or 2.5×) to reach their final selling price. 

For example, if market research or buyer feedback suggests that a dress will retail for no more than $100, and the retailer applies a 2.2× markup, the wholesale price needs to be around $45. This implies that the brand will have to ensure that their total costs of production (including margin) must stay under $45. Backward pricing promotes efficiency and market matching but needs the right forecast and good control of cost to be able to sustain profitability.

Competitive Pricing

Competitive pricing is another strategy that is commonly used and determines the wholesale prices by what other competitors are offering for the same goods. This strategy involves constant scanning of the marketplace to keep up with the peers. 

To take an example, suppose other similar mid-market range denim jackets are wholesaling between 50 and 55 dollars, then you must sell at this price, or above it, or below it depending on your brand positioning. In case your materials and design are better, you can charge a little more to indicate quality and branding. In case you are aiming at mass market retailers, it might be to your advantage to undercut slightly.

Manufacturer’s Suggested Retail Price (MSRP)

Then there is the Manufacturer Suggested Retail Price (MSRP) model in which the brand offers a suggested retail price to be used by retailers. Based on this, the wholesale prices are normally pegged at 50% of the MSRP. This approach assists in ensuring consistency when it comes to pricing among the retail partners and removes the danger of over discounting that would negatively affect the brand value perception. 

As an example, when you have the MSRP of a jacket set at the price of $120, the wholesale price that buyers will be offered is typically 60 dollars. Pricing using MSRP is very convenient when a brand has more channels to sell or when a brand wants to have a premium image. But enforcement may be challenging particularly in the case of independent retailers or marketplaces that price aggressively.

Discount Off MSRP

Closely related to MSRP pricing is the discount-off-MSRP strategy, often used when targeting value-driven retailers or seasonal outlets. The brand provides the wholesale customer with a percentage discount (usually 20% to 40%) of the MSRP, which would provide perceived value to the retailer. This flexibility can help clear inventory or meet the needs of budget-conscious partners, but it must be carefully balanced to avoid undercutting standard wholesale customers or diluting the brand’s pricing integrity.

Value/Demand-Based Strategies

Contrary to cost-based pricing or competitor-based pricing, value/demand-based strategies consider the price of any product purely as an objective that is directly proportional to the perception of the customer. This strategy is more focused on brand perception, emotional appeal, and market demand as opposed to achieving a mere cost recovery. In the context of a wholesale fashion pricing strategy, this means setting prices that reflect the brand’s identity, customer loyalty, and uniqueness of the design—regardless of how much it costs to make.

Value-Based Pricing

Value-based pricing is one of the most subtle expressions in this category. Rather than basing on the cost of manufacturing a garment or how much the competitors are charging, this approach works by first evaluating the value that the product gives to the customer. 

For example, a limited-edition capsule collection from a designer label may only cost $40 to produce, but if the perceived value based on exclusivity, brand cachet, and storytelling is $120 or more, the wholesale price can be set much higher than a traditional markup would suggest. This is a pricing approach that needs thorough analysis of your target market and successful brand positioning. It is especially effective when used by fashion brands that embrace high-quality materials, ethical production, or original design.

Psychological Pricing

This can be supported by psychological pricing that employs behavioral economics to affect purchasing behavior. Although such a strategy is more widely used at a retail level, it is also relevant at a wholesale level. 

For instance, setting a wholesale price at $49 instead of $50 creates a sense of affordability, even to bulk buyers. It can also help retailers maintain psychologically attractive retail price points like $99 or $149, which often perform better than round numbers. This approach exploits the human psychology of believing that prices slightly below a threshold are much cheaper, and it would even affect the purchase of bulk orders.

Dynamic Pricing

Dynamic pricing is perhaps the most liberal and data-driven in value/demand-based models. This process is done by modifying the wholesale prices on a real-time or periodic basis on the basis of changing variables like seasonality, demand, production capacity or even supply chain conditions. 

For example, a brand can have a reduced price on wholesale of outerwear during spring months to promote pre-orders, and a higher price during the demand season in fall. In the same way, when a particular dress type becomes viral on social media and is receiving a lot of attention and interest from retailers, the brand can raise the price of its future orders to ride the wave. 

Incorporating value and demand-based methods into your wholesale fashion pricing strategy allows you to maximize margins where your brand is strongest – its identity, desirability, and relevance. Although these strategies are less predictive than cost or market-based models, the profit potential and alignment of the strategy with customer expectations are more achievable. 

Maximizing Profits and Optimizing Wholesale Fashion Pricing Strategy

Strategic Financial Management

Effective financial management is at the heart of any successful wholesale fashion pricing strategy. To make reasonable pricing decisions, brands should have a firm understanding of their cash flow, margins, and break-even points. 

Profit margin analysis, inventory turnover ratios and sales forecasting are some of the tools that can be used to determine the areas to grow or areas that can be a loss. In setting wholesale prices, one should also consider the returns, markdowns, and seasonality, besides the cost of production. Routine tracking of financial KPIs enables fashion brands to change their strategy early enough and prevent surprises. 

By aligning pricing with broader financial goals such as investment in marketing or product development, brands can protect profitability while fueling sustainable growth.

Cost Reduction and Sourcing

Improving profit margins doesn’t always mean raising prices, it can also mean reducing costs. By reducing the supply chain, renegotiating terms with manufacturers, or finding cheaper yet high-quality materials, it is possible to greatly increase profitability without changing price points. Another way that fashion brands can capture economies of scale is by ordering more or shipping in bulk or using just-in-time production to prevent oversupply. Also, local or vertically integrated suppliers can help cut lead time and shipping costs.

Enhancing Brand Value and Demand

One of the most effective ways to justify higher wholesale prices is to make your brand appear more valuable. This does not occur in a week, it has been developed with repetitive branding, narration, design quality, and customer experience. When a brand has a strong identity and is well-positioned, it can easily charge a premium price because customers want to associate it with exclusivity, fashion leadership, or eco-friendly products. 

By providing clear communication of their values, fashion brands can create more demand through ethical manufacturing, unique aesthetics, or influencer partnerships. When demand is high and the brand story is compelling, wholesale partners will be less likely to question pricing and more enthusiastic about stocking your collections.

Pricing Adjustments and Flexibility

The flexibility to change prices in response to market changes, customer behaviour or internal costs changes is essential to long-term profitability. Tiering pricing structures (e.g. give discounts on large orders), seasonal pricing (offer reduction on off-season products) or even temporary pricing structures on first-time buyers can make the cash flow easier and encourage larger purchases. 

You should also monitor and measure sales data to know which models or collections are not doing well or doing above average and change the price accordingly. Adaptability enables the fashion brands to be competitive and resilient in even turbulent markets.

Wholesale Fashion Pricing Strategy Examples

Knowing theory is one thing, but it’s great to see how brands implement pricing strategies in practice. Below are three real-world examples of wholesale fashion pricing strategy in action, demonstrating how different approaches can serve specific brand goals.

Fast-fashion retailer: Adaptive pricing through forecasting

One of the largest fast-fashion brands used advanced analytics to develop an on-demand pricing strategy using demand forecast and sell-through data. They used trends, past sell-throughs, and geographical purchasing patterns to set the best pricing levels before releasing each seasonal wholesale catalog. 

As an example, when a particular style of cropped jacket was predicted to do well in the colder northern markets, wholesale prices did not decrease in those markets. Conversely, in the warmer regions where the demand is expected to be low, the brand would sell at a discount of 15-20% off MSRP to encourage bulk purchases. 

This dynamic pricing strategy assisted the brand in maximizing revenue through adjusting the prices to the local conditions at the market and avoiding overproduction.

Contemporary Designer Label: Premium value-based pricing

An upscale modern fashion brand marketed itself as a luxury but affordable brand. Their wholesale fashion pricing strategy centered around value-based pricing, emphasizing craftsmanship, limited production runs, and sustainable sourcing. 

Although their clothes were a bit more expensive to make than mass-market rivals, they sold them at a premium price, wholesale, due to the powerful brand narrative. 

To give an example, a linen blazer that cost $60 to make was wholesaled out at $110, supported by powerful brand content and a perceived high value. The retailers could afford the premium due to the high visual merchandising backing and exclusivity assurances of the brand.

Casualwear Brand: Competitive pricing in a saturated market

One of the mid-level casual wear brands that aimed at getting an entry in the department stores found it necessary to implement a competitive price strategy in order to secure shelf space amid the leading brands. They would perform regular market scans regarding similar product categories and maintain their wholesale prices a bit lower than some of the main competitors. 

A hoodie that sold on the shelf at $35 was sold wholesale at $30 – a profit that was still viable due to the optimized COGM- and it was positioned as having higher margin potential to the retailers. 

In the long run, this approach allowed them to enter the bigger retail chains and increase the number of their B2B customers, even though they had little brand recognition in the beginning. Their application of uniform MSRP codes also made prices to be standardized at retail stores.

These examples show that a well-tailored wholesale fashion pricing strategy can vary widely based on brand positioning, target retailers, and market conditions but when executed strategically, each path leads to profitability.

Conclusion

Have you picked the wholesale fashion pricing strategy that suits your brand best? All the strategies are strong in their own way, whether you choose to cover the costs, remain competitive, or promote the values of your brand. The important thing is to know your business, be dynamic, and watch the market. A good approach will enable you to set your prices with confidence, increase your profits, and establish a good and long-lasting relationship with your retail buyers.