What Margins Do Retailers Need? A Guide for Brand Owners
The Margin Stack: What Everyone Takes
Before your product reaches a consumer's hands, multiple parties need their cut. Understanding this "margin stack" is the single most important thing you can do before approaching wholesale.
The 40/35 Rule
In Australia, the standard margin structure is:
- Retailers take 40% off the ex-GST RRP (they buy at 60%)
- Distributors take 35% off the retailer's buy price (they buy at 65% of that)
This means if your product has a $50 RRP (inc GST):
| Step | Calculation | Price |
|---|---|---|
| RRP (inc GST) | Starting price | $50.00 |
| Ex-GST RRP | $50 / 1.1 | $45.45 |
| Retailer buys at | $45.45 x 0.60 | $27.27 |
| Distributor buys at | $27.27 x 0.65 | $17.73 |
| Your landed price | $17.73 | |
| Your brand margin | $17.73 / $45.45 | 39% |
With a 39% brand margin, this product is viable for wholesale.
The 30% Minimum
As a general rule, you need at least 30% brand margin to make wholesale worthwhile. Below that, your COGS and business costs eat into any profit.
Here's what different RRPs look like:
| RRP (inc GST) | Your Landed Price | Brand Margin | Viable? |
|---|---|---|---|
| $19.95 | $7.07 | 39% | Yes |
| $29.95 | $10.62 | 39% | Yes |
| $49.95 | $17.71 | 39% | Yes |
| $99.95 | $35.44 | 39% | Yes |
Notice the margin percentage stays the same regardless of price point — what changes is whether your COGS fit within that 39%.
What If Your Margins Are Tight?
If your brand margin falls below 30%, you have a few options:
- Increase your RRP — if the market can bear it
- Reduce COGS — optimize packaging, ingredients, or manufacturing
- Create wholesale-specific SKUs — larger sizes with better margins
- Bundle products — higher average order value can offset thinner margins
Quick Margin Check
Want to know your exact margins? Chat with Alex — our AI assistant will calculate your brand margin in under a minute when you provide your RRP.