Wholesale Without the Headache
A Guide to Profitable Pricing for Canadian Makers
You’ve mastered your craft. You’ve built a thriving direct-to-consumer (DTC) business selling your incredible beef tallow products—whether it's nourishing skincare balms, premium cooking fats, or artisan soaps. Your customers love what you do, and perhaps, more frequently now, a local boutique or a specialty grocer has reached out with an intriguing question: "Do you offer wholesale?"
This is it. The exciting, yet often intimidating, next step in scaling your brand. Wholesale promises larger orders, broader visibility, and a significant boost to your bottom line. But for many Canadian makers, the idea of pricing for wholesale can feel like stepping into a minefield. How do you ensure profitability without devaluing your brand or alienating your existing customers?
This comprehensive guide will demystify wholesale pricing for handmade and artisan CPG (Consumer Packaged Goods) businesses like yours, giving you the clarity and confidence to expand into new markets profitably.
The Wholesale Opportunity: Beyond the Farmers' Market & Online Store
Imagine your meticulously crafted tallow products beautifully displayed in curated shops across Canada. That's the power of wholesale. It’s not just about bigger orders; it’s about:
Expanded Reach: Tapping into new customer segments you might not reach directly.
Increased Brand Awareness: Leveraging the retailer's customer base and credibility.
Consistent Revenue Streams: Wholesale orders can be larger and more predictable than individual DTC sales.
Operational Scale: Moving more product can optimize your production processes.
However, to unlock this potential, you need a pricing strategy that benefits both you and the retailer.
The Golden Rule of Wholesale Pricing: Protect Your Value (and Your Margins!)
The biggest mistake makers make when venturing into wholesale is underpricing. They fear their products won't sell, or they simply calculate "cost x 2." This can lead to:
Burnout: Working harder for less profit.
Brand Devaluation: Training customers to expect lower prices.
Retailer Disinterest: Retailers need sufficient margin to cover their costs and make a profit. If your wholesale price is too high for them to get a decent markup, they won't carry your product. If it's too low, they might question your quality.
Your wholesale price must be low enough for a retailer to make a profit, but high enough for you to make a healthy profit after covering all your costs.
Understanding the "Wholesale Multiplier": Your Core Formula
The industry standard for wholesale pricing revolves around a multiplier of your Cost of Goods Sold (COGS). Retailers typically mark up products by 2x to 2.5x (sometimes even 3x for very high-end or unique items). This means your wholesale price must be roughly half (or less) of the Manufacturer's Suggested Retail Price (MSRP).
Your pricing journey starts with knowing your true COGS.
Industry Rule of Thumb:
Wholesale Price = Your True COGS x 2
MSRP = Wholesale Price x 2 (or 2.2 - 2.5)
So, if your COGS is $10:
Wholesale Price = $10 x 2 = $20
MSRP = $20 x 2.25 = $45 (This gives the retailer a 2.25x markup)
Breaking Down Your Costs: The Only Way to Ensure Profitability
Before you even think about a multiplier, you need a comprehensive understanding of your True Cost of Goods Sold (COGS). This goes far beyond just ingredients.
Components of Your True COGS for Tallow Products:
Direct Material Costs:
Raw Fat: Cost per pound/kilogram, including any delivery fees. Factor in yield (how much rendered tallow you get from raw fat).
Other Ingredients: Beeswax, essential oils, carrier oils, herbs, etc. (cost per gram/ml for a single unit).
Packaging: Jars, tins, lids, labels, safety seals (cost per unit).
Direct Labor Costs:
Your Time: This is critical! How long does it take you to prepare, render, formulate, jar, and label one unit of finished product? Assign yourself a fair hourly wage (e.g., $25-35/hour) and allocate it per unit.
Direct Production Overheads (Allocated per unit/batch):
Energy: Electricity/gas used for rendering and heating.
Consumables: Cheesecloth, filters, cleaning supplies, gloves directly used in production.
Equipment Depreciation: A tiny fraction of the cost of your slow cooker, scales, thermometers, etc., allocated per unit.
Wholesale-Specific Costs (New additions!):
Wholesale Packaging: Do you need larger boxes, extra protective packaging, or specific shipping materials for bulk orders? This is different from your DTC packaging.
Freight/Shipping: Who pays for shipping to the retailer? If you do, factor this into your costs or set a minimum order quantity (MOQ) for free shipping.
Payment Processing Fees: Credit card fees, platform fees (for wholesale platforms like Faire), usually a percentage of the total transaction.
Your Action: Use a detailed spreadsheet to meticulously track and calculate your True COGS for each product you plan to sell wholesale. If your current COGS calculation only includes ingredients, you're likely underpricing.
Setting Your Wholesale Price: A Step-by-Step Process
Once you have your meticulous COGS, the process becomes clearer:
Step 1: Calculate Your True COGS.
Add up all the direct material, labor, and production overheads per unit. Be honest and thorough.
Example: If your 4oz Tallow Balm has:
Material Cost: $3.00
Labor Cost (15 mins): $6.25
Production Overhead: $0.75
True COGS = $10.00
Step 2: Apply Your Multiplier.
Use the industry standard 2x multiplier for your initial wholesale price.
Example: Wholesale Price = $10.00 (COGS) x 2 = $20.00
Step 3: Determine Your MSRP (Manufacturer's Suggested Retail Price).
This is what the retailer will sell it for. Apply a 2.2x to 2.5x multiplier to your wholesale price.
Example: MSRP = $20.00 (Wholesale) x 2.25 = $45.00
Crucial Check: Does this MSRP align with your current DTC price? It should be very similar. If your current DTC price is much lower, you're likely severely underpriced across the board, and need to adjust your DTC prices first before offering wholesale.
Step 4: Factor in Minimum Order Quantities (MOQs).
Set a minimum number of units or a minimum dollar value for wholesale orders (e.g., 6 units of a specific product, or a minimum order of $150). This makes smaller, unprofitable orders less likely.
Consider free shipping on orders above a certain threshold (e.g., $300+). Factor the shipping cost into your overall pricing or the MOQ.
Beyond the Price: Your Wholesale Value Proposition
Pricing is important, but retailers are buying more than just a product; they're buying into your brand. What else makes you an attractive partner?
Your Brand Story: Why do you make tallow? What's your unique sourcing story? This adds narrative and value to their shelves.
High-Quality Photography: Professional product photos for their website and social media.
Marketing Support: Providing lifestyle shots, product descriptions, or even social media templates.
Reliable Communication & Fulfillment: Being responsive, shipping on time, and having clear invoicing.
Professional Packaging: Your labels and packaging must be retail-ready.
Common Wholesale Pricing Mistakes to Avoid
Underpricing Because of Fear: Don't let the fear of rejection lead you to charge too little. Know your value.
Forgetting Your Labor & Overheads: Your time is valuable. Your electricity bill for rendering is a business cost. Account for everything.
Ignoring Retailer Markup Needs: If the retailer can't make a decent profit, they won't carry your product. Understand their perspective.
Not Having Clear Terms: Define payment terms, shipping terms, return policies, and MOQs upfront.
Devaluing Your DTC Price: Your DTC (direct-to-consumer) price should always be your highest price. Wholesale should be lower to the retailer, but your online store shouldn't be cheaper than a retail store selling your product.
Conclusion: Scale Smart, Profit Big.
Wholesale is a powerful lever for scaling your artisan tallow business, but only if approached strategically. By meticulously understanding your costs, applying industry-standard multipliers, and presenting a compelling value proposition, you can confidently enter the B2B market, expand your reach, and secure significant, sustainable profitability.
Stop guessing. Start building your wholesale channel with precision and confidence.
Ready to calculate your true costs and prepare for wholesale success?
Contact us today and let's get started!
