# Price-List / Margin-Stack Template

The price on your invoice is not the price the shopper pays. Between your dock
and the shelf, a distributor and a retailer each add a margin, and every one of
them marks up from your price — so the shelf price ends up a multiple of what
the product cost you to make. Fill one line per product to see the whole stack
at once, and check that your price leaves room for everyone downstream and still
lands where shoppers will actually buy.

A margin stack is the chain of prices a product passes through from your cost to
the shelf, where each tier — you, the distributor, the retailer — adds its own
margin on top of the price it paid. This worksheet lays the chain out so you can
read every step: your cost to make the product, the price you sell it at, the
price the distributor sells it to the retailer at, and the retail shelf price the
shopper pays. The margin at each step is the difference between what that tier
paid and what it charges.

The convention across the channel is to quote gross margin — the share of a
selling price left after the cost of the goods, margin dollars divided by the
price, not by the cost — as a percentage of the selling price, not a markup on
cost. When a distributor says it needs "25 points," it means 25% of what it
sells the case for. Keep every margin in this worksheet on that same basis so
the tiers stack cleanly.

Start from the cost per unit on your COGS / recipe-cost worksheet — that is the
true cost this stack sits on top of. The example values in every table are
illustrations to keep the fields legible; replace all of them with your own.

The worksheet shows what margin each tier takes and where the shelf price lands.
It does not decide your price for you, it is not pricing or accounting advice,
and every distributor and retailer negotiates its own terms. Treat the margins
here as placeholders for the real numbers your buyers quote you, and confirm
those before you commit to a price.

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## The margin stack, per product

Do this once per product. Each tier buys at the price the tier above it sells
at, so the chain links top to bottom — your selling price is the distributor's
cost, the distributor's price is the retailer's cost, and the retailer's price
is what the shopper pays. Read the margin at each step as the price out minus
the price in, over the price out.

| Channel tier | Buys at (cost in) | Sells at (price out) | Margin per unit (out − in) | Margin % (÷ price out) |
| --- | --- | --- | --- | --- |
| (example) You — the maker | $3.60 (your cost to make) | $6.00 (your price) | $2.40 | 40.0% |
| (example) Distributor | $6.00 (your price) | $8.00 (distributor price) | $2.00 | 25.0% |
| (example) Retailer | $8.00 (distributor price) | $12.00 (retail shelf price) | $4.00 | 33.3% |
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| | | | | |
| | | | | |

A distributor buying at $6.00 and selling at $8.00 keeps a 25% margin — $2.00
over its $8.00 selling price. Measured the other way, that is a 33% markup on the
$6.00 it paid. Same two dollars, two different percentages. The channel quotes
the margin; if you plan against the markup by mistake, you will set your price
too low and hand away the difference. Keep every tier on margin-of-price and the
arithmetic stays honest.

## Read the stack: how it compounds

Each tier's margin looks modest on its own — 40 points for you, 25 for the
distributor, a third for the retailer. But margins stack multiplicatively, not
additively: the retailer marks up a number that already carries the
distributor's margin, which already carries yours. At these three margins the
retail shelf price is exactly double your selling price and about 3.3 times your
cost to make. Fill in your own shelf price and cost, then divide one by the other
to see your product's real multiple.

| Where the $12.00 shelf price goes | Per unit | Share of shelf price |
| --- | --- | --- |
| Your cost to make it | $3.60 | 30.0% |
| Your margin | $2.40 | 20.0% |
| Distributor margin | $2.00 | 16.7% |
| Retailer margin | $4.00 | 33.3% |
| Retail shelf price | $12.00 | 100% |

The shopper pays $12.00; you keep $2.40 of it. That is the reason to build your
price to survive the whole stack rather than to look good on your own invoice —
the margin you set has to still be there after two more tiers have taken theirs.

## Price backward from the shelf

The stack above runs forward: start from your cost, add each margin, arrive at
the shelf. The honest real-world direction is often backward. Shoppers pay a
price the shelf will bear — a price point, the specific shelf price a category of
shoppers expects and will pay, often set at a psychological figure like $11.99
rather than derived from cost — and the tiers below it each take their cut from
that fixed number, leaving whatever remains for you. Start from a realistic shelf
price, strip out the retailer's margin, then the distributor's, and see what
price you are actually left with.

| Price backward from the shelf | Example | Your entry |
| --- | --- | --- |
| Target retail shelf price | $12.00 | |
| − Retailer margin (33.3%) → distributor price (shelf × 0.667) | $8.00 | |
| − Distributor margin (25%) → your price (distributor × 0.75) | $6.00 | |
| Your cost to make (from your COGS worksheet) | $3.60 | |
| Your margin at that price (your price − cost) ÷ your price | 40.0% | |

When you strip the downstream margins out of a shelf price and the price left
for you doesn't cover your cost plus the margin you need, the product cannot ship
at that shelf price. The only honest moves are to take cost out of the product,
raise the shelf price and test whether shoppers still buy, or drop the item. And
in the real channel there is more to subtract than tier margins — a slotting fee
(a payment a retailer charges a supplier to stock a new item on its shelves,
deducted from what you are paid), promotional allowances, and freight all come
out of your side of the stack, not the shelf price. Leave room for them before
you commit.

## Build a price list across products

Once the stack is clear for one product, lay your line out as a single price list
so you can compare across it. Hold the tier margins you actually negotiate
constant down the column, and the shelf prices and multiples fall out of your
cost and your price.

| Product (pack) | Your cost | Your price | Your margin % | Distributor price | Retail shelf price | Shelf ÷ your cost |
| --- | --- | --- | --- | --- | --- | --- |
| (example) Roasted tomato salsa, 16 oz jar | $3.60 | $6.00 | 40.0% | $8.00 | $12.00 | 3.3× |
| (example) Hot pepper sauce, 5 oz bottle | $1.80 | $3.00 | 40.0% | $4.00 | $6.00 | 3.3× |
| (example) Simmer sauce, 24 oz jar | $5.40 | $9.00 | 40.0% | $12.00 | $18.00 | 3.3× |
| | | | | | | |
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Keep the pack size on every line — a price without its pack is not a price, and
the shelf price only makes sense next to what the shopper is holding. Carry the
identity and pack from each product's spec sheet so the price list and the spec
agree.

## Sign-off

Number and date every version so sales, the distributor, and whoever sets your
list all work from the same prices. Re-run a line whenever your cost, a tier's
margin, or a shelf price moves — a price list built on last season's cost is a
margin you no longer have.

| Field | Example | Your entry |
| --- | --- | --- |
| Product and pack size | Roasted tomato salsa, 16 oz jar | |
| Your cost per unit | $3.60 | |
| Your price | $6.00 | |
| Retail shelf price | $12.00 | |
| Price-list version | Rev. 1 | |
| Prepared by (name, role) | Sam Ortiz, Operations Lead | |
| Date prepared | 07/15/2026 | |
| Next review (or trigger) | On cost or margin change | |