Legal Definitions - wholesale price

The term wholesale price refers to the cost at which goods are sold in large quantities to businesses, such as retailers or distributors, rather than directly to individual consumers. This price is typically lower than the retail price because it reflects bulk purchasing and the absence of direct consumer marketing and sales costs. Businesses that buy at wholesale prices intend to resell the goods to their own customers, often at a marked-up retail price, or use them as components in products they manufacture and sell.

• Example 1: A Clothing Manufacturer and a Boutique

  A small independent clothing boutique orders 100 custom-designed blouses from a garment manufacturer. The manufacturer charges the boutique $25 for each blouse. The boutique then sells these blouses to its customers for $60 each. In this scenario, the $25 per blouse is the wholesale price because it is the price paid by a business (the boutique) for goods purchased in bulk, intended for resale to its own customers.

• Example 2: A Restaurant and a Food Supplier

  A popular local restaurant regularly buys large quantities of fresh produce, meats, and dairy from a specialized food service supplier. For instance, the supplier sells a 50-pound bag of potatoes to the restaurant for $30. The restaurant then uses these potatoes to prepare various dishes for its diners. The $30 for the bag of potatoes represents the wholesale price, as it is the cost incurred by a business (the restaurant) for ingredients purchased in bulk to be used in the creation of products (meals) that will be sold to consumers.

• Example 3: An Electronics Distributor and a Retail Chain

  An electronics distributor purchases 5,000 units of a new smart home device directly from the manufacturer. The manufacturer sells each device to the distributor for $75. The distributor then sells these devices to various retail chains, which in turn sell them to individual consumers for $150 each. Here, the $75 per device is the wholesale price, as it is the price at which the manufacturer sells a large volume of goods to another business (the distributor) for further distribution and eventual resale to the public.