Wholesale vs DTC Profitability
Compare unit economics between Direct-to-Consumer (High Price, High OpEx) and Wholesale (Low Price, Volume). Decide where to focus your growth.
Product Base
DTC Costs
Wholesale Costs
Unit Profit Breakdown
Channel Duel
Profit Gap: $18.50
DTC Efficiency
You make $44.00 per unit (44.0%). High effort, high reward.
Wholesale Efficiency
You make $25.50 per unit (51.0%). Low effort per unit, but requires volume.
The Verdict
DTC is more profitable per unit. Grow wholesale only for scale/awareness.
Execution Steps
Enter Product MSRP and COGS.
Input DTC costs: Ad Spend (CAC), Shipping, Fees.
Input Wholesale costs: Retailer Discount %, Sales Commissions, Bulk Shipping.
Compare the 'Net Profit per Unit' side-by-side.
Pro Strategy
- If your DTC CAC is very high (e.g. >30% of price), Wholesale might actually be MORE profitable per unit.
- Use Wholesale to cover fixed factory costs (volume) so your DTC units become cheaper to produce.
- Don't offer wholesale discounts >50% unless your manufacturing cost is <20% of MSRP.
Core Concepts
Gross to Net
DTC has high Gross Margin (you keep 100% of price) but lower Net Margin due to CAC and logistics. Wholesale is the opposite.
Volume Leverage
Wholesale profit per unit is lower, but order sizes are massive. 1 Wholesale order might equal 1,000 DTC orders.
Customer Ownership
DTC gives you customer data (LTV potential). Wholesale gives you scale but no data. This intangible value isn't in the chart but matters.
What is Wholesale vs DTC Profitability?
This comparative model breaks down the Unit P&L for two distinct channels. It visualizes the trade-off: DTC requires marketing & logistics spend; Wholesale requires price discounts. It reveals the 'True Profit' after all channel-specific variable costs.
Best For
- • Deciding whether to attend a trade show.
- • Evaluating a purchase order from a major retailer.
- • Allocating inventory during shortages.
Limitations
- • Assumes constant CAC (DTC costs usually rise with scale).
- • Does not account for payment terms (Wholesale pays Net 30/60).
- • Ignores returns (usually higher in DTC).
Alternative Methods
Channel Waterfall
More detailed fee breakdown.
Contribution Sim
Analyzing volume impact on fixed costs.
Industry Applications
See how this methodology generates real revenue uplift in different sectors.
Beauty Brand
DTC ads were expensive (CAC $40 on $80 item).
Analyzed Wholesale. Retailer took 50%, but $0 CAC.
Apparel Startup
Retailers demanded 60% discount.
Calculated that at 60% off, profit was $2. DTC profit was $20.