Channel margin (retail and distribution)
also: retail margin · wholesale price · distributor margin · MSRP
The share of the retail price kept by distributors and retailers; selling through channels means you earn the wholesale price, not the shelf price.
When a product sells through retail, the retailer buys at a wholesale price and sells at a retail price, keeping the difference; distributors in between take their own margin, and online marketplaces charge referral and fulfillment fees. Each layer reduces what reaches you, while your COGS stays the same.
That is why a product that looks profitable at its retail price can lose money through channels. Channel partners may also expect marketing contributions, return allowances, extended payment terms and price protection, which affect both margin and cash flow.
Founder takeaway
Build a price waterfall from retail price down to your net revenue for each channel, and set the retail price so gross margin still works at the wholesale price.
engineer review pending