What is keystone pricing?
Keystone pricing sets a product's retail price at double what it cost you wholesale. Buy a scarf for $18 and you sell it for $36. That doubling is a 100% markup, also called a keystone markup, and a 50% margin: half of each sale pays for the scarf, half is left for every other cost and profit.
How do you calculate keystone pricing?
Retail price = wholesale cost × 2. The $18 left over is 100% of the cost, your markup, and 50% of the $36 price, your margin. Fine jewelry stores may use triple keystone, as Shopify's guide notes.
| Rule | $18 scarf sells for | Markup | Margin |
|---|---|---|---|
| Keystone: cost × 2 | $36 | 100% | 50% |
| Triple keystone: cost × 3 | $54 | 200% | 66.7% |
In Shopify, open a $36 product and click "Cost per item" in its Price section. Enter $18, what one unit cost you, and Margin reads 50%. Shopify hides it on any taxed product when your prices include tax.
How does keystone pricing work in wholesale?
For your wholesale price, keystone means half the retail price, as Shopify's wholesale guide puts it. A shop pays you $16 for a candle you sell at $32, so making it has to cost well under $16. In Shopify B2B, on the Basic, Grow, Advanced and Plus plans, a catalog charges those shops half once you set its "Price adjustment", the change from your store prices, to Decrease 50%.
What does a sale do to a keystone price?
The scarf still cost you $18, so every dollar off comes out of your half. At 25% off, the $36 scarf sells for $27 and leaves $9: a 33% margin. Half off sells it at cost. Your shipping, card fees and ads also come out of that half, so the 50% is a gross margin, not what you keep.
Is keystone pricing a good strategy?
Keystone gives you a good first price: one markup prices every product. It looks only at cost, so check what other stores ask for the same product. A cheap item can need more than double: a $2 keyring at $4 leaves $2 to pack, ship and advertise it. Keystone is cost plus pricing with the markup fixed at 100%. A product shoppers value far above double its cost suits value based pricing.
Bigger orders on a keystone margin, with Sledge
Sledge does not read what your products cost you or work out a keystone price. With a Sledge volume discount, a buy 2, save 10% tier sells two $36 scarves for $64.80, still a 44% margin. On any paid plan, Growth Intelligence can suggest one when many orders hold more than one item and no Sledge offer runs yet. Its fixes add up to one total of possible sales, labeled "Est. potential", in your store's currency.
