The question usually arrives as a phone call. A grocer three towns over wants to carry your product, and they want to know your wholesale price. Somewhere in the next few days you'll do a comparison in your head between the price you get at your own counter and the price they're offering, and you'll feel the gap.
That comparison is the wrong one, and it's wrong in a way that talks people out of good deals and into bad ones with equal reliability.
What does each channel actually leave you?
Price is what somebody hands you. Contribution is what's left after the unit and everybody in the middle have taken their share, and it's the only figure the channels can be compared on.
Say you roast coffee. A twelve-ounce bag sells for $18 at your counter, and the green coffee, the roast loss, the bag, and the label come to $7.20. Sell it through your own site and you lose about 54 cents to the card processor and $4.26 to shipping and packaging, so the bag leaves you $6.00.
Now wholesale it to that grocer at $10.80. No card fee, no shipping, just 60 cents a bag for the delivery run. That bag leaves you $3.00.
The gap in the prices was $7.20. The gap in what you keep is $3.00. Every fee and every box you don't have to pack closes most of the distance you felt on the phone, which is the first thing the arithmetic does for you. The tool's how-it-decides section runs the same subtraction on your own numbers.
How many direct sales does one case replace?
This is the number to walk into the conversation holding. A twelve-bag case at $3.00 a bag carries $36 of contribution, and $36 is six bags sold direct. One case, six direct sales, and now the grocer's order has a size you can reason about.
Six is a good number for coffee. It is not a good number everywhere, and the spread is the point. The tool's farm and food preset puts a twelve-jar case at about five direct sales. Its boutique retail example puts an eight-unit case at roughly a sale and a half at the shop's own register, which is a brutal enough ratio that a wholesale program there has to be a volume story or no story at all. Same arithmetic, three very different answers, and none of them is knowable from the price alone.
Once you have the ratio, the negotiation stops being about whether wholesale feels bad. It becomes a question with a number in it. How many cases a month does this account have to move before it's worth the shelf space in your own cooler, the delivery run, and the invoice you'll be chasing in forty-five days?
What you're actually buying with the discount
Here's the part that reframes the whole decision, and it took me an embarrassingly long time to see it.
You gave up three dollars a bag. Over that twelve-bag case, you handed the grocer $36 to put your coffee in front of twelve people you didn't have to find, in a building you don't pay rent on, staffed by somebody you don't employ. That $36 bought customer acquisition, denominated in product instead of ad spend.
Which makes it comparable to the other way of getting those twelve people, and most owners have never run that comparison. Say it costs you $30 in ads, time, and the free-shipping threshold to land one customer on your own site, and that customer buys five bags across the year. That's $6 of acquisition sitting on top of every bag, which happens to be the entire direct contribution. On that arithmetic the grocer's $3.00 is the better deal, and it isn't close.
Change the assumptions and the answer flips, which is exactly why it's worth calculating rather than feeling. If your acquisition cost is $10 and that customer buys ten bags, direct wins by a mile. The marketing break-even calculator is where you get that half of the number, and running the two tools against each other is more useful than running either one alone.
Where does the marketplace land?
Usually in the middle, and usually closer to direct than people expect. List the same bag at $19 on a marketplace, pay a 15 percent commission and the shipping, and you keep $4.50. Better than the grocer, worse than your own site, and it comes with a customer whose loyalty belongs to the platform rather than to you.
The maker version of this is starker. The tool's maker preset has a $45 piece keeping about $23 direct, $20.50 on a handmade marketplace, and $8.50 wholesale at the craft convention of half of retail. A potter who can generate their own demand should be nearly indifferent between their own site and the marketplace, and should think hard before wholesaling. A potter who can't generate demand is paying wholesale's toll for a shelf that generates it instead, which is a rational trade and worth naming as one.
What the per-unit math can't see
Four things, and any one of them can outweigh the arithmetic.
Terms and timing come first. Wholesale pays less and pays later, often net-30 or net-45, and a business that's fine on margin and short on cash has a different problem than the one this calculator solves. Then your production ceiling. An account that wants forty cases a month is a bigger yes than it looks if you can only make thirty.
Then the Saturday. A farmers market pays the best contribution of any channel and costs you a day, and if you're the highest-billing person in the building that day has a price nobody invoices you for, which is the same trap that turns a business into a job you can't quit. And last, the shelf itself. A grocer carrying your eggs is advertising you to people who will later buy direct, and the per-unit math has no column for that.
Running your own numbers
The channel margin calculator takes your price, your unit cost, and the fees in each channel and gives you contribution per unit, per channel, and the case equivalence, in about a minute. The presets exist so the form isn't a wall of zeros, and every figure in them should end up replaced with yours. Fee schedules drift, so read your own statements rather than trusting any default, including the ones above.
What none of it settles is the second year. The direct customer you paid $30 to find may come back three times with no new acquisition cost attached, which quietly halves what that customer really cost you. The grocer's twelve bags have to be re-earned with every order, and the account can end with one phone call from a new buyer. Almost nobody knows their own repeat rate well enough to put it in the comparison, and until you do, the honest version of this decision has a shrug in the middle of it.