GROSS. — free commercial calculators for UK FMCG brand teams

How retailer margin actually works

Front margin vs back margin, margin vs mark-up, VAT, the wholesaler layer — the most argued-about number in UK grocery taken apart line by line, with a free calculator.

Front margin, back margin, margin vs mark-up and the wholesaler layer — with the arithmetic shown.

Retailer margin in UK grocery is quoted as front margin: the gap between what the retailer pays you and the shelf price ex-VAT, expressed as a percentage of the shelf price. If your product retails at £1.50 with 20% VAT, the shelf price ex-VAT is £1.25. At a 35% retailer margin, the retailer keeps 43.75p of that and pays you 81.25p. That 81.25p is your invoice price, and every cost you have — cost of goods, freight to their depot, promo funding — comes out of it.

The percentage is measured off the shelf price, not off your price. This matters because your own margin is measured the other way: off your net revenue. The same trading relationship produces two different percentages that sound comparable and are not.

Front margin and back margin

Front margin is the visible gap above. Back margin is everything else the retailer earns from you that never appears on a price file: retrospective discounts, range support, marketing contributions, settlement terms. A buyer who concedes on front margin and recovers it in back margin has not conceded anything — the money leaves your invoice either way.

When you model a listing, the honest number is the total: front margin plus every back-margin commitment, as a share of your gross sales value. In the trade this full picture is the gross-to-net waterfall, and it routinely takes 10–30% of invoice value before you get to your own costs.

Your margin is not their margin

Your gross margin is net revenue less landed cost (cost of goods plus inbound freight), divided by net revenue. On the £1.50 example: you bank 81.25p, and if your product costs 32p to make and 2.5p to ship per unit, your gross margin is 46.75p — 57.5% of net revenue. The retailer is on 35%; you are on 57.5%; nobody is lying, but the two numbers are measured off different bases and move differently when prices change.

This is why a buyer asking for "just two more points" costs you more than two points: their percentage comes off the shelf price, which is bigger than your net revenue. Two points of retailer margin on £1.25 is 2.5p — which is more than 5% of your 46.75p margin.

The wholesaler layer

Selling through a wholesaler or cash-and-carry adds a second margin taken after the retailer's, off the price the retailer pays. Margins stack multiplicatively: a 35% retailer margin and a 25% wholesaler margin leave you 48.75% of the shelf price ex-VAT, not 40%. Route-to-market decisions deserve their own arithmetic, not an estimate.

Asked a lot

What retailer margin do UK supermarkets expect?

It varies by category and by retailer, but 30–45% front margin on the shelf price ex-VAT is the broad range for branded grocery, with health, beauty and premium categories at the higher end. Treat any single figure as a starting assumption to be tested, not a rule.

Is retailer margin calculated on the price including VAT?

No. Margin is calculated on the shelf price excluding VAT. On a £1.50 retail price at 20% VAT, the margin base is £1.25. Zero-rated food uses the full shelf price because there is no VAT to strip.

What is the difference between margin and mark-up?

Margin is the gap as a percentage of the selling price; mark-up is the same gap as a percentage of the buying price. A 35% margin equals a 54% mark-up. UK grocery quotes margin. If someone quotes you a mark-up, convert before you agree to anything.

What is back margin?

Retailer income from you that is not the front price gap: retros, range support, marketing funds, promotional funding, settlement discounts. It is still margin — it comes off your invoice — it is just harder to see.

The other calculators

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• The Shelf — Your range, defined once. Enter each product’s cost price, RSP, units per case and rate of sale — every calcul
• The P&L — See what the retailer really makes on you. Reads top-down: shelf price, VAT, who takes what, and what you actu
• The Waterfall — Every deduction between the shelf price and your bank. Gross to net net, with promo funding, back margin and o
• The Floor — The lowest cost price, or the RRP, that still clears your target margin. Solved backwards from the number you
• The Listing — Model the range review before the buyer does. Week by week, with a full promo calendar behind the annual GSV-t
• The Payback — How much incremental volume a promo needs to pay itself back. Break-even in cases, and the uplift that implies
• The Stock Answer — What to order, and when, before you run out. A weekly supply plan that follows your promo calendar, in whole c
• The Amazon Cut — What FBA takes before you see a penny. Every fee per unit, plus a full-year GSV-to-net P&L by cases sold.
• The TikTok Cut — What TikTok Shop takes on every sale. Every fee per unit, plus a full-year GSV-to-net P&L by cases sold.
• The Line-Up — The same product across grocery, Amazon and TikTok, side by side. The biggest channel is rarely the one that p
• The Range — The whole portfolio on one till roll. Blended margin, the SKU that carries the range, and the full-year plan.
• The Wait — Margin is an opinion; cash is a fact. When the money actually moves — and the gap your bank account has to sur
• The Ledger — One email a month on the commercial maths of UK FMCG. No selling. The archive lives here.
• The Ledger No. 001 — Your margin is your insurance. The minimum margin that survives a halved rate of sale, worked in full.
• The Guides — The long reads behind the calculators: retailer margin, gross-to-net, FBA fees and margin benchmarks, written
• Gross-to-net: where your revenue goes — GSV, NSV, promo funding and back margin — the waterfall between invoice and bank, and what a healthy one looks
• Amazon FBA fees in the UK — Referral, fulfilment, storage and the plan, added up honestly — plus the break-even price nobody checks.
• FMCG margin benchmarks — Indicative UK brand gross-margin ranges by category, measured on the right base and honest about being ranges.
• Payment terms in UK grocery — Sixty days is not a detail — it is working capital, and it is yours. The debtor-day maths, the shelf-fill trap
• What a promotion actually costs — Funding off invoice, the uplift with the widest error bars in the building, and the payback test nobody runs.
• The Rate Card — Every default in GROSS., what it is, when it was checked and where it comes from. The maths is only as good as

Free, no sign-up. The maths is checked; the defaults are dated and sourced on The Rate Card. VAT number: not applicable. This is a website.