Price matters, but the cheapest quote is not always the best deal. Knowing how wholesale pricing is built — and where your margin actually comes from — helps you choose a distributor on the things that drive your profit.
MRP, trade price and your margin
MRP is the maximum retail price printed on the pack. You buy from a distributor at a trade or wholesale price below MRP, and the difference (after taxes) is your gross margin. How much margin you make varies by product type and category.
Schemes and offers
Distributors may offer schemes such as quantity deals on certain lines. Work out the effective price after the scheme, but weigh it against how fast the item sells — a great deal on a slow mover just ties up your cash.
Compare on your real basket
Do not pick a distributor on a handful of headline prices. Compare across the lines you actually sell most. Remember that reliability has value too: a cheaper supplier who is often out of stock costs you sales you never see.
A note on price-controlled medicines
In India, some essential medicines are price-regulated under the Drug Price Control Order, with ceiling prices monitored by the NPPA. For those products, prices and margins are set by the rules rather than by negotiation, so always follow the current ceiling prices.
Cash flow and credit
Payment terms affect your working capital. If a distributor offers credit, balance it against fair pricing and a good long-term relationship rather than chasing the lowest price alone.
This is general business information, not financial or legal advice — verify the current price-control rules and tax treatment that apply to your situation.
Frequently asked questions
How is pharmacy margin calculated?
Roughly, it is the difference between the price you pay your distributor (trade price) and the MRP, after accounting for taxes. The exact margin depends on the product and any schemes.
Are medicine prices fixed in India?
Some essential medicines are price-controlled under the Drug Price Control Order, with ceiling prices set by the NPPA. For those, follow the current ceiling; others are set by the market.
Check the current rules at the source
This guide is general information, not legal or tax advice. Rules change, so confirm anything that affects your licence or your filings with the authority itself:
Related guides
How to choose a wholesale pharma distributor for your pharmacy · How to avoid stockouts: smart reordering for your pharmacy
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