Work out private label margin instantly with clear inputs, formula shown and shareable results.
Private label typically retails below the branded equivalent but carries a much higher percentage margin. The cash margin per unit is the decisive comparison, because a higher percentage on a lower price can still yield less cash profit per sale.
Gross margin
Margin % = (Retail price - Cost) / Retail price x 100
Cash margin difference
Difference = (PL price - PL cost) - (Branded price - Branded cost)
Because there is no brand marketing cost in the supply price and the retailer captures the value that the brand owner would otherwise take.
Only if the cash margin is higher and the customer does not leave for a competitor stocking the brand. Category-by-category testing is essential.