What Is Kakeritsu in Japanese Wholesale? Retail Prices, Wholesale Prices and Margins
In Japanese wholesale, kakeritsu is the wholesale price as a percentage of the reference retail price. With a tax-exclusive retail price of ¥10,000 and a 50% ratio, the tax-exclusive wholesale price is ¥5,000. Overseas brands should distinguish this ratio from gross margin and check profitability after assigning import, domestic delivery and other costs.
- Keep your home-market retail price separate from the reference retail price for Japan.
- Use the same tax basis for retail and wholesale prices when calculating the ratio.
- When a distributor is involved, identify which seller-to-buyer transaction each wholesale price describes.
Jodai, gedai and kakeritsu: a ¥10,000 example
The reference retail price is called jodai; the wholesale price paid by the retailer is called gedai. Some transactions use a suggested retail price as jodai. Label it clearly, for example “manufacturer’s suggested retail price,” so both parties know the price to which the ratio applies.
Wholesale price = reference retail price × wholesale ratio. Ratio (%) = wholesale price ÷ reference retail price × 100. “Go-gake” means 50%: a product with a tax-exclusive reference retail price of ¥10,000 is sold wholesale to the retailer for ¥5,000 excluding tax. Kakebarai means payment on account, or deferred payment. Do not confuse it with the pricing ratio.
| Wholesale ratio | Retail price excl. tax | Wholesale price excl. tax | Retailer’s sales less purchase cost | Retailer’s gross margin |
|---|---|---|---|---|
| 40% (yon-gake) | ¥10,000 | ¥4,000 | ¥6,000 | 60% |
| 50% (go-gake) | ¥10,000 | ¥5,000 | ¥5,000 | 50% |
| 60% (roku-gake) | ¥10,000 | ¥6,000 | ¥4,000 | 40% |
Illustrative calculations assume sale at the reference retail price and no additional acquisition costs. Staff costs, rent and other operating expenses must still be paid from the difference.
Assume a tax-exclusive retail price of ¥10,000, wholesale price of ¥5,000 and tax rate of 10%. The tax-inclusive retail price is ¥11,000. The ratio is 50% on a consistent tax-exclusive basis, but dividing the tax-exclusive wholesale price by the tax-inclusive retail price gives about 45.5%. It appears lower even though the wholesale price has not changed. Calculate using tax-exclusive prices for both, and show the consumer-facing tax-inclusive price in a separate field.
A quote saying “50% of retail; shipping extra” still leaves the buyer unable to calculate total acquisition cost if it omits the product and reference price, whether the price is brand-to-retailer or through a distributor, and who pays shipping to whom. Specify the reference price as well as the ratio.
A 50% wholesale ratio does not necessarily mean a 50% brand margin
The brand’s gross profit is wholesale revenue minus cost of goods sold. Gross margin (%) = gross profit ÷ wholesale revenue × 100. The wholesale ratio uses retail price as its denominator; the brand’s margin uses wholesale revenue. Different costs therefore produce different margins at the same wholesale price.
| Assumed cost of goods sold | Wholesale revenue excl. tax | Gross profit calculation | Brand gross margin |
|---|---|---|---|
| ¥2,500 | ¥5,000 | ¥5,000 − ¥2,500 = ¥2,500 | ¥2,500 ÷ ¥5,000 = 50% |
| ¥3,500 | ¥5,000 | ¥5,000 − ¥3,500 = ¥1,500 | ¥1,500 ÷ ¥5,000 = 30% |
Both cases assume a ¥10,000 reference retail price excluding tax and a 50% wholesale ratio. Cost differences create a 20-percentage-point margin difference despite the same wholesale price.
The retailer margins in the previous section also assume sales at the reference retail price. Additional acquisition costs or markdowns reduce those margins. Retailers must also pay staff costs, rent and other operating expenses from gross profit, so the difference between sales and purchase cost is not final profit.
Work backwards with the costs your brand bears in Japan
Would converting your home-market retail price into yen and halving it cover the cost of getting goods to Japan? What remains depends on who pays for international transport, import procedures, storage, delivery, sales support and distribution. Estimate your own obligations before proposing a wholesale price, then work backwards to the required unit price.
- Set a reference retail price for Japan — Propose a yen price. Keep home-market retail prices separate from Japan’s reference price and use one consistent basis.
- Estimate costs your brand will bear — Separate product costs from logistics and other costs. Do not count costs paid by the retailer or distributor a second time as your own.
- Calculate the required wholesale unit price — Add wholesale servicing costs to your product and logistics costs, then add the amount you want to retain per unit after those costs. The example below uses ¥1,000.
- Convert to a ratio and compare trade terms — Calculate required wholesale unit price ÷ Japan reference retail price × 100. Include quantity, returns, lead times and payment terms in the proposal.
Assume product costs and your costs up to arrival in Japan total ¥3,500 per unit, plus ¥500 for wholesale servicing: total cost is ¥4,000. To retain ¥1,000 after those costs requires a ¥5,000 wholesale unit price excluding tax, or 50% of a ¥10,000 tax-exclusive retail price. These costs are assumptions, not market benchmarks. Company-wide overhead is also excluded, so the retained ¥1,000 is not final profit.
If a distributor buys goods and resells them to retailers, calculate brand-to-distributor and distributor-to-retailer transactions separately. If the distributor instead charges a sales-support commission, include that fee in the brand’s profitability calculation. Treatment of import taxes depends on the transaction and tax circumstances; do not automatically add every tax payment to cost of goods sold.
Do not apply a quoted market ratio without checking its conditions
SUPER DELIVERY’s official help describes average wholesale prices on its own service as roughly 40–60% of retail, with variation by company and product. Treat this as a reference for price consideration, rather than a nationwide benchmark, and calculate profitability using your own products and cost responsibilities.
A returnable arrangement and an outright purchase in which the retailer bears unsold-stock risk allocate risk differently. Do not rank offers by ratio alone when quantity, shipping, lead time or payment timing differ. If strict volume conditions increase your inventory burden, include that burden in profitability. Compare profit, rather than unit price alone.
A suggested retail price is a reference. Japan’s Fair Trade Commission states that requiring resellers to follow specified selling prices is generally prohibited. Proposing a retail price does not entitle a supplier to enforce it by, for example, stopping shipments to retailers that discount.
Present the yen wholesale price alongside the ratio
Saying only “we want a 50% ratio” does not identify the price basis. Put the reference retail price, yen wholesale unit price excluding tax, trading parties, delivery terms and minimum order quantity in the same proposal so the retailer can assess acquisition cost.
- Align the Japanese reference retail price and tax-inclusive/exclusive basis.
- Show the ratio and yen wholesale unit price excluding tax together.
- Identify whether the transaction is brand-to-distributor or distributor-to-retailer, or direct.
- Assign import, domestic delivery, storage and fee costs.
- Present quantity, lead time, payment and returns terms with the price.
- Agree when prices may be reviewed after exchange-rate movements.
If the proposed terms leave the brand at a loss or the retailer insufficient room to sell profitably, reconsider product costs, retail price, cost allocation and quantity terms before continuing sales outreach. Rework the price structure to support both parties. If wholesale still cannot be profitable, consider direct sales too.