PTR, PTS and PTW: What Each Price Means and How to Calculate It

PTR is what the retailer pays. PTS is what the stockist pays. PTW is what the wholesaler pays. All three are derived the same way — start at MRP and remove each tier's margin, one rung at a time, going down.

The arithmetic is simple. The part that causes genuine, repeated, expensive disagreement is not the formula but its base — whether a margin percentage is measured against cost or against MRP. Both conventions are in live use in Indian trade, they give different answers, and price lists routinely fail to say which one they mean.

Run your own numbers in the PTR/PTS calculator; this page explains what it is doing and why the answer sometimes disagrees with your supplier's.

The three prices, one line each

• PTR — price to retailer. What the retailer pays whoever supplies them: a stockist, a wholesaler or a distributor, depending on the route.
• PTS — price to stockist. What the stockist pays the company or its C&F agent. The first rung below the company's own billing.
• PTW — price to wholesaler. What the wholesaler pays, where a wholesale tier exists between the stockist or distributor and the retailer.

Each is the rung below the one above it, and the gap between any two rungs is that tier's margin. The vocabulary varies by sector — the price-type ladder by industry maps which term each trade actually uses, and list price vs MRP vs reseller price separates these from the other prices on a brochure.

The formula — and why there are two of them

A margin percentage is meaningless without a base. "20% retailer margin" can mean either of two things, and they are not equivalent.

Convention A — margin on cost. The retailer wants to earn 20% on what they paid. Their cost is PTR, they sell at MRP, so:

MRP = PTR × (1 + margin) → PTR = MRP ÷ (1 + margin)

Convention B — margin on MRP. The margin is 20% of the selling price. The rupees earned are MRP × margin, so:

PTR = MRP × (1 − margin)

These agree only when the margin is zero. Everywhere else Convention A gives a higher PTR than Convention B, and the gap grows with the margin.

Whichever you use, the next rung repeats the same operation on the rung above:

PTS = PTR ÷ (1 + stockist margin) · or · PTS = PTR × (1 − stockist margin)

Worked example: pharma-style margins

Take an ex-GST value of ₹100, a 20% retailer margin and a 10% stockist margin. (If your MRP is tax-inclusive, strip GST first — see below.)

	Convention A: on cost	Convention B: on MRP
PTR	100 ÷ 1.20 = ₹83.33	100 × 0.80 = ₹80.00
PTS	83.33 ÷ 1.10 = ₹75.76	80.00 × 0.90 = ₹72.00

The two methods differ by ₹3.76 on the stockist price — 3.76% of MRP, on a product whose entire stockist margin is 10%. That is not a rounding quibble. It is the difference between a deal working and not working, and it is invisible unless somebody asks which base the percentage is on.

For DPCO-scheduled drugs this is not a matter of convention at all: margins are regulated by notification, and the notification governs both the rates and how they are computed. Check the current notification rather than any industry rule of thumb, including this page's.

Worked example: FMCG-style margins

Same method, smaller margins — a 10% retailer margin and a 5% wholesaler margin on the same ₹100:

	Convention A: on cost	Convention B: on MRP
PTR	100 ÷ 1.10 = ₹90.91	100 × 0.90 = ₹90.00
PTW	90.91 ÷ 1.05 = ₹86.58	90.00 × 0.95 = ₹85.50

Here the two conventions differ by ₹1.08 rather than ₹3.76. That is the useful generalisation: the base matters in proportion to the margin. At FMCG margins it is a rounding-sized irritation; at pharma or durables margins it is a commercial disagreement. Learn the method, not one set of answers.

The same ambiguity runs through every margin conversation in the channel, not just price derivation — the three ways one margin can be quoted covers where else it bites.

Working the ladder upward

Most explanations only run downward, but a lot of real pricing work runs the other way. A company often starts from the price it needs to realise — a target PTS, or a factory price plus a required contribution — and has to find the MRP that supports the whole chain above it.

The formulas simply invert. On the margin-on-cost convention you multiply back up:

PTR = PTS × (1 + stockist margin) · MRP = PTR × (1 + retailer margin)

Starting from the ₹75.76 above: 75.76 × 1.10 = ₹83.34, and 83.34 × 1.20 = ₹100. The chain closes.

On the margin-on-MRP convention you divide back up instead:

PTR = PTS ÷ (1 − stockist margin) · MRP = PTR ÷ (1 − retailer margin)

From ₹72.00: 72 ÷ 0.90 = ₹80, and 80 ÷ 0.80 = ₹100. Same MRP, from a PTS nearly four rupees lower.

That is worth sitting with. Two companies targeting the same ₹100 MRP with the same stated margins can set stockist prices ₹3.76 apart, purely because they read the percentages against different bases — and neither has made an arithmetic error. When you inherit a price list, working it back up to MRP is the quickest way to find out which convention built it.

Where PTW fits, and why it is quoted less consistently

PTR and PTS are relatively stable ideas because the tiers they name are stable: there is a retailer, and in pharma there is a stockist. PTW is looser, for three reasons.

The wholesale tier is optional. Plenty of routes go company → distributor → retailer with no wholesaler at all. In modern trade and e-commerce the tier does not exist, so neither does the price.

The wholesaler's supplier varies. A wholesaler may buy from a super stockist, a distributor, or occasionally the company. PTW therefore describes a position in a chain rather than a fixed rung.

Wholesale margins are negotiated per deal. Retailer margin is usually a published convention; wholesale margin is often thin, volume-dependent and agreed transaction by transaction. A rate card can state PTR credibly; PTW is frequently just whatever last week's quantity earned.

The practical consequence: treat a quoted PTW as a specific offer, not a structural constant, and confirm which tier it is a price to.

The rounding trap

Rounding at each tier compounds, because every rung is computed from the rounded rung above it.

Take a three-tier chain — 20% retailer, 5% wholesaler, 10% stockist, all on cost — from an ex-GST ₹100. Computed straight through, PTS is ₹72.1501. Rounded to whole rupees at each step, it goes ₹83 → ₹79 → ₹72.

Fifteen paise a unit. On 50,000 units that is ₹7,504 — real money, created by nothing but arithmetic hygiene.

The honest caveat: this only bites when you round hard. Rounding to paise at each tier moves the same chain by ₹0.0001, which is nothing. So the rule is narrow and easy:

Carry full precision through the chain and round once, at the end, to paise — never to whole rupees at intermediate rungs.

If a price list rounds to whole rupees for readability, keep the unrounded figure as the one you actually invoice and reconcile against.

These are pre-tax prices

PTR, PTS and PTW are pre-tax. GST is added on top when the invoice is raised. MRP, by contrast, is tax-inclusive — it is what the consumer hands over.

So you cannot apply margins to MRP directly. Strip the tax first:

Net = MRP ÷ (1 + GST%)

A ₹100 MRP at 12% GST carries only ₹89.29 of margin-bearing value. Applying a 20% retailer margin to ₹100 instead of ₹89.29 overstates every rung beneath it. Working that sequence through on Convention B gives PTR ₹71.43 and PTS ₹64.29 — the full three-step version is in PTR and PTS calculation after GST.

Schemes sit on top of the ladder, not inside it

A scheme does not change PTR.

PTR, PTS and PTW are invoice prices — the number on the bill. A QPS, slab or turnover scheme is settled after the period, usually by credit note, and only if it is claimed. It never touches the price at which the goods were billed.

This matters because "our PTR already includes the scheme" is a common and costly confusion. It does not, and treating it as though it does produces two errors at once: the price ladder is understated, and the scheme stops being tracked as a claimable entitlement because it has been mentally banked into the price.

Keep them separate. The ladder is the structure; the schemes are a second layer that moves your realised cost away from it. Where the two combine is net landing cost — the number that tells you what a unit actually cost once both layers have settled.

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To run these formulas on your own margins, both conventions side by side, use the PTR/PTS calculator. RebateLedger holds the scheme layer that sits on top — entitlement accrued as purchases post, and every claim tracked to the credit note that settles it.