What is Price to Retailer (PTR) and Price to Distributor (PTD)?

The price ladder

When a D2C brand sells through shops (general trade) or retail chains (modern trade), each intermediary keeps a margin. Starting from the MRP printed on the pack:

• PTR (price to retailer) is what the shop pays its supplier.
• PTD (price to distributor) is what the distributor pays.
• PTSS (price to super stockist) is what a super stockist pays, where the brand uses one.

The brand's own selling price is the price at the first tier it bills. Modern trade chains usually buy direct, so the brand bills at a price close to PTR. General trade usually runs through a distributor, and sometimes a super stockist above it.

Markdown or markup

Trade margins are quoted in two ways, and mixing them up changes the price:

• On selling price (markdown): PTR = MRP × (1 − retailer's margin).
• On cost (markup): PTR = MRP ÷ (1 + retailer's margin).

The same quoted margin gives a lower PTR on a markdown basis than on a markup basis. Confirm which one each partner means before agreeing terms.

GST on the ladder

MRP includes GST, and so do the PTR and PTD figures traders usually quote. The brand's revenue is the price it bills excluding GST. GST is charged at each tier on the price that tier pays, and each buyer claims the GST it paid as input tax credit.

Trade schemes change the GST treatment:

• A discount shown on the invoice reduces the value on which GST is charged.
• A discount given after the sale, such as a scheme payout or a quantity rebate, reduces the value only if it was agreed before the sale, can be linked to specific invoices, and is passed on by a credit note on which the buyer reverses the matching input tax credit. Otherwise GST stays on the full invoice value.
• Free units ("buy ten, get one free") are treated as part of one supply at a lower price per unit, not as gifts, when they are given with the sale.

What it does to margin

Offline revenue per unit is far below the website's, but there is no shipping per order, no payment gateway fee and usually no per-order marketing. The fair comparison is contribution per unit after:

• trade schemes and display fees;
• returns and damaged stock taken back from the trade;
• freight to the distributor and the field sales team;
• the cost of the credit days the trade takes to pay.

What goes wrong

• Quoting a margin without saying markdown or markup.
• Forgetting the super stockist's margin when general trade expands into new regions.
• Treating MRP-based revenue as sales. Report offline revenue at the billed price, excluding GST.