How to calculate Maximum Retail Price (MRP), price to retailer (PTR) and price to stockist (PTS) under GST?

In This Article, we will cover topic-
  • How to calculate MRP (Maximum Retail Price)?
  • How to calculate PTS (Price to Stockist)?
  • How to calculate PTR (Price to Retailer)?
  • Factors affecting Maximum Retail Price
  • Formulas
  • Excel Sheet Calculator for MRP calculation, PTS calculation and PTR calculation
  • Download MRP/PTS/PTR Calculator
  • Specific Examples to understand MRP/PTS/PTR calculation

Query:

Kindly explain to me MRP ,PTR and PTS calculation regular all product 5 % GST product and mail to me at my mail. What does it mean PTR and PTS in sales & marketing? How does companies calculate product’s MRP’s.

Response:

Companies calculation to fix MRP depend upon many Factors:

  • Actual Cost of Product (Manufacturing, Testing, Packaging etc.)
  • Marketing Expenses for Product Promotion
  • Sales Team Expenses
  • Transportation and Availability Expenses
  • Research and Development (R & D) Cost if any
  • Competitors MRP
  • Uniqueness and/or Competitive status of product
  • And many more

Here we are going to discuss general calculations to fix MRP/PTS/PTR. Hope it will be helpful for you. You can calculate these things from any Goods and Service Tax (GST) value. Just replace 5% GST from your product GST value. Gst is divided into four slabs i.e. 5, 12, 18, 28 %.

MRP: MRP means Maximum Retail Price. It is the price at which customer will purchase any goods/services. It is inclusive of all taxes (GST).

PTS: PTS means Price to Stockist. It is the price at which any company will give its goods to stockist or distributors. It may be inclusive of GST or not.

PTR: PTR means Price to Retailer. It is the price at which retailer will purchase goods from stockist or distributors. It may be inclusive of GST or not.

First we start with Maximum Retail Price followed by Price to Retailer and Price to Stockist.

Maximum Retail Price(MRP):

Maximum retail price may be defined as the final maximum cost paid by an end consumer for any goods/services.  A good and/or service may be sell out less than from its MRP but can’t be sell out more than its MRP. MRP is inclusive of all taxes and no further taxes could be added in this unless specified.

Its compulsory to print maximum retail price at any good/service. Maximum Retail Price (MRP) is calculated by actual manufacturing cost , profit margin,  marketing expenses, C&F margin/franchisee margin, Stockist Margin, Retailer Margin, GST etc. Actual manufacturing cost may include manufacturing cost, transportation, electricity, GST, salary, rent, office handling charges etc.

Maximum Retail Price calculation is almost same of all sectors and industry. Few minor changes may be vary according to industry and distribution channel.  (Like In case of pharma franchise marketing, C&F and pcd/Franchisee may be same and/or different.  )

Maximum Retail Price Calculation Formula= Manufacturing Cost + Packaging/presentation Cost + Profit Margin + CnF margin + Stockist Margin + Retailer Margin + GST + Transportation + Marketing/advertisement expenses + other expenses etc.

Click here to Download MRP (Maximum Retail Price) Calculator in Microsoft Excel Format
Below calculation is for example purpose only. Change value of yellow color portion as per your need. Change value and wait for seconds to get your mrp online. Remove what is not applicable.



For Example a company is producing a product a product/service at cost of 35/- per piece. Then MRP can be fixed according according to above formula.

  • Manufacturing cost=35/-
  • Packaging/Presentation Cost= 5/-
  • Margin 25%= 35*25/100=8.75/-
  • Total Cost=35+5+8.75=48.75/-
  • GST: 4.76/-
  • CnF margin 6%= 4.08/-
  • Stockiest margin 10%=7.21/-
  • Retailer Margin 20%= 15.88/-
  • Transportation Cost: 1.30/-
  • Marketing/Advertisement Expenses: 14.50/-
  • Other Expenses: 3/-

Maximum retail price = 35 (MC) + 5 (PC) + 8.75 (M) + 4.08 (CFM) +7.21 (SM) + 15.88 (RM) + 4.76 (GST) + 1.30 (T) + 14.50/- (M) + 3/-(O) = 99.48, in round figure is 100/-.

PTR/PTS/Cnf margin is calculated below in article. Tax and transportation will cost at every step e.g. when supply from manufacturer to CnF, CnF to stockiest, stockiest to retailer. Tax is ultimately paid by end consumer. Minor difference in tax may occur during every transaction but we can ignore these differences because these are negligible. Suppose GST is 5%.

Transportation from manufacturer to CnF is 0.50/- per piece. Transportation from CnF to stockiest= 0.50/- per piece. Transportation from stockiest to retailer= 0.30/- per piece. Total Transportation Cost= 1.30/- per piece.  Marketing/Advertisement expenses= 14.50/- per pc. Other expenses= 3/- per pc

MRP could be less or more depend upon change in cost, margin, transportation, tax etc.

One should be careful while fixing MRP for any product/service. It can impact at product/service market’s presence. MRP should neither be as low as it couldn’t get enough profit to run company nor as high as it couldn’t compete with competitors. Above calculation is for example purpose only, one can use his own method to calculate MRP.

Calculating PTS/PTR value exculded of GST (For Registered Person Under GSTIN):

Suppose MRP(Maximum Retail Price) is 100/- per strip (inclusive of GST)
Retailer Margin: 20%
Stockist Margin: 10%

Following calculation is useful in pharma industry as well as other industries:
Calculate it from opposite side:
MRP is 100/-
GST is 5%
Now deduct government GST from MRP i.e. remaining price after GST is MRP*100/(100+percentage as mention) i.e. 100*100/105=95.24.
GST= 4.76 .

Formula for Calculating PTR and PTS from any MRP under Goods and Service Tax (GST)

That is total GST that will go to Government’s gst department. Minor difference of gst will occur when you will bill to stockist and stockist will bill to retailer. That can be ignored and put this gst as standard. Every party will pay only that gst and this gst will be paid finally by customer. All other will get their gst refund from party they will bill.

Read Related: What is Goods and Service Tax?

How to apply for GSTIN?

PTR (Price to Retailer):

Now calculate price of retailer. Calculate it with similar formula as above Amount*100(100 + margin of Retailer) i.e. 95.24*100/(100+20)= 9524/120=79.36
Click Here to Download PTR/PTS/MRP calculator in Microsoft Excel Format

You can calculate any PTS/PTR online in below sheet. Just Change MRP Value and other values in Yellow color as per your need and wait for few seconds. You will get calculation online…

Price to retailer is calculated as per profit percentage you are going to give him i.e. generally nearly 20% or some time with scheme or may increase or decrease. Price to retailer will be approx. 79.36 plus 5% gst. As it should be nearly 83.32 to retailer.

If retailer sell it to customer with MRP 100/- then he gets approx. 20% profit. In case if he will take 5% gst from customer, he has to bill this product at 95.24/- plus 5% gst. GST will be compensated and Difference between 95.24-79.36= 15.88/-.

Then profit of retailer is 15.88*100/79.36=20.01%. You can further less or up profit of retail by increasing or decreasing it’s selling rate or percentage of margin.

PTS(Price to Stockist):

Now calculate price to stockist: Formula is Amount*100(100+margin of Stockist) i.e. 79.36*100/(100+10)= 7936/110=72.15/-
Price to stockist is calculated as per given profit percentage i.e. 10% in most of cases. May be high or low depend upon company or product, you are working. Price to stockist should be get product at 72.15/- plus 5% GST.
It will be nearly 75.76/- to stockist. Gst will be compensated with gst of retailer. Hence, 79.36-72.15=7.21/-. Here profit of stockist is 7.21*100/72.15=9.99% i.e. nearly equal to 10%.
Now you can calculate PTR or PTS at any MRP by this formula. Same you can apply to your c&f prices and net rates….

Calculating PTS/PTR value inclusive of GST (For Unregistered Person Under GSTIN):

Unregistered persons can bill to retailer as per calculation mentioned above. But they can’t mention or collect GST from retailer. They can issue invoice to retailer inclusive of GST without mentioning GST rate. For example MRP is 100/-
Retail Margin is 20%. GST is 5%. They can’t collect GST directly by mentioning GST in Invoice. They can invoice at PTR inclusive of GST. They can bill to retailer by calculating PTR(inclusive of GST) as follow:
PTR: MRP/(100+retail margin) x 100
= 100/120 x 100= 10000/120= 83.33/-
In This rate Retailer price 79.36/- plus 5% GST will be included. An unregistered person is not authorized to collect the tax, so they can’t add GST column in their invoice and have to bill inclusive of GST.Like wise PTS will be calculated.
PTS: PTR/(100+Stockist margin) x100 = 83.33/110 x 100 = 8333/110 = 75.76/-
In This rate Stockist price 72.15/- plus 5% GST will be included. An unregistered person is not authorized to collect the tax, so they can’t add GST column in their invoice and have to bill inclusive of GST. 

More Examples at Request by our Reader:

Query:

How can calculate MRP, PTR AND PTS kindly explain. Urgently message for one example with MRP 95.

Response:
If mrp is 95 Deduct 5% gst first Then calculate ptr and pts by following formula Amount*100/(100+percentage). Here you can place MRP, PTR  and PTS in place of amount to calculate particular price.
95*100/105= 90.47%
Remaining then deduct 20 percentage of retailer margin
90.47×100/120=75.39
This is PTR (Price to Retailer)
Now 75.90×100/110 = 68.53
This is PTS(Price to Stockist)One more example if mrp 57 then what will be ptr and pts
Deduct gst as applicable. We are considering 5% Then actual mrp will be after excluding of gst is 57×100/105= 54.28
Calculate PTR by formula is 54.28×100/120=45.23
Pts is 45.23×100/110= 41.11We can calculate ptr and pts with including of gst or excluding of gst. Both above example is excluding of gst what we had deducted in starting At every stage gst is added with invoice. But actual gst is paid by consumer. All middle men don’t pay gst from their pocket. They get it from next one in supply chain. There will be minor increase in gst during supply from company to c&f, c&f to distributor or distributor to retailer but this amount could be neglected during calculation.

 

Query: 2

How to derive the price list for if :
MRP is Rs.295/- including GST 5%
Stokiest Margin-6 %
Distributors margin 8%
Retailer Margin 15% on MRP
I will be thankful if you help me out.

Response:

MRP is 295/- included Gst. Calculate it in reverse direction. it will be more easy.
Now calculate Price to retailer (Included Gst) First:
Formula is Rate/MRP *100/(100+margin)
295*100/(100+15)=295*100/115=256.52/-.i.e 257
Calculate Price to Distributor(Included Gst): 257*100/(100+8)=257*100/108= 237.96 i.e. 238
Price to Stockist (Included Gst) will be 238*100/(100+6)=238*100/106=224.53 i.e. 225/-
If want to calculate without Gst then deduct 5% gst from mrp first and then calculate all as shown in this article.

Query 3:

I would like to know the formula of PTR or TRADE PRICE of pharmaceutical company . How to calculate trade price or ptr.
I am a distributor /wholesaler of pharma company.
These are the pharma company net rate and mrp
Rs. 11 net rate, 44.30 mrp
Rs.7.75 net rate, 16.50 mrp
Rs. 10 net rate, 32 mrp
Rs. 13 net rate, 42 mrp
Rs. 16.5 net rate, 65 mrp
Rs. 18 net rate, 80 mrp
Rs. 23 net rate, 80 mrp
Rs. 7 net rate, 35 mrp
Rs. 9 net rate, 44 mrp
Rs. 32 net rate, 150 mrp

Response:

Read in detail at How to calculate trade price or Ptr?
Formula is MRP(Rate)*100 divided by (100+Percent of margin)
PTR or Trade rate is calculate by above formula: (Supposing retailer margin is 20%)
44.30*100/(100+20)= 4430/120 = 36.92/-
16.50*100/(100+20)= 1650/120 = 13.75/-
32*100/(100+20)=3200/120=26.67/-
42*100/(100+20)=4200/120=35/-
65*100(100+20)=6500/120=54.17/- same continue as
8000/120=66.67/-
8000/120=66.67/-
3500/120=29.17/-
4400/120=36.67/-
15000/120=125/-

Hope you have found this article helpful. If you have any another method for calculating ptr and pts, you can share with our readers through comment or mail. We will update our article with better way of calculating. Please revert with your suggestions and queries at pharmafranchiseehelp@gmail.com
Read Here: How to calculate profit margin, net rates, trade rates in Pharma franchise/pcd Marketing?

Read Related:

22 Replies to “How to calculate Maximum Retail Price (MRP), price to retailer (PTR) and price to stockist (PTS) under GST?”

  1. The formula given herewith calculates the exact PTR and PTS but what will be the component of tax. what will be the actual rate and tax for the calculated PTR and PTS values the PTS we get .the example is MRP 100 Tax 13.5% the margins 20 and 10 % then we get PTR becomes 73.42 and PTS 66.75. My question what will be billing rate for retailer and stokist. means retailer will be billed at rate 73.42 and tax will be further added ?

  2. Calculate in same way only change the tax:

    MRP: 49
    Tax 12%
    Retail Margin 20%
    Stockist Margin 10%
    MRP (Excluding GST) will be: 49*100/112= 4900/112= 43.75/-
    PTR (Excluding GST) = 43.75*100/120 = 4375/120 = 36.46/-
    PTS (Excluding GST) = 36.46*100/110= 3646/110 = 33.15/-

  3. we are a new start up company and iam opting for composition delaer, so in this case i will not charge any gst on bills and in this case how should i calculate percentages ?

  4. We are new start up company and am opting for composition dealer in this case i will not charge any gst on bills so how should i calculate please suggest me ?

  5. We are new start up company and am opting for composition dealer in this case i will not charge any gst on bills so how should i calculate please suggest me ?

  6. @Kiran
    Procedure for you will also same. You won't charge but you have already given gst to manufacturer. In case you further don't charge gst or don't have gst registration, you will not be get reimbursement of gst That have been added in your costing.

  7. GST is applicable at Invoice value. If you are billing at stockist rate then it will be applicable at stockist rate. If you are billing with retailer rate then it will be applicable at it. MRP is inclusive of GST.

  8. @Seldom Hr
    Calculate in same way only change the MRP:

    MRP: 60
    Tax 12%
    Retail Margin 20%
    Stockist Margin 10%
    MRP (Excluding GST) will be: 60*100/112= 6000/112= 53.57/-
    PTR (Excluding GST) = 53.57*100/120 = 5357/120 = 44.64/-
    PTS (Excluding GST) = 44.64*100/110= 4464/110 = 40.58/-

  9. Sir how to calculate retailers price after gst rules implementation
    Before gst i used to give 20% margin on mrp of product and add 5.50% vat on the trp so what to do now if I continue the same procedure and add 12% gst on trp of product then there will no margin for retailers so kindly do the needful.

  10. Suppose if MRP: 150/-
    GST: 12%
    MRP (Excluding of Tax): 150*100/112=133.93/-
    Retail Margin: 20%
    Retailer Price: 133.93*100/120= 111.61/-
    Stockist Margin: 12%
    Stockist Price: 111.61*100/112= 99.65/

    Retailer Price will be 111.61 plus GST (12%)

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