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

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In This Article, we will cover topic-

  • PTR/PTS calculator
  • 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

PTR/PTS Calculator:

Definitions of MRP, PTR and PTS

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.

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/-.

Factors that influence the calculation of the Maximum Retail Price (MRP)

Several factors can influence the calculation of the Maximum Retail Price (MRP) in the pharmaceutical industry. These factors can include:

  1. Manufacturing Costs: The cost of manufacturing a pharmaceutical product can have a significant impact on the MRP. These costs include the cost of raw materials, production, packaging, and labeling. The higher the manufacturing cost, the higher the MRP.
  2. Research and Development Costs: Research and development costs can also affect the MRP. Developing a new drug or product involves extensive research, testing, and approval from regulatory authorities. These costs are factored into the MRP to ensure that the pharmaceutical company recovers its investment.
  3. Taxes: Taxes such as excise duty, customs duty, and sales tax can increase the MRP. The tax rate varies from state to state and country to country.
  4. Marketing and Distribution Costs: The cost of marketing and distribution can also influence the MRP. Pharmaceutical companies invest in marketing campaigns and sales promotions to increase brand awareness and boost sales. The costs associated with these activities are factored into the MRP.
  5. Profit Margin: A profit margin is added to the total cost of manufacturing, research and development, taxes, and marketing and distribution costs to arrive at the MRP. The profit margin ensures that the pharmaceutical company earns a profit on the sale of the product.
  6. Competitors MRP: It is important to conduct market research and analysis to identify the MRP of similar products offered by their competitors. This information is then used to ensure that the MRP of their products is competitive in the market.

In summary, the calculation of MRP in the pharmaceutical industry or any other industry is a complex process that involves considering several factors. Accurate pricing strategies are crucial for the success of a pharmaceutical franchise business or any business , and franchisees should ensure that their pricing strategies comply with legal and regulatory requirements while remaining competitive.

Price To Stockist (PTS)/Price To Retailer (PTR) Calculation:

Here we will calculate price to stockiest (PTS) and Price to Retailers (PTR) with any given MRP and margin percentage.
For Margin percentage in pharmaceutical sector check: profit margin in pharmaceutical industry (Manufacturer to retailers)

Things Required:

Maximum Retail Price
GST value (5%, 12%, 18%, 28%)
Retailer Margin
Stockist Margin

Suppose
MRP = 120/-
GST value = 12%
Retailer Margin = 20%
Stockist Margin = 10%

First you need to deduct retailer margin from MRP. This will give a net value that in other words we can say PTR including GST like below:
Formula used will be MRP*(1-Retailer Margin %)
Net value = 120*(1-20%) = 96/-

PTR Calculation:

Now calculate Price to retailer. Price to retailer (PTR) will be calculated by dividing above net value from GST factor value. For that you need to first calculate GST factor value. Formula for GST factor calculation is finding below:
GST Factor = (100+GST)/100
GST Factor value = (100+12)/100 = 112/100 = 1.12
PTR calculation formula = Net Value / GST Factor = 96/1.12 = 85.71/-

PTS Calculation:

Price to stockist will be calculated by deducting stockist margin percentage from retailer price. Formula for calculating price to stockist (PTS) is like:
PTS calculation formula: PTR*(1 – Stockist Margin %) = 85.71*(1-10%) = 77.14/-

Other Calculations:

If you want to calculate other calculations like Cnf price, sub stockist price etc then you can use formula like describe above. Suppose CnF margin is 6% then it will be calculate by below formula:
CnF (Carrying & Forwarding Agent Price) = PTS*(1 – CnF margin %) = 77.14*(1-6%) = 72.51/-

Read Related: What is Goods and Service Tax?
How to apply for GSTIN?
Medicine wholesale business profit margin

Question and Answer Related to MRP, PTR and PTS

Question: PTR meaning in pharmacy?
Answer: Price to retailers i.e. at which rates pharmaceutical company or distributor or stockiest sell goods to the pharmacy store.

Question: MRP stands for
Answer: Mrp is stand for maximum retail price that is to be paid by actual consumer for any product or services.

Question: Who decides MRP in India?
Answer: MRP is decided by the owner of that brand i.e. Company, firm or enterprises or individual. In some regulated sectors like pharmaceutical, some products fall under price control as per DPCO. Products that come under price control, maximum mrp limit is fixed by regulated authority. But for other products, no mrp restriction and one can fix mrp as per their need or market need.

Question: How to calculate gst on mrp?
Answer: GST is generally included in MRP. You can’t further add gst on mrp. You can less gst from mrp and calculate mrp without gst by formula i.e. MRP w/o gst = MRP*(1-GST%)

Question: What is difference between mrp and selling price?
Answer: MRP is maximum amount for that product or services but selling price is the price where a business consider that it’s profitable for them to sell at that price. For example if a product has 95 rs mrp then you can’t sell it above this price but if distributor sell it to retailer at retailer price i.e. 67.86/- or any net rate i.e. 45 rs or any other value then it will be its selling price.

Question: What is mrp formula for inclusive of vat?
Answer: Vat (Value added Tax) was tax structure before gst implementation in India. If you want to calculate mrp inclusive of vat then you can replace gst with vat and calculate your mrp from above calculations.

Question: Which is correct formula for calculation of retail price of formulation from above two method?
Answer: Both can be used but first method is more acceptable and used by most of business.

Question: How to do reverse calculation of gst?
Answer: If you have purchased a good at 100/- from unregistered person and gst of that product is 5%. Then your reverse calculation will be 100*5% = 5/-. Now you have to pay that amount at gst portal in supply extract to reverse charge column after that you can claim input of that gst paid by you at input tax (reverse charge) column at gst portal.

Question: Can anyone sell a product more than its mrp?
Answer: No one can sell a product more than its mrp. As per the Legal Metrology Act 2009, if the retailer sells a product at a price higher than the MRP, shall be liable to pay a fine or face imprisonment.

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?

25 Comments

  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. Yes retailer rate will be 73.42 plus 13.5% tax

  3. HOW TO CLACULATE PTR PTS FOR AN MRP OF 49 UNDER NEW GST

  4. 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/-

  5. Since MRP in pharma is inclusive of all taxes how to calculate PTS AND PTR with 10% and 20% margin. Take example of MRP Rs 60 and GST is 12%

  6. 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 ?

  7. 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 ?

  8. 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 ?

  9. Kindly inform us whether gst is to be charged on mrp or stockist price

  10. @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.

  11. 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.

  12. @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/-

  13. 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.

  14. 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%)

  15. Therefore, people need more day time online.

  16. how to calculate PTS and PTR for MRP 85 and GST 12%

  17. how to calculate PTS and PTR for MRP 85 and GST 12%

  18. What should mrp with 5%gst
    My product value with profit 385
    Distributor 15%
    Retailer 30%
    Plz suggest calculation

  19. I m a manufacturer
    While calculating Material cost . Should we calculate including gst. Example – I m getting a material
    Basic price is 10
    GST is 18%
    Total Rs 11.8

    So while calculating Mrp of final product.

    Should I take basic price tht is Rs 10
    Or including gst 11.8
    I must calculate.

    Than margin

    All wht u mentioned.

  20. hi
    i am ravi i have a one small cleaning products company so i dont have any idea in making MRP and Retails price i am a reseller so please help me

    my number is 7846948443

  21. Hi
    MRP is 450.
    We are providing offer price @250. Can the retailer sells product @250+GST?

    1. Yes, Retailers can sell @250 + gst as you are selling below mrp.

  22. It is seen that some Manufacturers fix very high prices as MRP (without any consideration to Cost of Production) and allow huge discounts on MRP. Is this legally correct?

  23. hi
    MRP is 349
    DISCOUNT 10%
    GST 12%
    Mfg. Margin(%) 25
    Stockist Margin(%) 12
    Retail Margin(%) 25
    Plz calculet pts and ptr with gst and without gst

  24. mrp is 349 and discount 10% selling price 314
    gst calcutale on mrp or selling price ?

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