Why Keystone Pricing and Net-60 Terms Leave a New Brand Funding Two Months of Shipments

A new fashion brand that sells to stores is paid less than the shelf price, and usually paid after the goods have shipped. Wholesale terms set the unit price and the number of days before cash arrives. Together they determine how much a founder must fund before a collection sells through.

The figures below come from business reference pages, an advisory firm’s analyses, Faire’s help center and JOOR’s wholesale research. They describe common structures rather than fixed rules that every buyer accepts.

Keystone Pricing Puts Wholesale Near Half of Retail

Keystone pricing sets the selling price at roughly double the cost. Racklify, a business reference site, uses a $20 wholesale cost to reach a $40 retail price. That is a 100 percent markup, but the gross margin is 50 percent, because half of the retail price is gross profit.

The same convention appears from the brand’s side in Eightx’s analysis of wholesale and direct margins. Retailers buy at roughly 50 percent of the manufacturer’s suggested retail price, so a $100 product wholesales at about $50.

Eightx also describes a higher structure it calls keystone plus, at 2.2 to 2.4 times cost. That leaves the retailer a margin of 55 to 58 percent. The difference matters when a brand sets its own margin target, because a 100 percent markup and a 50 percent gross margin describe the same price.

Net-60 Collection Timing
Eightx models collection on net-60 terms at about 72 days, compared with about 42 days on net-30 terms.

Pricing and Invoicing a First Wholesale Order

A first order starts from the cost of each unit and works toward a wholesale price that leaves room for the retailer. Racklify’s example uses a $12 wholesale cost against a $24 keystone retail price. From the $24 retail price, it deducts the $12 cost, then $4 for fulfilment and shipping, $1 for payment fees and a $2 promotional allowance. That leaves $5 of contribution per unit.

Fixed costs decide whether that $5 is enough. Racklify allocates $6 of fixed cost per unit to the same product and finds a $1 loss per unit at keystone pricing. The example shows why a keystone price needs fixed costs allocated before it is judged viable.

Invoice timing depends on the channel. On Faire, the wholesale marketplace, a retailer on Net 60 pays 60 days after the order date. If an order takes more than 14 days to ship, the 60 days run from the ship date. Faire’s help page says the platform covers the upfront cost of the order. The page does not say when brands receive their payouts, so that timing is not confirmed here.

Minimum order sizes are not covered by the sources used for this piece, so no figure is given.

Net-60 Terms and the Cash Gap

Net-60 terms move the collection date, not the invoice amount. Eightx models net-30 invoices as collected in about 42 days, net-60 in about 72 days and net-90 in about 100 days. It says net-60 can stretch to 70 to 75 days if a brand does not chase payment, and that realised collection often runs 10 to 15 days past stated terms.

On that model, a brand billing $10 million a year on net-60 carries roughly $2 million in receivables at any time. The apparel cohort runs well over a hundred inventory days, so Eightx estimates a cash cycle of more than five months.

Carrying that balance has a cost. Eightx’s table puts the annual carry on 72 days of receivables at about $23,700 per $1 million of net-60 sales at a 12 percent cost of capital, and about $35,500 at 18 percent. On net-60 terms, a brand can wait more than two months for cash it has already shipped.

Eightx recommends adding 2 to 5 points to wholesale pricing to cover that carry, and charging more for net-60 or net-90 than for net-30.

On net-60 terms, a brand can wait more than two months for cash it has already shipped.

Financing, Deductions and Markdown Support

Eightx lists two common ways to bring cash forward. Invoice factoring advances 70 to 90 percent of an invoice, and up to 96 percent, at about 1 to 5 percent per 30 days. Purchase-order financing funds up to about 100 percent of supplier cost at about 1.5 to 6 percent or more per 30 days. Eightx describes these as market norms rather than quotes.

A promotional allowance, such as the $2 per unit in Racklify’s example, is subtracted from contribution per unit.

Return and markdown allowances are not sized in the sources used for this piece. Eightx’s cash-flow analysis gives no rate for them, and no typical range is set out here. Racklify gives formulas for a routine 25 percent promotion, to recalculate the effective price and margin, but does not work out the resulting numbers.

When Direct-to-Consumer Sales Come Out Ahead

Eightx puts apparel direct-to-consumer gross margin at 50 to 60 percent, citing Triple Whale’s 2025 ecommerce benchmarks. It puts brand-level wholesale gross margin at 30 to 40 percent. In its worked example, a $100 product with $30 of cost earns a 70 percent gross margin sold direct and a 40 percent margin sold at keystone wholesale.

Direct sales carry their own selling costs. Eightx puts paid acquisition at 20 to 30 percent of revenue. It cites a median direct contribution margin of 15 to 20 percent, with the top quartile above 28 percent, also from Triple Whale’s 2025 benchmarks.

The comparison shifts with volume. In one Eightx illustration at modest volume, direct contributes 25 percent and wholesale 18.5 percent. Its advisory work says wholesale contribution margin usually lands in the 30 to 40 percent band. Among public consumer brands, Eightx cites a 2022 BMO Capital Markets analysis showing wholesale EBIT about 8 points above direct EBIT, and notes that the figure predates later increases in acquisition costs.

JOOR’s wholesale research says 55 percent of brands rank wholesale as their most profitable channel. The method behind that figure is not stated in the material used here.