Most U.S. launches that fail commercially do not fail on the product. They fail on arithmetic that was done once, early, in the wrong currency and with half the costs missing.
A brand converts its home price at the going rate, adds what feels like a sensible margin, and quotes it. Then the deductions start arriving — freight, duty, warehousing, a distributor, a retailer, promotional allowances nobody mentioned in the meeting — and by the second quarter the brand is contributing product at a loss and calling it market entry.
The opposite failure is quieter and more common than founders think. The price is set high enough to protect margin, and it lands two dollars above everything else in the shelf set. The buyer does not argue about it. They simply do not take the line, and nobody ever tells you that price was the reason.
Pricing is the one decision on this list that is genuinely hard to reverse. You can fix a label, change a distributor, replace an agency. Repricing a line that is already listed means renegotiating with every account that took it at the old number.
Everything downstream depends on one figure: what it costs to have a saleable unit sitting on a pallet in the United States. Not your ex-works cost. Landed.
The components:
Two things brands routinely leave out. Storage on unsold inventory — you are paying to hold stock for the months between arrival and sell-through, and a slow first year is expensive twice. And the cost of the units you never sell: damages, short dates, returns and the pallet that gets crushed. Build a wastage allowance in rather than discovering it as a variance.
Before you model anything
The Retail Readiness Assessment includes four questions on commercial readiness, and margin structure is the one brands most often fail. Five minutes, result on screen.
Take the assessmentThe mistake is to build up from cost. The discipline is to work down from the shelf price, because the shelf price is the only number the market actually sets. Everything between that and your revenue is somebody else’s margin.
Here is the shape of it. The figures below are illustrative — invented for arithmetic, not drawn from any client or any category — but the structure is what a real model looks like.
| Shelf price | $24.99 | What the shopper pays |
|---|---|---|
| Less retailer margin | −$10.00 | The retailer’s share, set by channel norms |
| Retailer’s cost | $14.99 | What the retailer pays the distributor |
| Less distributor margin | −$3.75 | Where a distributor is in the chain |
| Your invoice price | $11.24 | What you bill |
| Less trade spend | −$1.35 | Promotional allowances, features, new-item support |
| Less deductions and freight allowance | −$0.55 | Chargebacks, damages, freight terms |
| Net realised revenue | $9.34 | What actually reaches you |
| Less landed cost | −$6.20 | Everything from the factory gate to a U.S. pallet |
| Contribution per unit | $3.14 | Before any marketing, salary or overhead |
Three things to notice about that structure, none of which depend on the specific numbers.
First, the gap between invoice price and net realised revenue. In the example that is roughly seventeen percent, and it is entirely made up of costs that are negotiated or incurred after the buyer says yes. A model built before the meeting will not contain them, which is why the pre-launch spreadsheet is almost always optimistic.
Second, contribution is not profit. The figure at the bottom still has to pay for the commercial function, marketing, your team and everything else. A line that looks healthy per unit can still lose money at real volumes.
Third, small movements at the top are enormous at the bottom. Pull the shelf price down by two dollars to match a competitor and, with the same margin percentages, contribution falls by roughly a third. That is why the shelf price has to be established before the model is built rather than negotiated afterwards.
There is no single U.S. retail margin. There is a set of channel norms, and they differ enough that a price which works in one is unworkable in another.
Because the norms differ, model each route separately before choosing one. The answer is sometimes that a brand can afford specialty but not grocery, or marketplace but not either — and that is a useful answer to have before you spend a year pursuing the wrong one.
A price is not high or low in the abstract. It is high or low relative to the twelve products sitting next to it, at the size a shopper is comparing, in the store the buyer is thinking about.
So the benchmarking exercise is specific: identify the actual shelf set for your category in the actual retailer, at the pack size you intend to sell, and locate your price in it. Not the category average across the United States. That set.
Then answer the buyer’s question rather than your own. They are not asking whether your price is fair. They are asking whether a shopper standing in front of that shelf will reach for your product at that price often enough to justify the facings, and whether your line earns them more per linear foot than what it displaces.
Where a premium is genuinely defensible — a certification, a format, a clinically supported ingredient — it needs to be visible on pack in the two seconds a shopper spends looking. A premium that requires explanation is a premium that will not survive the shelf.
This is the section brands skip and then spend a year absorbing.
Trade spend is the money that comes off your invoice to buy activity: temporary price reductions, ad features, display support, new-item allowances. In most chain retail it is not optional, it is the ordinary cost of holding shelf space, and it is negotiated after the listing decision rather than before it. Budget for it as a percentage of net revenue from the beginning.
Slotting or new-item fees appear in some channels — common in grocery and mass, less so in natural and specialty. Treat them as negotiable and plan for the possibility rather than assuming their absence.
Deductions are the quiet ones. Small charges for late delivery, incorrect carton marking, a missing advance shipping notice, a short shipment, a damaged pallet. Each is minor. In aggregate, across a year, they are frequently the difference between the plan and the actual — and unlike trade spend, they are entirely within your control. Every deduction is a service failure you could have prevented.
The practical consequence is that operations is a pricing issue. A brand that ships accurately keeps money that a brand shipping sloppily hands back.
A minimum advertised price policy sets the lowest price at which your product may be advertised. If you sell in the United States through more than one channel — and almost every brand does, because marketplace comes first — you need one before the first unit goes live.
The reason is not tidiness. It is that a retail buyer will check your marketplace price, and a marketplace price below the shelf price they are being asked to protect ends the conversation. Not with an argument. They simply stop returning the call, because you have just demonstrated that you will undercut them.
Three things make a policy work in practice. It must be written and distributed to everyone who resells you. It must be applied consistently, because a policy enforced selectively is worse than none. And you need a way to see violations, which in practice means monitoring rather than hoping.
The related problem is unauthorised sellers — stock that reaches a marketplace through a route you did not authorise and is priced accordingly. Brand registry, controlled distribution agreements and consistent enforcement are the tools, and all of them work far better from the start than retroactively.
One more, easy to miss: your home-market pricing is visible. A U.S. buyer looking at a permanently discounted price in your domestic market has learned something about what your product is really worth. It comes up more often than founders expect.
Pack size is a pricing decision wearing different clothes.
The price point a shopper will accept for a category is fairly stable, and the lever you have is what you put inside the pack. A count or fill that lands you at an awkward shelf price can often be adjusted to land on a familiar one — and a familiar price point converts better than a rational explanation of why yours is different.
Channel differentiation matters too. Where you can, give different channels different pack configurations, so a shopper cannot directly price-compare your club pack against your specialty pack against your marketplace listing. This is ordinary practice and it protects everyone in the chain, including you.
Be careful with tooling commitments. Changing a pack format after launch means new artwork, new moulds or new cartons, and often a new round of compliance review. Model the pack architecture before you commit, not after the first reorder.
Build the landed cost from real numbers, not estimates. Work down from the shelf price rather than up from cost, and put trade spend and deductions in the model where they belong — they are the difference between the plan and the outcome. Model each route to market separately before choosing one. Benchmark against the shelf set a buyer is actually looking at, not a national average. Write a MAP policy before the first unit is live, and enforce it consistently. Then hold the price, because repricing after listing is the most expensive correction in this document.
This guide is educational and reflects our operating experience in U.S. retail. It is general information, not legal, tax or financial advice. The worked example uses illustrative figures for arithmetic only and does not represent any client, category or benchmark. Margins, fees and terms vary by retailer, channel and category. Last reviewed August 2026.
Supporting guides in this cluster
Related
Where freight, duty and storage come from in the landed cost model.
Read →Three routes to shelf, who decides, and how margin moves through the chain.
Read →The model, the benchmark, the price list and the policy — built for you.
Read →U.S. Market Assessment
Send us your product and your numbers. We come back with a written assessment of what entering U.S. retail would require and what it would realistically return.
