Retailer buys from wholesaler and sells to customer.
Retailer has
costs, (like rent, employees, taxes, loss/breakage, advertising, etc.) and
needs to make a profit (which is the reason they are in business). Those added
items must be placed on the price charged the customers, above what the
retailer paid for the product.
Many costs a
wholesaler incurs don't change much, if selling one or a thousand of something
(say the phone bill, or clerks payroll for taking an order are the same if for
1 or 100 of something). So, as long as they sell a lot of something, they can
sell it for less than if they sold one of it. Hence, the wholesale price is for
wholes (or large) quantities.
Wholesale is a
bulk sale by a manufacturer or distributor to for resale to a retailer. Retail
is any sale to an individual or company for end use. In almost all states it is
illegal to sell wholesale to an individual, or claim to sell wholesale when it
is for end use and not for resale. Also in most states wholesalers may not sell
to the public. Wholesale sales do not carry sales tax, as sales tax is charged
to the end user. Thus is a "wholesaler" were to sell an individual
something and charge the sales tax it would be by definition a retail sale and
it would be deceptive to claim that it was a wholesale sale or that the merchant
was a wholesaler. It is unethical for some one to break the law. One should
strongly consider whether or not one should do business with any unethical
party as it is likely if that party bend or break the rules he or she is more
likely not to be honest with you or honor warranties etc. End result, you get
what you pay for.
Retail is marked
up from the price the wholesaler sold it for to the retailer. The wholesaler
usually gets their goods and pricing from the manufacturer which is marked up
as well.