Calculate your exact distributor margin percentage, monthly net profit after freight and overheads, and annual earnings from any FMCG, pharma, electronics, or industrial distributorship.
How Distributor Margin Works
Distributor margin is the difference between the price you buy from the company and the price you sell to retailers. Net profit is margin minus freight, handling, and operational costs.
Gross Margin % = ((Dealer Price − Distributor Price) / Dealer Price) × 100
Net Profit/Month = (Monthly Sales × Gross Margin %) − Monthly Overheads
Annual ROI = (Annual Net Profit / Total Investment) × 100
Example: You buy at ₹80 (distributor price), sell to retailer at ₹100 (dealer price). Monthly throughput ₹5L, overheads ₹15,000:
Gross Margin = 20%, Net Monthly Profit = ₹1,00,000 − ₹15,000 = ₹85,000
Distributor Margin Benchmarks — India 2026
Category
Gross Margin
Net Margin (after costs)
FMCG / Foods
5–12%
3–8%
Pharma / OTC
10–20%
7–15%
Electronics / IT
8–15%
5–11%
Apparel / Textiles
15–25%
10–18%
Industrial / B2B
10–20%
7–14%
FMCG Beverages
6–10%
4–7%
Distributor Margin FAQs
A good distributor margin in India is 10–20% gross margin. Below 8% makes it hard to cover freight (1–3%), warehousing, and staff costs. FMCG distributors compensate with high volume. Industrial and pharma distributors earn more per unit but move lower volumes. The key metric is monthly net profit, not just margin %.
GST is generally neutral for registered distributors since you claim input tax credit (ITC) on purchases and collect GST on sales. The net GST impact is near zero if your sales and purchases are in the same slab. However, if you serve unregistered retailers (under composition scheme), you may not be able to pass on GST, slightly compressing your effective margin.
Working capital for a distributorship typically covers: 15–30 days of inventory, 30–45 days of retailer credit (outstanding receivables), security deposit to the company (1–3 months of purchase value), and a monthly operating buffer (rent, salaries, transport). Use our Working Capital Calculator to get an exact figure.
Trade discount is the % off the printed dealer/MRP price that the company gives you. Your margin is what's left after you sell to retailers at dealer price. If the company gives you a 15% trade discount and you sell to retailers at 5% off dealer price, your effective margin is 10%. Companies also offer performance incentives and scheme discounts (typically 0.5–3% extra) on hitting monthly targets.
