Help & Reference
Frequently asked questions
Answers to common questions about beverage pricing, margins, case formats, and how to get the most out of Alculator.
Answers to common questions about beverage pricing, margins, case formats, and how to get the most out of Alculator.
FOB stands for "Free On Board." It is the price a supplier charges a distributor for one case of product at the point of origin — typically the supplier's warehouse dock or co-packer. Once the product is loaded, the distributor assumes responsibility for freight, insurance, and delivery costs.
FOB matters because it is the foundation of every downstream price in the three-tier system. Every number that follows — landed cost, distributor sell-in price, and the retail shelf price the consumer sees — is derived directly from the FOB. A small change in FOB gets amplified at each tier because margins are applied as percentages, not flat dollar amounts.
For example, a $1.00 increase in FOB per case becomes roughly $1.43 more at the distributor level (at a 30% margin) and approximately $2.20 more at retail (at a 35% retailer margin on top). This compounding effect means precision in FOB pricing is critical. Read more in our FOB Pricing Explained guide.
These two terms are often confused, but they produce very different numbers from the same inputs.
Gross margin expresses profit as a percentage of the selling price. Markup expresses profit as a percentage of the cost. The beverage industry standard is gross margin.
Gross Margin: Sell Price = Cost ÷ (1 − Margin%)A practical example: if your cost is $80 per case and you want a 30% gross margin, the sell price is $80 ÷ (1 − 0.30) = $114.29. If you accidentally apply a 30% markup instead, the sell price is $80 × 1.30 = $104.00. That is a $10.29 per-case difference — more than enough to erode your profitability.
Alculator uses gross margin throughout the calculator to match industry convention. For a deeper dive, see our Markup to Margin Calculator article.
Margins vary by category, channel, and geography, but here are common ranges:
These are gross margin percentages, not markup. The default sliders in Alculator are set to 30% distributor and 35% retailer — a reasonable starting point for most beer and RTD brands. You can adjust them globally or override per row if certain SKUs have negotiated different terms. For more detail, see our Distributor Margins guide.
Landed cost is the distributor's true all-in cost for a case of product. It equals the FOB price plus any additional costs required to get the product onto the distributor's warehouse shelf.
Common components to include:
In Alculator, the "Freight + Tax" column captures these additional costs per case. The distributor's margin is then applied to the landed cost, not just the FOB, which is an important distinction when modeling your pricing stack.
Working backwards is called reverse pricing. Instead of starting with FOB and calculating forward, you start with the retail price consumers see on the shelf and calculate backwards through each margin layer to determine the FOB you need to charge.
Retailer Cost = Retail Price × (1 − Retailer Margin%)For example, if you want a 4-pack to retail at $12.99 with a 35% retailer margin and 30% distributor margin, and your case is a 6×4 (six 4-packs per case) with $2.00 in freight and tax:
Alculator's Rev mode does this calculation automatically. Toggle the Fwd/Rev switch, enter your target retail pack price, and the calculator instantly shows the required FOB. Try it in the calculator.
Click the "+ Add Row" button below the pricing table to add a new SKU row. Each row is independent and can have its own product name, FOB price, case format, and freight/tax values.
Adding multiple SKUs is valuable for several reasons:
There is no hard limit on the number of rows you can add. Each row calculates independently, and all rows respect the global margin sliders unless you apply per-row overrides.
The global margin sliders at the top of the calculator set the default distributor margin and retailer margin applied to every row. When you adjust a slider, all rows that have not been individually overridden update instantly.
A per-row override lets you set a custom margin for a specific SKU. This is useful when a particular product has negotiated different distributor terms, or when you want to model on-premise vs. off-premise pricing for the same SKU. Per-row overrides are indicated visually so you can tell at a glance which rows use the global default and which have been customized.
To clear an override and return a row to the global default, simply remove the per-row value. The row will snap back to whatever the global slider is set to.
The calculator has two modes:
Toggle between modes using the Fwd / Rev switch in the calculator header. The input and output columns swap depending on the mode. All other settings — margins, case format, freight/tax — remain the same in both modes.
Reverse mode is especially helpful when entering a new market where you know the competitive shelf price but need to determine if your cost structure supports it.
Click the "Export" button in the calculator toolbar to download your current pricing table. The export includes all rows with their complete pricing breakdown: product name, FOB, freight/tax, landed cost, distributor sell-in, retailer cost, and per-unit retail price.
The export is formatted as a clean spreadsheet-ready file that you can open in Excel, Google Sheets, or any spreadsheet application. It is designed to be presentation-ready for distributor meetings, internal pricing reviews, or retailer sell sheets.
No data is stored on our servers. Everything runs locally in your browser, so your pricing information stays private.
In the overwhelming majority of transactions, yes. The three-tier system is built around case-level economics. Distributors purchase full cases from suppliers, warehouse them, and sell full cases to retailers. Pricing, margin calculations, and promotional programs are all structured at the per-case level.
There are limited exceptions. Some distributors offer "split case" or "each pick" programs for on-premise accounts that need individual bottles or small quantities. However, the economics of split-case picking are expensive for the distributor, and many charge an additional fee or require a minimum order that effectively prices the product higher than a full-case purchase.
For pricing purposes, you should always model at the case level. That is why Alculator uses per-case FOB and landed cost as the primary inputs, then calculates down to per-pack and per-unit pricing based on your case format.
It depends on what you are selling and where. The three-tier system — supplier, distributor, retailer — is a legal framework established after Prohibition that governs the sale of alcoholic beverages in the United States. In most states, alcohol producers are required by law to sell through a licensed distributor and cannot sell directly to retailers or consumers (with limited exceptions for taproom sales, farmers markets, or direct-to-consumer shipping where state law permits).
For non-alcoholic beverages and hemp-derived beverages (where legal), the three-tier mandate does not apply. Suppliers can sell directly to retailers, through distributors, or direct-to-consumer. However, many non-alc and hemp brands still choose to use the three-tier distribution model because distributors provide warehousing, delivery logistics, retailer relationships, and shelf placement that are difficult and expensive to replicate independently.
Regardless of your legal requirements, if you use a distributor, the pricing math is the same. Alculator models the full three-tier chain so you can see the end-to-end economics whether distribution is mandated or voluntary.
Hemp-derived beverages occupy a unique position. They are not classified as alcoholic beverages under federal law, so the traditional three-tier mandate does not apply. However, many hemp beverage brands use the three-tier distribution model anyway because it provides access to established retail channels and logistics infrastructure.
From a pricing perspective, hemp beverages follow the same margin math as beer or RTDs. Distributors typically apply 25–35% margins, and retailers apply 30–45% off-premise or higher on-premise. The key difference is regulatory: hemp brands may face state-by-state variations in licensing requirements, potency limits, and labeling rules that can affect which distributors and retailers will carry the product.
Alculator works the same way for hemp beverages as it does for alcoholic products. Enter your FOB, set your margins, choose your case format, and the calculator handles the rest. For more on the three-tier structure, see our Three-Tier System guide.
A case format is expressed as Packs × Units, where the first number is the number of retail packs in the case and the second is the number of individual units (cans, bottles) in each pack.
The format you choose in Alculator determines how the calculator breaks the per-case pricing into per-pack and per-unit retail pricing. Different formats can produce very different per-unit shelf prices even with the same FOB, which is why format selection is a strategic decision.
Even when two case formats contain the same total number of units, the economics can differ significantly because of how consumers and retailers think about pricing.
Consider a 6×4 case (six 4-packs, 24 total units) versus a 4×6 case (four 6-packs, 24 total units). Both have 24 cans per case. But a 4-pack and a 6-pack carry different consumer price expectations, different competitive sets on the shelf, and different impulse vs. stock-up purchase dynamics.
Use Alculator to model the same FOB across different formats side by side. Add two rows with identical FOBs but different case formats and compare the resulting per-pack retail prices. This helps you choose the format that positions your product competitively in your target channel.
Open the calculator and experiment with your own numbers — or explore our learning guides.