PTR and PTS Calculation: How Medicine Prices Are Worked Out

Learning ptr pts calculation is essential if you work with medicine prices, because the price printed on a pack is not the price a retailer or a stockist actually pays. The printed maximum retail price, or MRP, is the top price a customer can be charged, and it already includes GST. Behind that figure sit two trade prices: PTR, the price to retailer, and PTS, the price to stockist. Each step in the chain takes a margin, so the price falls as a pack moves from company to stockist to retailer to patient. To work out those prices correctly, try our free PTR-PTS Calculator, which applies the same steps explained in this guide.

This guide explains the chain in plain language, shows each formula, and works through one example from MRP to PTS. Once you understand the order of the steps, you can check any invoice, quotation or margin claim without guessing.

The Method / Formula

The calculation works backwards from the MRP, and the order matters. First, remove GST. Then back out the retailer margin to reach PTR. Then back out the stockist margin to reach PTS. The three formulas are:

Price excluding GST = MRP including GST / (1 + GST rate / 100). Here, MRP including GST is the printed pack price, and the GST rate is the applicable percentage, such as 12%. Dividing by 1.12, rather than subtracting 12%, is the correct way to remove tax that is already included in the price.

PTR = Price excluding GST / (1 + Retailer margin / 100). PTR stands for Price to Retailer, the price at which a retailer buys from a stockist. The retailer margin is expressed on PTR itself, which is why you divide by 1.20 for a 20% margin instead of taking 20% off the higher price.

PTS = PTR / (1 + Stockist margin / 100). PTS stands for Price to Stockist, the price at which a stockist buys from the company. Again, the stockist margin is expressed on PTS, so you divide PTR by 1.10 for a 10% margin. Put together, the chain runs MRP including GST, then price excluding GST, then PTR, then PTS, with each step lower than the one before it.

How to Calculate PTR and PTS Step by Step

1. Start with the MRP including GST, exactly as printed on the pack, and note the GST rate that applies to the medicine.
2. Remove GST first: divide the MRP by 1 plus the GST rate as a decimal. For a 12% rate, divide by 1.12. This gives the price excluding GST.
3. Back out the retailer margin: divide the price excluding GST by 1 plus the retailer margin as a decimal. For a 20% margin, divide by 1.20. This gives PTR.
4. Back out the stockist margin: divide PTR by 1 plus the stockist margin as a decimal. For a 10% margin, divide by 1.10. This gives PTS.
5. Check the result by working forwards: PTS plus the stockist margin should return PTR, PTR plus the retailer margin should return the price excluding GST, and adding GST should return the MRP.
6. Round sensibly at the end, not in the middle. Rounding each intermediate step can shift the final price by a few paise, which matters when the calculation is repeated across thousands of packs.

Always confirm which margin base your supplier uses before you quote. In this method, each margin is expressed on the lower price beneath it, so PTR is the base for the retailer margin and PTS is the base for the stockist margin. If a supplier instead quotes a margin as a share of the higher price, the numbers will differ, and mixing the two conventions is the most common cause of disputes.

Worked Example

Take a medicine with an MRP of Rs 100 including GST, a GST rate of 12%, a retailer margin of 20% and a stockist margin of 10%. These are the figures used in the worked example on the calculator page.

Step 1, remove GST: Rs 100 x 100 / 112 = Rs 89.29. So the price excluding GST is Rs 89.29. Step 2, back out the retailer margin: Rs 89.29 x 100 / 120 = Rs 74.40. So PTR is Rs 74.40. Step 3, back out the stockist margin: Rs 74.40 x 100 / 110 = Rs 67.64. So PTS is Rs 67.64.

The full chain is therefore: MRP Rs 100 including GST, price excluding GST Rs 89.29, PTR Rs 74.40 and PTS Rs 67.64. Notice how the retailer margin in rupees is Rs 14.89 (Rs 89.29 minus Rs 74.40), and the stockist margin is Rs 6.76 (Rs 74.40 minus Rs 67.64). Each margin is a percentage of the lower price, not of the MRP, which is why the rupee amounts look smaller than 20% and 10% of Rs 100.

Common Mistakes / Good to Know

• Subtracting GST instead of dividing it out. Taking 12% off Rs 100 gives Rs 88, not Rs 89.29, because the tax is already inside the MRP. Always divide by 1 plus the GST rate.
• Applying margins to the MRP. The retailer margin is based on PTR and the stockist margin on PTS. Applying 20% and 10% directly to the MRP will understate both trade prices.
• Reversing the order. GST must come out before the margins, because the margins are calculated on the price excluding GST. Removing a margin from a tax-inclusive price mixes tax and trade profit together.
• Forgetting schemes and other charges. This calculation gives the standard trade prices only. Schemes such as 10+2 free, additional discounts, freight or special incentives are not included, so check whether your deal carries any of them before quoting a final cost.

Remember that PTR and PTS are trade prices, not profit figures on their own. A retailer’s actual profit also depends on operating costs, discounts given to customers and unsold stock, while a stockist’s profit depends on distribution costs and credit terms. Use PTR and PTS to check prices and negotiate fairly, not as a guarantee of earnings.

Frequently Asked Questions

For tax on a final price in a different system, see our VAT Calculator, and read our companion guide, How to Calculate VAT: Adding and Removing VAT Explained, for the full method.