I’m shopping for new living room and bedroom furniture. Prices range from okay for junk to outrageous for reasonably nice stuff. Even some of the expensive stuff is simply veneered plywood or fancy pressboard. I’d like to buy tasteful pieces that are likely to last for years–meaning the more expensive furniture.
So, what’s the usual mark-up on the better furniture?
I’ve checked that out in the past and have come to the conclusion it’s 300% at the finer places like Ethan Allen.
This because I called the manufacturers (look at the label or tags)- and because I have a builders contractors license, offered me prices less than half.
So Ethan Allen has to be getting at least that or a better break than that.
I suspected it might be that high, even taking into consideration advertising and other overhead costs. Realistically, how much play is there in the numbers when negotiating the price?
I seriously doubt it’s 300% (list for 1,000, wholesale for 250).
I figured it was at least 100% (list for 1,000, wholesale for 500). I ran into some info years ago to figure that, but I don’t recall what the info was.
Bolding mine. Advertising and other overhead costs have nothing to do with mark-up. Mark-up, by definition, is based on the cost of the goods.
Ahh–thanks. Out of curiosity, where would the funds then come to pay for overhead costs?
Well, my GF works for an interior design showroom and I’ve seen mark-ups far greater than that on some pieces of furniture. Granted, the price tag on the thing is what the customer pays; the decorators that actually shop there pay at least 20-30% less on most pieces. The showroom itself still has 300-700% markup on most things.
Keep in mind that this is a high-end showroom. It ain’t Wal Mart. The showroom sells $40,000 tables, $20,000 sofas and $500 pillows. You don’t sell that kind of thing every day, so part of the markup basically amounts to a “storage charge” for keeping it on the floor for so long.
From the gross profit generated by the mark-up. Methinks you’re not clear on terms.
COST - what the retailer pays the manufacturer for the goods
SELLING PRICE - what the retailer sells the goods for
MARK-UP - the percentage of the cost which is added to the cost to determine the selling price
GROSS PROFIT - selling price minus cost
NET PROFIT - gross profit (typically in the aggregate) minus expenses other than cost
Example: widget costs me 100. I mark it up 150%, sell it for 250. Gross profit on widget is 150. (Net profit is hard to figure on one widget, you would have to apportion rent, utilities, insurance, taxes, payroll, etc. on a per widget basis to do so.)
Well blow me down! I’d heard that jewelry stores had 500-600% mark-up, didn’t know that at least some furniture stores do. I still suspect that less lofty stores (e.g. Ethan Allen) perhaps aren’t up in that range, but I can’t say that I know.