Pricing at your Furniture Dealer

Pricing on furniture at your local dealer can be hugely confusing and even overwhelming for you as a customer. It's terrible what our industry has done to pricing and how unstable it can be. You walk into a store, see the floor model price, then want to have different color legs on the piece or perhaps different pillows and then the order price is significantly more. What is going on?

Let's start by looking at what stores have to charge in order to stay in business. If a store does not make its margins AND generate cash flow, they cannot survive. Simple as that. I learned this lesson very well in my late 20's when I was in charge of pricing for Grand Union Supermarkets, Florida Division in the late 1970's. I was responsible for making sure all sixty-six stores had both competitive prices and stayed financially healthy. Buyers would do the purchasing, I was in the next office over setting the prices on what they bought for the stores. It was a tedious business and a penny on a Gallon of Milk made a difference! I brought that knowledge to The Keeping Room and for the next 37 years applied that religiously to furniture pricing resulting in a healthy business over almost four decades. I noticed that many stores that didn't last, failed to protect their margins and cash flow - they didn't understand that concept and one day would be out of money and simply have to close. Margins are also affected greatly by how costly the overhead is for the store and how many employees they have on staff. That's why you see higher prices on storefronts in beautiful locations and those that have lots of salespeople to help out. They have to have higher prices to cover those expenses.

Switching over to the producer side of things, every supplier has a main line price book, which is really geared to the Decorator market on better quality goods. Because Decorators cannot charge for their time and have to offer "Free" services, they have to make up the hours of research and layout work in what they charge their client. Plus, EVERY customer expects a discount. So, the MSRP is typically set at 3x the wholesale cost on goods. to allow that Decorator market to make their nut and still offer a discount. An item with a $ 5,000 wholesale cost will have an MSRP of $ 15,000 and be discounted from there depending on what that merchant needs for margin. That's why you see everyone discounting! Keep in mind that doesn't include shipping / delivery / warehouse costs, which can be significant.

This would be pretty easy if it were all that simple. but its not. Every supplier is always working some deals in one form or another and this confuses all of us - the merchant AND you as the retail consumer. The deals are all over the place and inconsistent both with what is offered and the timing. Nor do all dealers offer the same kind of deal. For suppliers though, moving units through the factory is all that matters from a business sense. The saying at the manufactuer is always "You can't take margin to the bank" and they will trade off profits for volume from time to time. Steady cash flow is the king when you have production lines working. How to they move units, then? Some have ongoing promotions, others put on a sale when orders slack off, and still another took they have are what we call "Top Pocket Deals" where a given merchant is offered a smoking hot deal on some items that is not given to other dealers, based on what they show on the floor, space given to a brand, etc. And then there are the over-stock situations (primarily with imports) that have to be ordered nearly a year out and can quickly stack up in a USA warehouse once they arrive and need to be moved out.

Savvy dealers will rarely order product from the main price book. Our floor stock is primarily "deal" product that we can mark down immediately from the book price. We store owners spend a lot of time looking for deal product that has appeal - we have to try to avoid the funky and not-selling product that no one else wants, either. I would always be on the phone calling companies when I had empty space to fill, so see what they could sell me at a good price. And if supplier "A" had nothing, they knew very well I would move to supplier "B" or to supplier "C" to get product, so it is very dog-eat-dog to not lose valuable floor presence in a store. Covid of course, changed everything - there were zero deals and zero product to be had. As a merchant you would grab anything that you could get your hands on to keep your store full.

Post-Covid, we are back to the old ways of doing business. Every supplier is hungry, deals are back and its all back to moving units out the door. I've been doing this long enough I know how to work it and get superb deals from my suppliers. Stores can them decide how apply those deal prices.

Option 1 - Mark at the book price and pocket the extra profit.
Option 2 - Apply your standard markup based on the deal price and move that unit(s) as a one-shot Special.

I have always been an Option 2 guy - pass that deal on and move the pieces (cash flow) then get more deals. However, this causes pricing inconsistency for clients and can be very confusing for them. Option 1 avoids that and maintains pricing consistency in the store.

Case in point (example).

This Sherrill sofa sold yesterday @ $ 1,991 (20% off the tagged price retirement clearance). It was marked $ 2,489. The customer almost didn't buy it because she had concerns it wasn't made well at $ 1,991. I had to explain to her in detail that a Sherrill Sofa is not a cheap piece of furniture, its a top tier brand. If I were to order this for her, based exactly as in this spec, it would cost $ 3,382 at my store.

Why was it $ 893 less than the order price in the first place? Simple, I got a deal on it. This piece came out of their showroom at the High Point Market as they were pulling out pieces (discontinued fabric on this one) to make way for new April Market stock.

https://www.myfurnitureforum.com/sho...-Taupe&p=46750

She left the store happy with the purchase, but she was still not clear on how the pricing worked and why this didn't cost more. I think she got a smoking hot deal on it. A new Sherrill sofa for under $ 2K? WOW.

What does this tell you as a shopper? Once again it comes down to trust your eyes, accumulate knowledge on what makes a good piece of furniture before you go shopping. Look at the sewing of the cover, the tailoring of the piece, the flex in the frame, the resilance of the cushion cores. Ask about the suspension system and lift a corner on a sofa to see if the frame flexs too much. Know the difference in a throw pillow made with polyester fiber fill vs a down fill. Recognize a deal when you see it.

I have some deal pieces in my store that I honestly cannot believe are still on the showroom. Don't even get me started on the Century Wing Chair in genuine Mohair covering.....most people don't even know what that is and that chair a quarter of the price to build a new one!