Guide
How much margin do you make buying furniture at a discount off MSRP?
If you buy furniture at a percentage off MSRP and resell it at MSRP, your gross margin equals that percentage. MSRP, the manufacturer's suggested retail price (also called the retail list price), is the price a supplier recommends to consumers. So buying at 25% off MSRP gives a 25% gross margin at full price, and buying at 50% off gives a 50% margin.
What is the difference between margin and markup?
Margin is profit as a share of the selling price; markup is profit as a share of your cost. They describe the same sale from opposite ends, which is why the numbers differ:
- Gross margin = (selling price − cost) ÷ selling price
- Markup = (selling price − cost) ÷ cost
- Markup multiple = selling price ÷ cost
A 50% margin is a 100% markup, or a 2× multiple.
What margin do you make at 25% and 50% off MSRP?
For a piece with an MSRP of $1,000:
| Your discount | Your cost | Sell at MSRP: margin | Markup multiple | Sell 10% above MSRP: margin | Sell 10% below MSRP: margin |
|---|---|---|---|---|---|
| 25% off (trade account) | $750 | 25% | 1.33× | 31.8% | 16.7% |
| 50% off (bulk wholesale) | $500 | 50% | 2.00× | 54.5% | 44.4% |
The last column shows how fast a sale erodes margin at a trade discount: a 10% promotion cuts a 25% margin to 16.7%.
What costs come out of that margin?
Gross margin is before your operating costs. For a furniture business those usually include:
- Selling costs: advertising, marketplace fees, payment processing.
- Fulfilment: delivery, if your supplier doesn't include it.
- Returns and damage: refunds and replacement freight.
- Overheads: showroom rent, staff, software.
Free delivery from the supplier removes one of the biggest costs on bulky items.
Which discount suits which business?
The 25% trade discount suits businesses that add value on top of the product: designers billing a design fee, stagers charging for a staging service, and online stores selling at or above MSRP with strong branding. The up-to-50% bulk wholesale discount suits retailers who carry stock and need room for promotions, overheads and a showroom.
At Artisan Furniture Canada, trade accounts (designers, retailers, online stores and dropshippers) get 25% off MSRP, and bulk wholesale orders get up to 50% off MSRP, with free delivery to all 10 provinces.
Margin for a whole furniture store
The per-piece margin above is only part of a store's profitability. For industry benchmarks across a whole furniture business, read furniture store profit margins in Canada.