The Furniture Industry Is A Secret Cabal

“Most people do not realize that home furniture has a 200% to 400% markup on it. Some has less, but that is where the majority falls. In fact my friend was a furniture industry insider and at the Highpoint show, a furniture company told him to mark up the price of a wall unit by 400%. One wall unit he came back home with for $1800 had a retail price of $6500. So when these big stores advertise in the local papers with 50% off MSRP sales, they could still be doubling their money. Not only that, many stores advertise their sale prices are 50% off MSRP, yet if you dig a little deeper, you might find that they never sold the pieces at MSRP to begin with, so they are really just dropping their price maybe 5 to 10%. Some stores don’t drop their price at all, because they were already at MAP. This means that store really is not having a sale!”

You’ll find that manufacturers set their so called “MSRP” price, and then usually in secret between them and the home furniture stores, there is another price called MAP, which stands for Minimum Advertised Price. This MAP price is the bottom threshold selling price allowed by the manufacturer. One mattress store manager even showed me the MAP price on all his mattresses. His sales people get 15 to 20% commission for selling at MSRP, and they only get 7-10% if they sell at MAP. Naturally you’ll find a lot of resistance from salespeople to sell at MAP. In my opinion, the term MSRP should be illegal to associate with furniture. Street Price is a better number to use.

Most manufacturers dictate to the stores that they cannot sell the furniture for less than MAP or they can lose their franchise. Often times there is a penalty, sometimes up to $15,000 written into the contract. Many stores like to cut to the chase and just sell at the MAP price. Most of the online furniture discounters in the Carolinas tend to sell at MAP price. If you call them to talk price, always ask them to go lower, until you hear them mention that they are already at the MAP price and cannot go lower.

If you are talking to Online Retailer A and you have quotes from Online Retailer B, ask Retailer A to beat that quote. Verify the price across other sites as well. By selling at the MAP price, a furniture store still makes a decent profit, and you get a nice “discount” off some useless MSRP number that really means nothing anyway. That’s how the game is played. It’s kind of stupid, there’s a lot of charades and smoke screens, mixed in with misinformation, but that’s the game.

We went into a mattress store and simply stated which model of Stearns & Foster mattress we wanted, and talked the sales person down to the MAP price. I always ask them “what is the MAP price for this mattress?” This startles a lot of salespeople, who are not accustomed to us “morons walking in off the street with our knowledge and internet prices”. Sometimes it involves going to a few home furniture stores to learn for real what the MAP price is. Some home furniture stores like to lie and quote you an MAP price this is higher than the actual MAP price for your furniture. Some may lie to you and say there is no such thing as MAP. Unfortunately there is no Kelly Blue Book or NADA book for us to lookup home furniture prices or furniture store “dealer cost”, so you cannot determine how much MAP is, you have to shop around and try to get a consensus, based on what salespeople are willing to tell you. Please don’t email me asking where you can look it up, it’s nonexistent. They don’t have to tell you the MAP. You also don’t have to open your wallet.

- Anonymous

Lessons:

  • The value of good research
  • The need to comparison shop
  • With price-negotiable goods, try asking straight-out for “MAP”
  • Remember that your ability to walk away is your strongest negotiation tactic, never forfeit it by getting emotionally attached to a purchase

RELATED: What Is Minimum Advertised Price?

(Photo: Paul Keleher)

Comments

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  1. Geekybiker says:

    I know matresses at least are a huge scam. When they offer you 50% off when you walk for the door, you wonder how much they are normally ripping people off for.

  2. Xerloq says:

    This is old news, but I’m glad it came around again. What I want to know is how to buy furniture for a couple points over cost.

  3. TurboWagon00 says:

    That tactic wont work with mattresses for well-documented reasons. In a nutshell, manufacturers protect their dealers by selling *slightly* different versions of mattresses to each reseller, making cross-shopping all but impossible. This also happens in consumer electronics (and other industries too , Im sure).

  4. Anonymous says:

    This is pretty typical of many industries. I personally worked selling jewelry for Zales Corp. and the markup on items like gold chains is upwards of 400-500%; diamond markup is slightly less. This is why many stores can afford to advertise certain items at deals such as 50% off like this article states. People just need to think about this when they’re purchasing expensive items and determine if it’s really worth it to purchase.

  5. Buran says:

    OK, out with it. Who offers decent furniture with the least markup?

  6. Jasmo says:

    Retail markup – what a concept! What’s next, charging interest on loans?

  7. ElizabethD says:

    New furniture sold in most stores (as opposed to hand made by craftsmen) is atrociously overpriced AND shoddily made, with the cheapest materials. It’s nauseating. We just had to replace a bunch of furniture this past year, and it was not a pleasant experience. The crap that came from JC Penney’s web site was the worst; we sent most of it back. (Guess what! It was “made in China.”)

  8. Toof_75_75 says:

    @ElizabethD:

    As long as you didn’t put the furniture in your mouth you should have been ok :-p

  9. chili_dog says:

    Hey, if you never had to pay for a business then this seems like a huge rip-off. But lets face facts, the only way there is a store is because there is more, much more being paid for products. Heck, in my cell phone business I have an AVERAGE mark up of 6.3 times.

  10. ceejeemcbeegee is not here says:

    In regards to mattresses, the problem with these markups is you are possibly getting an inferior product. My dad’s garment co sat across the industrial alleyway from a mattress refurbishing plant. They picked up discarded and used mattresses from the curbs, stripped them to the frames, and re-upholstered them. Half the shipment was labeled ‘refurbished’, the other half was labeled ‘new’ and sent to a MAJOR mattress company. I’m sure most people have these “new” mattresses in their home now.

  11. ceejeemcbeegee is not here says:

    @chili_dog: Apparently, many here at consumerist.com have a problem with people selling you things and businesses making money.

  12. rubberpants says:

    @buran
    IKEA

  13. Nytmare says:

    @ceejeemcbeegee: Apparently, many commenters here at consumerist.com have a problem with consumerist.com writing words and paragraphs, and linking to articles.

  14. MENDOZA!!!!! says:

    for a percentage of the cost, I’ll drive to Highpoint, shop for you, and have the company deliver it.

  15. ceejeemcbeegee is not here says:

    @nytmare: Apparently, many commenters here at consumerist.com have a problem with other commenters writing words and paragraphs, and expressing their opinions.

  16. Anonymous says:

    I own a small custom furniture and design store for baby and children (we don’t make the furniture, we have vendors that do) and our mark up on furniture is only 2 to 1, which barely has a profit margin of 5-10%. Granted the custom wall units are selling at 10 to 20K and we buy them for 5 to 10K. Advice for those wanting a discount: be very nice and accommodating to the designer and ask for a discount towards the end.

  17. Xerloq says:

    @ceejeemcbeegee: I’ve got no problem with companies making money (or the writing of words in paragraphs). I am, after all, a capitalist. I also want the best deal possible. I’ve got no problem paying for the actual cost of the furniture, plus a little bit of profit to keep the guys in business.

    You’re telling me that companies need to mark things up 400% to stay in business? I hope no one tells the grocers – or Sam Walton for that matter. That would screw their business models.

  18. zanngo says:

    Working in the fabric industry is like that, too. The food industry is much more regulated – consumers are more savvy and more likely to comparison shop – so markups are typically around 50% at grocery stores ($1 wholesale, $1.50 retail…) But in fabrics, we use the term “whatever the market will bear.” Meaning, if people expect cashmere to be $100, we sell it for that, even if we only paid $3 for it. Britex in SF is like that. They work on the psychology that higher pricing means higher quality and more uniqueness. So that faux fur they sell for $140 is going to be under $35 anywhere else, since it only cost $7 in the first place. Nauseating, huh? But that’s American consumerism at work. Ever wonder how Ross and Marshall’s can sell their “designer fashions for less?”

  19. sofasleeper says:

    With mattresses, furniture, flooring, etc. there is a long replacement cycle, and the retailers only get their shot at you once every several years. It’s not a matter of ripping you off, their business model needs to make that much just to survive the long period between purchases. The only difference is nowadays most furniture is made overseas and is of an inferior quality.

    Ikea has the benefit of making TONS of money off of crappy little accessories and people who shop there as a social experience. The Ikea near me has to hire police to direct traffic almost every Saturday of the year.

    The good news is you can buy real handcrafted furniture from someone local for only two or three times what the ‘expensive’ furniture stores charge, and probably never have to buy it again.

  20. technotica says:

    So what is a cheaper option – buy furniture at 400% markup or buy it from a catlog (online or dead tree) and pay the difference in shipping?

    Us people out in the middle of nowhere are typically out of range for cheap delivery from your schmancy IKEAs and Crate and Barrel. Half tempted to rent a U-Haul and travel 5 hours north to IKEA and haul back my furniture booty.

    Unless you’re interested in oak country style furniture you’re SOL in Iowa.

  21. ceejeemcbeegee is not here says:

    @Xerloq: 400% is standard. Clothes, electronics, shoes…all marked up by 400%, 600%, even 800%, and no one bats an eye. For something like quality furniture, something you will have for 10-15 years, a 400% markup should be expected.

    That being said, I’ll be using that “what is the MAP price for this” next time I visit Plummers.

  22. Geekybiker says:

    @zanngo:
    Yah, its called closeout on last years fashions.

  23. @Buran: I’m no furniture guru, but I’ve heard people have good luck at factory stores (if you’re lucky enough to live in North Carolina), or at these appointment-only warehouse-type places that sell to interior designers who mark up and take a cut selling to their clients but will also sell direct to the general public, if you can find them. And I hear they’re often in slightly skeezy urban neighborhoods, but I’d be okay with that to save $2000. :)

    One thing I *do* know (because my husband’s family is involved in the arts) is that if you hit regional arts shows you will often run across local craftsmen making furniture (or blown glass or wrought iron or pottery or god knows what else) and selling very fine, unique handmade goods at a very reasonable price for the quality. You won’t get a couch that way, but smaller furniture pieces are easy to find. We’re not talking $20 end tables, but for $200 you’re going to come home with something a lot more well-made and with a lot less mark-up than you’d get for $200 at a furniture store. Flipside is, there’s a lot more time investment to find something you like. But if your husband is dragging you to regional art shows anyway ……..

  24. fredmertz says:

    Many online furniture retailers will sell at well below MAP — they just won’t send you a written quote — they tell you the price over the phone. Check out furniturebestprice.com — have used them many times and saved a ton of money, even after factoring in delivery from FL to NY (basically, the prices are much lower and not paying sales tax offsets the delivery).

  25. RebekahSue says:

    How much markup is necessary to cover insurance for employees and for property, as well as rent and/or taxes?

    I’d rather pay cost, but I also want good vendors to stay in town.

  26. not_seth_brundle says:

    @Buran: Try the Baker outlet on Manchester Road. Their stuff is typically really expensive, but at the outlet they mark down their overstocks, scratch-and-dents, returned custom orders, etc. and you can get some great stuff for Pottery Barn prices.

  27. gatopeligroso says:

    FTA “If you call them to talk price, always ask them to go lower, until you hear them mention that they are already at the MAP price and cannot go lower”.

    WRONG WRONG WRONG. Minimum Advertised Price means just that, the lowest possible price that they can ADVERTISE it for. They can sell it for a dollar if they want, they just need advertise above the minimum in order to avoid losing advertising money or other incentives.

  28. ncboxer says:

    It’s High Point, not Highpoint. It is nice having family that works for the furniture industry (or at least use to until her job got killed because they moved manufacturing to China). She still helps out with the shows. When it came time to furnishing my house, we looked at Furnitureland South in High Point (which is supposed to be world’s largest furniture showplace) to see what I wanted, and then bought wholesale using the family connection. Prices at Furnitureland were supposed to be half what they were in Northeast US, but my wholesale prices were 1/3 of what Furnitureland was charging.

    I just ordered new mattresses wholesale too. They’re only 1/2 off retail.

  29. JiminyChristmas says:

    For certain types of furniture I always shop antique stores before even thinking of buying new. Basically, any solid wood furniture: tables, chairs, dressers, bookshelves, etc., is likely to be cheaper and better quality than all but the high end new furniture stores.

  30. ElizabethD says:

    @JiminyChristmas:

    Jiminy, you are so right. Consignment stores and yard sales are other good sources of older, very well made solid furniture. Sometimes it’s worth paying for a professional refinishing and/or (in the case of sofas etc.) reupholstering of older furniture that may look out of style due to finish or fabric, but that has good bones and durable construction. We have an old rock maple dresser and bureau in our bedroom… they looked awful in the consignment shop, but at $45 each they were a bargain. Cost a couple hundred more to have them stripped and finished, but you can’t buy that quality new for that price. They are solid as a … rock (maple)! And the new, lighter finish is gorgeous.

  31. Alan Thomas says:

    Ikea? VERY hit or miss in quality. In Pa., the Morgantown furniture outlet is pretty good–a converted mall entirely dedicated to furniture.

    Of course, there are lots of USED furniture stores…

  32. BudSmith says:

    OK. So I run a small home store in California.

    Here is what my markup pays for:

    Rent, Utilities, Insurance, Phone, Internet, Interest on stock, Maintenance, Taxes on employees, my fixtures, income tax, breakage, theft, bags, wrapping paper, repairs to the computer system, someone to answer the phone, gas for the delivery truck, insurance on the delivery truck, maintenance on the truck, signs, lightbulbs, etc ….

    While the markup may SEEM high, someone has to pay for all of these things … that is you, the consumer.

  33. Protector says:

    It’s what the market will bear. If the majority of people will buy furniture at this markup, why *wouldn’t* retailers continue to do it? They’d be stupid not to.

  34. MissCellania says:

    I buy vintage or antique furniture -you get better quality that way. The drawback is that you cannot get financing or delivery. But I can borrow a truck, and with small children, the LAST thing I want to finance is furniture!

    That won’t work for mattresses or stuffed sofas.

  35. JB Segal says:

    Peeve alert! Peeve alert!

    Minimum Advertised Price Price?

    Let’s just put our Personal PIN Number in and get some money at the ATM machine, buy our furniture with cash and then talk about it on IRC chat, why don’t we?

    End Peeve alert.

  36. shades_of_blue says:

    When my friend bought his Simmons BeautyRest World Class, he kept of taking about the killer deal he got. I laughed, because he bought into all the BS the Sleepy’s salemen told him. The price was fair, but not the great deal he thought. WC 900 coil count (850+50 outer coils) with box spring, queen for 800. Good nice, I’ve seen better for it, but the tops looked like rejects.

    Me, I killed the low price point on a Serta TrueForm 9″ queen with split box spring. The queen with full box at best goes for $1199 online and retail. Bonton ran their semi-annual sale, which knocked off 25% and for signing up for their charge card an extra 10%. Don’t remember the exact total, thanks to the higher cost of split box springs, but it was a great deal. Rubbed it in the Sleepy’s guys faces, man were they pissed.

  37. SexCpotatoes says:

    Shades_Of_Blue : 35% off of $1199= 779.35 + tax

  38. zanngo says:

    @ SEXCPOTATOES : $1199 less 25%= $899.25, less the additional 10%= $809.33. Plus tax. Oh, and apparently the split box spring was an extra charge. Glad Shades_Of_Blue got such a killer low price compared to the friend’s $800.

  39. HogwartsAlum says:

    @ElizabethD:
    href=”#c2493303″>JiminyChristmas:

    Oh absolutely. Better quality, and much cheaper, unless it’s rare antiques.

    Love the flea market. I stay away from anything upholstered, for fear of bedbugs, odors, etc. But most stuff in my house is either flea market stuff or discount outlet stuff. I got a really nice wood dresser with legs and beautiful lines for $35. It was orange. I stripped it, painted it white, and replaced the knobs with porcelain ones that I stuck violet transfers on. It looks great in my purple bedroom.

  40. Ein2015 says:

    I used to work at a furniture store. I can tell you that everything in this post is correct.

    Quick tip: make a friend in the furniture business.