Trade discount levels: 15%, 20%, 30% or net?

A 30% trade discount doesn't leave 15% margin on a piece that began at 45% gross margin. In the illustrative example used here, the piece retails for $1,000 and costs $550. After the discount it sells for $700, leaving $150 of gross profit, or about 21.4% of the reduced selling price.

Choose the trade offer from that remaining margin and the cost to serve the project. Then explain what the discount applies to and how it interacts with promotions. A price that looks generous in the application form still has to fund the work behind the order.

Calculate the margin on the actual selling price

Gross margin is selling price minus cost, divided by selling price. A discount changes that denominator. It also removes gross-profit dollars while leaving the product cost unchanged.

For the sample $1,000 piece costing $550, the choices look like this:

The last row is a cost-plus example. “Net” simply means the quoted buying price in this context; it doesn't inherently mean cost plus 35%. A store can establish a net price through another approved calculation.

Markup and margin are different measures. Multiplying $550 by 1.35 produces $742.50, but the resulting margin is about 25.9%, not 35%. Use the custom-furniture pricing guide to keep those definitions consistent in staff discussions.

Test the discount at different starting margins

The same discount can be comfortable on one category and difficult on another. The next table holds the reference selling price at $1,000 and varies the cost to produce starting margins of 40%, 45%, and 50%.

These are calculated examples, not surveyed furniture-store margins. Use landed cost where the store's pricing method requires it, including the freight and other costs attached to bringing the piece into stock. A vendor invoice price alone may leave the calculation incomplete.

Gross profit still has to support the business. Account for the project service, sample handling, storage, commission arrangement, and delivery coordination the store has promised. A larger order doesn't make those costs vanish; it may simply distribute some of them across more pieces.

Consider what the designer needs from the price

A designer buying for resale needs room for their own business model and a price they can explain to the client. A small trade reduction becomes difficult to use when a consumer promotion routinely makes the same item cheaper. Consider pricing stability alongside the headline percentage.

There is no single discount that every store can afford or every designer will accept. In a 2024 industry report, an anonymous furniture executive described independent-store gross margins in the 40s. That was an interview observation, not a measured benchmark for your showroom.

Calculate from your own costs, then test the offer with the accounts you want to serve. Ask whether the final price and service make their project workable. A discount comparison without the reference price, exclusions, and delivery charges is only part of the comparison.

The broader trade-program guide connects price with project support. A reachable rep doesn't replace margin, but a generous discount doesn't answer a question about the correct leg finish either.

Choose a tier structure the team can apply

Volume tiers need clear qualification rules. State which purchases count, the period used, how returns affect the total, and when a changed tier applies. Decide whether an approved tier belongs to the firm or an individual contact.

Category rules can protect thinner-margin products, but keep them explainable. A designer should be able to tell which pieces receive which price before submitting the proposal. Too many hidden exceptions make a simple-looking percentage less useful than a transparent net quote.

Net pricing can suit a substantial project when the store wants to price the complete specification deliberately. Record the final amount, included services, and conditions. Avoid suggesting that “net” reveals the store's cost or guarantees the same formula across every vendor.

Review a tier after a defined period rather than negotiating it again on every order. The account should know what qualifies for a change and who can approve an exception. A different number from every associate is a negotiation habit, not a trade program.

Set the rules for sale items, brands, and fees

Decide whether trade pricing stacks with a sale or whether the customer receives the better of the approved offers. Either arrangement needs to be written and reflected in the quote. Don't subtract the trade discount from a sale price simply because the screen permits another percentage.

A published national-chain trade policy illustrates that a trade program can define product and offer exclusions. Use your own policy and agreements rather than assuming that another store's exclusions describe what your vendors allow.

Brand agreements need separate attention. Minimum advertised price and the final transaction price are not interchangeable concepts. Use the MAP-pricing explainer and the actual brand agreement before advertising or promising a discounted offer.

Delivery and fees should receive the treatment the program states. If the service is priced to recover the store's actual delivery expense, discounting it can change the economics of the whole order. Say whether the trade reduction covers merchandise only or merchandise and named fees.

For a customer-owned-material order, discount only the charges covered by the policy. Fabric supplied by the designer isn't merchandise the store is selling. The frame, application charge, freight, and other work still need their own stated prices and treatment.

Protection plans have their own prices and conditions. In OrderPilot they are not discountable. Keep the furniture price and the plan offer clear so the customer can understand both decisions.

Apply the policy in OrderPilot

OrderPilot can display the customer's trade tier in the customer information used on the order. Staff then apply the approved line or order discount with a reason. The tier field doesn't automatically select a discount or reprice the quote.

An order discount can apply to products only or to products and fees. Select the scope that matches the written program, then review the result. For the sample merchandise, a 20% products-only discount changes the furniture price from $1,000 to $800 while leaving a separately priced delivery fee unchanged. Permissions limit who can change prices. Use the discount authority matrix to distinguish a routine trade offer from an exception needing approval. Where manager review is configured on Professional, route the quote through that review before committing the exceptional price. The order history retains the pricing changes and reasons. That gives the next colleague a way to distinguish the standing account offer from a one-project concession. Apply the same showroom discount rules when a designer orders with a different associate.

Review the whole quote before sending it

Check the configuration, reference prices, discount scope, fees, and final amount together. A changed fabric can alter the price and cost even when the discount percentage stays the same. Review the approved quote version instead of assuming the original margin survived every revision.

Make the customer's copy clear about what they are buying and paying. A net-price quote doesn't need to expose supplier costs. A discounted quote should use a truthful reference price and the agreed exclusions.

Keep the discussion about the furniture specific. “Trade price” should not become a mysterious second species of walnut dining table. The designer is still buying the same defined piece, through a commercial arrangement the store can explain.

Publish a pricing policy that answers the common questions

Put the account qualification, discount or net-price method, merchandise scope, sale treatment, brand restrictions, fee treatment, and approval authority on one usable policy sheet. Include how long an approved offer holds and when account terms are reviewed.

Test it against a regular sofa, a sale piece, a COM order, and a mixed merchandise-and-delivery quote. If staff reach different totals from the same facts, improve the policy before expanding the program.

Choose the price from the margin the store actually keeps, then make it dependable. Use the discount authority guide to turn that decision into a rule every associate can follow.

Sources

1. Are furniture stores dying, or just changing? — Business of Home, March 20, 2024; interview-based industry reporting.
2. Trade Program: Terms & Conditions — Modani Furniture; primary example of program terms and exclusions.