How Much Do Retailers Earn (Markup) On My Purchase?

It’s very likely that after we start telling you how much retailers earn on what they are selling you that we’ll start receiveing death threats, snowballs and long, formal complaints to our lawyers from angry retailers throughout the country.

So should we do it?

Of course.

The simple answer to tell you is that it “depends.”  Depends on what?

It depends on whether this retailer has one store or 20 stores, whether they source directly from factories or via middlemen, and also whether they sell online vs a brick and mortar store.  To save on the potential complications associated with all these scenarios, let’s just say that a starting point for retailers is to charge their customers a 50% markup on an item.  

So for example, let’s say that you are from San Francisco and you are shopping for a lovely leather-stitched club chair in a dark mocha brown color.  You go to your local furniture shop and ask “Bob” the sales person how much it costs to purchase the following club chair below.

Bob tells you that he can discount the sofa to $400.  You think it’s an awesome deal, especially since you’ve been craving for something just like this.  But did you know how much Bob is earning off of you?  Do you care?

If so, here’s a simple equation.

Purchase Price (excluding tax + delivery)   x    50% (gross margin)   =   Price they bought it from a wholesaler

So on your $400 purchase the price, they probably bought it for $200 and are making a good two-hundred dollars off of you.  We hope you’re still happy with  your purchase.  =)

….. btw, if you found this interesting sign up for our RSS and keep posted as we’ll dig deeper and give you more insider secrets and scenarios around how much you’re paying for what you thought was a great purchase.

DealDécor.com is America’s first group-buying platform for patient and savvy shoppers to enjoy steep discounts on home décor and furniture products (30-70% savings).  DealDécor.com will be launching in the San Francisco Bay Area in August 2011.