Building a Furniture Brand with Ethan Abramson · 2024-07-26 · 8 min
Key moments - from our scoring
Substance score
25 / 100
Five dimensions, 20 points each
Paula King explains the practical mechanics of trade discounting for furniture brands working with designers and builders. Trade discounts - typically ranging from 10-15% off retail - work because pricing structures should accommodate them while maintaining profit margins. Rather than giving away inventory, well-designed pricing allows brands to absorb these discounts while still making their target margin. Beyond the immediate discount, Paula emphasizes the long-term relationship value: designers who find good products and reliable experiences become repeat customers who refer others, multiplying the return on investment compared to one-time homeowner sales. For verification, smaller brands like Rexhill Studio often rely on trust initially, though some require documentation or trade account setup. Paula also addresses a critical but often-overlooked detail: resale certificates and sales tax handling in states like New York, where designers as the final point of sale become responsible for collecting sales tax, requiring paperwork from the designer to protect the furniture maker.
Paula King recommends starting with 10% as a basic amount, noting that ranges from 5-20% exist depending on brand size and sales volume, but your pricing structure should already accommodate these discounts within your profit margins.
For smaller brands like Rexhill Studio, Paula suggests starting with trust and taking their word for it, though you can also require trade account setup or request documentation as verification grows.
In states like New York, designers typically provide a resale certificate making them the final point of sale responsible for collecting sales tax, so you would offer the discount tax-exempt and collect their documentation to protect yourself.
Paula argues no - even one-time designer relationships have value because satisfied designers share your brand name with other designers and clients, functioning as word-of-mouth marketing and creating repeat business potential.
Our reviewer’s read on each dimension, with quotes from the episode.
The episode is 8 minutes with roughly half consumed by double-intros, a sponsor read, and an outro, leaving minimal substantive content. What remains covers trade discount basics at an introductory level with no density of novel ideas.
trade discounts are a percentage that you would take off the top of your retail price. You can choose what that is. I've seen anywhere 5%, 10%, 15%.
your pricing structure would accommodate and be able to eat those costs. So you're not necessarily giving anything away.
Every point made - price to accommodate discounts, designers bring repeat business, paperwork for trade accounts - is standard, easily Google-able B2B business advice with no contrarian or first-principles thinking present.
designers in theory will come back to you again and again if they're happy with the product and the process of working with you
there's total value in offering that to designers even if it's someone you think you might not work with again
Paula King is a relevant practitioner as a small furniture brand co-owner, but there is no indication of scale, significant revenue, or depth of experience that would elevate her beyond a beginner-level commentator on this topic.
For a small brand like us we don necessarily require that sort of documentation
I remember being really confused about it So we figured it out
The only concrete specifics offered are a percentage range (5 - 20%) and a single state-specific legal concept (NY resale certificate); there are no revenue figures, no data on how discounts affected Rex Hill Studio's business, and no named designer relationships.
in the state of New York, when you are selling an item, you receive something called a resale certificate
I've seen anywhere 5%, 10%, 15%. Sometimes big, big brands will do up to 20%
There is effectively no conversation - the host reads a listener question once and the guest delivers an uninterrupted monologue; there are zero follow-up questions, no probing, and no pushback on any claim made.
what are your thoughts on designer discounts in your own company and how have you been going about it over the years to make sure you get the most out of each sale and experience?
Thank you so much for listening to the show.
Computed from the transcript - who did the talking, and the words that came up most.
Special Podcast Deal - use code - Ethan10 - at checkout for 10% off the full bitsbits.com website Welcome to Building YOUR Furniture Brand, a special edition episode of Building a Furniture Brand with Ethan Abramson. On this episode, we talk about Trade Discounts - the type of percentage off you can give, how to judge if a designer is eligible for a discount, when to collect official to the trade paperwork, and more. This episode guest is Paula King, co-owner and designer at Rexhill Studio. If you want to hear more about Paula and Rexhill Studio - Check out the show archives - episode 102 If you want to ask your own question for a future episode, please send an email to hello@buildingafurniturebrand.com Learn more at buildingafurniturebrand.com
Transcribed and scored by The B2B Podcast Index.
Hey everyone, Ethan here, back with a second episode of the new Building Your Furniture Brand format show, now in its regular scheduled Friday time slot. Like I shared last week, I'll still be putting out the standard Building a Furniture Brand podcast, as well as the Building on the Bad inspirational episodes. But since I get a lot of questions emailed to me from people asking about their own businesses, I've added a new show where I'm going to be taking questions that get sent to me and then ask them to guests of the show who will answer them based around their own real-world experiences.
If you want to ask your own question, send an email to hello at buildingafurniturebrand.com. As always, if you enjoy the show, please share it with a friend or leave a review wherever you listen. And now, here's the second episode of Building Your Furniture Brand.
Hello and welcome to Building Your Furniture Brand, a special edition episode of Building a Furniture Brand with Ethan Abramson. On this show, I take your questions and ask them to one of the show's many featured furniture company owners or industry experts to give you real-world answers to questions that you have about running your own business better. If you want to ask your own question, please send an email to hello at buildingafurniturebrand.com.
On this episode, I talk with Paula King, co-owner and designer at Rex Hill Studio. If you want to hear more about Paula and Rex Hill Studio, check out the show archives episode 102. This episode's question coming up right after a quick word from our sponsors using code Ethan 10 is basically free money let's be honest to run a shop you need bits and so what better place to get them than bits bits calm it right there in the company name so nice they named it twice And let me let you in on a little secret Using code Ethan10 is going to get you 10% off everything on their site.
Like 10% off their own line of Spiro Flush trim bits in standard and custom sizes. Also, 10% off their industry first fluted down cut pattern bits. My favorite is 5-3-PB-750. Okay, it's not the most exciting name, but take a look and I think you'll agree it's pretty magical.
And of course, they still manufacture all their bits in America for over 30 years in-house in their family-owned facility. So when you think bits, think bitsbits.com. That's B-I-T-S-B-I-T-S dot com.
And remember, at checkout, use code ETHAN10. to be in, not knowing the right thing to do? Lots of great questions there, Brian, and I feel your pain. No one wants to give away free furniture, but sometimes discounts to certain people, designers or builders to name a few, can be good for business.
Paula, as our guest today, what are your thoughts on designer discounts in your own company and how have you been going about it over the years to make sure you get the most out of each sale and experience? Hi, Brian. Your question is so good, especially in the beginning of not understanding how the hell this whole trade thing works. I remember being really confused about it So we figured it out And so I happy to share what we know about it at least So trade discounts are a percentage that you would take off the top of your retail price.
You can choose what that is. I've seen anywhere 5%, 10%, 15%. Sometimes big, big brands will do up to 20% for sales or things like that, but you certainly don't need to do that at all. I would say 10% is probably a good sort of basic amount that you'd want to offer off.
Conceptually, the idea would be that your pricing structure would accommodate and be able to eat those costs. So you're not necessarily giving anything away. You're pricing your top price to be your whole profit. And then if you're offering a discount, you're still sort of making what you need to make in order to still make a profit.
There's total value in offering that to designers even if it's someone you think you might not work with again it's sort of your name your brand designers in theory will come back to you again and again if they're happy with the product and the process of working with you um they become a trusted name that will then maybe share your name with other people so there's definitely value in offering it to trade um and designers specifically and also you know hopefully they're doing more than one project with you and so you're sort of getting more bang for your buck in the investment of working with a designer versus just a homeowner who is just going to purchase something one time I would say as far as knowing if they're a real designer or not there are certain ways you can go about that you can obviously just take their word for it and go on trust if they say who they are and that's the choice you can make.
Another way is you can set up a trade account or require paperwork. Some brands specifically ask for that in order to set up a trade account It a little bit more level of detail of organization administration For a small brand like us we don necessarily require that sort of documentation unless and there one reason we would and so it happens sometimes with designers when you are giving a trade discount they may also be asking for there not to be any sales tax associated with the sale this is probably state specific.
But for example, in the state of New York, when you are selling an item, you receive something called a resale certificate. And so in this instance, the designer would be the final point of sale to a client, and they would be responsible for collecting the sales tax. So when you sell it to the designer, they might ask for no sales tax, and then you might include the discount. And so that is just something to be aware of as well that kind of gets wrapped in.
sometimes not every designer will ask for this but often it's the case and in that case you would want to collect paperwork that you know proves that they are responsible for collecting sales tax which would help with that sort of piece you're asking about and then of course you have no control how much the designers are marking up your product to their clients that's sort of between them and so you know but hopefully it's worthwhile in the end because you've built a relationship with a designer who loves your product and wants to sell it over and over and over again.
And yeah, I think hopefully that's helpful information about trade discounts and how it can help your business. Good luck. Thank you so much for listening to the show. If you liked what you heard and you got value out of it, please think about leaving a review and subscribing wherever you listen.
To learn more about the series, please visit buildingafurniturebrand.com and feel free to reach out anytime with questions or guest suggestions to hello at building a furniture brand.com. You can find me at the build with Ethan on Instagram.
Hope you enjoyed the show and can't wait to bring you the next one.
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