I know the average retail markup for stereo gear is around 45%. What must the mark up be for mattress stores to stay open with this much competition? 90%?
Ha! Not even close! High end stereo gear is an easy double. Which I know from years of buying from a friend in the business. Never paid more than about 60% of retail. Even at that he was making a profit. In other words usually he would double it, but for me only marked it up 10%. Very common.
Please note the difference between markup and margin. Markup is cost to sale price. Margin includes all other costs. Margin in high end might only be around 5%.
Same applies to mattresses. Only more so. Something I researched extensively because back when I was poor and needy I was not about to pay for what looked like frills. Which in the case of matteress it literally is frills.
So here’s the deal, as shown to me by the owner of Everrest Mattress in Seattle, WA. Mattresses are such a commodity with such thin margins that all the springs in all the mattresses all across the whole western US are made by the same one or two manufacturers. Same goes for all the foam and fabric. These three things- springs, foam, fabric- that’s a mattress.
Basically this guy wanted to sell a mattress, saw a guy (me) ready to pay a lot more for a Sealey (or whatever) and so took the time to walk me around his warehouse which made it excruciatingly clear to me that all these high end mattresses no matter how expensive are all the same damn thing. The fabric on the outside changes. The places they put foam changes. But really what changes the most is the advertising.
This is how they add $1k or more to what is really a $350 mattress. The markup is not 90%. Its more like 200%. Spendy mattress, full price, maybe 300%. That’s the markup. Which might even be low. Margin on the other hand includes all costs- massive advertising, killer sales commissions, retail floor space, warehousing, transportation and delivery- these all add up resulting in a bottom line margin that’s actually pretty thin.
