How to Price Furniture in Canada: A Margin-First Method

Start from the margin you need

Set the price from the margin the business needs, not from a competitor’s shelf price or a simple cost-plus percentage. Gross margin shows how much of the selling price remains after the product cost: gross margin = (price − cost of goods) ÷ price. To work backwards, use: price = cost of goods ÷ (1 − target gross margin). If a chair’s landed cost is $300 and the target gross margin is 50%, the required price is $300 ÷ 0.50 = $600. The product pricing calculator applies this calculation without confusing margin and markup.

Margin and markup are not interchangeable. A $300 cost and $600 price produce a 50% gross margin but a 100% markup, because markup divides profit by cost. Use gross margin to test whether a price can support overhead and profit; use markup when setting a repeatable increase on known costs or communicating with suppliers and staff.

Landed cost is the input, not the profitability result. It should capture the product cost and relevant inbound costs needed to get the item into sellable inventory. Contribution margin goes further than gross margin by subtracting variable selling costs such as payment fees, shipping subsidies and advertising. Use it when deciding whether a product, collection or campaign creates cash after the costs of making the sale. A product can meet its gross-margin target and still have weak contribution after advertising.

Showing the price in Canada

Show a clear product price and label whether tax is included. A tax-exclusive price keeps the same merchandise price visible across Canada, while the final amount changes at checkout by delivery province. A tax-inclusive price shows the customer’s likely payable total earlier, but requires the storefront to calculate the correct tax for each destination. Neither format changes the product’s underlying margin; it changes how clearly the customer sees the transaction total.

For online orders, use the delivery address rather than the customer’s browsing location. The Canada Revenue Agency says that goods sold and shipped to another province are supplied in the province where they are delivered, so that province’s GST/HST rate applies. For illustration only, an order delivered in Ontario is charged 13% HST. A $1,000 pre-tax table therefore becomes $1,130 for an Ontario delivery, before any separately stated charges.

The CRA lists 5% GST in Alberta, British Columbia, Manitoba, Quebec, Saskatchewan and the territories; 13% HST in Ontario; 14% HST in Nova Scotia from April 1, 2025; and 15% HST in New Brunswick, Newfoundland and Labrador and Prince Edward Island. Do not use one national tax multiplier for every checkout (Source: Canada Revenue Agency).

Also confirm whether the store must register and charge GST/HST. The CRA says most businesses remain small suppliers and do not have to register while taxable supplies do not exceed $30,000 over four consecutive calendar quarters. For a practical pre-tax and margin check, use the product pricing calculator, then review Canadian tax guidance in Canada seller guides.

When a higher price is the wrong move

A higher price is the wrong move when the extra margin depends on a volume level the product is unlikely to sustain. For illustration only, at a $100 price and $60 product cost, each delivered unit contributes $40 before advertising. At $110, contribution rises to $50. The increase only improves total contribution if unit volume stays above 80% of its previous level. If sales fall by more than 20%, the lower-priced version produces more contribution overall.

Check more than the product’s gross margin before raising the ticket. A price increase can leave cash tied up in slow-moving inventory, reduce repeat purchases, or push acquisition costs above what the order can support. A lower price may be the better decision when it clears dead stock, protects a profitable customer segment, or improves contribution after advertising. For a product with frequent refunds, compare contribution using realized revenue and refund value rather than treating every order as a completed sale.

Use the right measure for the decision: gross margin shows the economics of the item before marketing; contribution after advertising shows whether the sale still works after acquisition cost; collection and customer profitability show whether the price supports the wider business. ORVX reports these measures by product, collection and customer, along with inventory position, dead stock and return rate. It can identify where a price experiment is worth running, but it cannot estimate price elasticity or predict how demand will respond. For a quick first pass, use the product pricing calculator, then test only where the break-even volume is realistic.

A pricing review routine

Review each important SKU at least monthly, and whenever supplier cost, freight, advertising spend, discounting or return behaviour changes. Compare the current price with the product’s realized economics, not just its catalogue price. Delivered orders show what the store actually kept; cancelled and returned orders should not be treated as revenue.

Use each measure for a different decision. Gross margin is the right check when the question is whether the product covers its merchandise cost. Contribution after advertising is the better pricing signal when paid acquisition is material. For illustration only, a $1,000 realized revenue result with $400 product cost and $150 advertising spend leaves $450 before other operating costs, or 45% contribution after advertising. Return rate and refund value explain whether the apparent margin is being eroded after purchase. Inventory position, dead stock and remaining stock value indicate whether to test a discount, hold price or stop replenishing.

Record the price, discount, realized revenue, costs, return rate and contribution for each review period. ORVX reports these measures by product and collection, and can surface a recommended action such as test, fix economics, reduce or stop with a stated reason and confidence. It can also identify where a price experiment is worth running, but it cannot estimate price elasticity or predict how demand will respond. For a quick starting point, use the product pricing calculator, then validate the decision against your own completed-order data.