Best for: Furniture merchants, ecommerce leaders, finance teams, and operators comparing order economics across channels or companies.
Three margins answer three different questions
| Measure | Plain-language question | Typical scope |
|---|---|---|
| Product gross margin | What remains after the costs classified as cost of goods sold? | Revenue less COGS, divided by revenue |
| Order contribution margin | What remains after the variable costs caused by this order? | Product cost plus shipment, payment, channel, and other defined variable costs |
| Company net margin | What remains after the whole business is run? | Operating expense, interest, taxes, and other company-level items also come out |
A useful operating report names the revenue base, lists which costs are included, and identifies the time period. Without those three notes, a margin percentage can look precise while remaining impossible to compare.
Accounting policy changes what gross margin contains
Gross margin is an accounting output, not a universal product truth. A merchant may include inbound freight, warehousing, outbound delivery, or fulfillment labor in cost of goods sold; another may classify some of those costs in operating expense. Both can follow their stated policies, yet the reported gross margins are not operationally interchangeable.
- Write the COGS policy downName whether product cost, inbound freight, duty, warehousing, outbound freight, delivery labor, and packaging sit above or below gross profit.
- Keep the order view separateFor price and discount decisions, calculate a consistent order contribution view even when financial reporting classifies costs differently.
- Reconcile, do not renameA management contribution metric should bridge back to the financial statements. It should not be presented as GAAP gross profit or net income.
What public benchmarks can and cannot tell you
The U.S. Census Bureau's 2023 Annual Integrated Economic Survey reports $129.801 billion of sales and $66.319 billion of gross margin for NAICS 442 furniture, home furnishings, electronics, and appliance retailers. That works out to about 51.1%, but it is a broad industry aggregate rather than a target for one furniture order, one channel, or one merchant.
Aswath Damodaran's January 2026 Furn/Home Furnishings dataset reports 30.28% gross margin, 6.59% unadjusted operating margin, and 1.10% net margin across 27 firms. The spread is a useful reminder that a healthy-looking gross margin does not automatically become healthy company profit. It is not a promise of what an individual store should earn.
Williams-Sonoma and Wayfair show why definitions matter
Williams-Sonoma's fiscal 2025 Form 10-K says cost of goods sold includes merchandise cost, inbound freight, freight from distribution centers to stores, third-party delivery expense, and shipping materials, among other items. Its gross margin therefore reflects costs that another merchant might place elsewhere.
Wayfair's 2025 Form 10-K says cost of goods sold includes product cost plus shipping and fulfillment costs. It reported a 30.2% gross margin, while its company-defined contribution margin was 15.2% and net margin was negative 2.5%. Wayfair also explains the adjustments in its non-GAAP contribution metric. Read those definitions before comparing the numbers.
| Check | Why it changes the result |
|---|---|
| Revenue base | Gross sales, net sales, and net revenue can differ after discounts, returns, or pass-through items. |
| Freight placement | Inbound, outbound, last-mile, and fulfillment costs may appear in COGS or operating expense. |
| Metric status | GAAP gross or net margin and a company-defined non-GAAP contribution margin are different measures. |
| Business mix | Marketplace, owned inventory, store, ecommerce, and services revenue can have different economics. |
Build one order-level waterfall for pricing decisions
- Start with collectible revenueUse the amount you expect to collect after the offered discount, not an unearned list-price anchor.
- Subtract product and landed inventory costApply one documented internal policy for merchandise cost, inbound freight, duty, and related landed cost.
- Subtract the packed shipmentUse expected linehaul plus destination, service, fuel, and handling charges appropriate to the order.
- Subtract variable selling and collection costInclude payment fees, commissions, channel fees, and other costs that change with the transaction.
- Label the result preciselyCall the result order contribution under the stated policy. Do not call it company net profit.
Frequently asked questions
Is contribution margin the same as gross margin?
No. Gross margin follows the company's stated cost-of-goods-sold policy. Contribution margin is a management measure that subtracts a defined set of variable costs. The two can coincide under a particular policy, but the labels should not be assumed to mean the same thing.
Should outbound furniture delivery be in COGS?
That depends on the company's accounting policy and applicable reporting guidance. For order-level pricing, outbound delivery should still appear somewhere in the economic waterfall so it cannot disappear from the decision.
What is a good furniture gross margin?
There is no single safe target. Public aggregates vary by company mix and accounting policy. A useful target must cover the merchant's packed-shipment costs, variable selling costs, operating expense, return exposure, and desired return.
Is order contribution margin net profit?
No. Company overhead, marketing that is not assigned to the order, technology, occupancy, payroll, interest, taxes, and other items may still come after order contribution.
Sources and primary material
Carrier tariffs, classifications, pricing, and company reporting can change. Open the source, confirm the effective date, and apply the terms governing the actual decision.
- U.S. Census Bureau, 2023 AIES basic time series for NAICS 442 Industry sales and gross-margin aggregate.
- Aswath Damodaran, Margins by Sector (January 2026) Furn/Home Furnishings public-company margin dataset.
- Williams-Sonoma fiscal 2025 Form 10-K Cost-of-goods-sold policy and financial results.
- Wayfair 2025 Form 10-K Gross, company-defined contribution, and net margin definitions.