For all people looking to buy a leather sofa in Singapore, read on.
Have you ever wondered how much it would cost to buy a good quality full leather sofa? In this article, we seek to answer this question by breaking down the cost components of a full leather sofa. We got these insights by visiting the upstream suppliers of sofa manufacturers. You would get a clearer idea about how much to budget for different types of full leather sofa.
TL; DR
Can you get a good quality 3 seater full leather sofa for under $1,500? No, we think it is not possible.
This already takes into consideration the different types of leather used. Refer to our estimate below for how much one would expect to pay for a good quality leather sofa based on the type of leather used:
- Top grain full leather sofa: $1,884
- Full grain full leather sofa: $2,475
- Full aniline full leather sofa: $3,385
Key cost breakdowns for a sofa retailer
The cost to the retailer for selling sofas sets the floor on how much he or she is willing to charge.
There are 3 key components to consider:
- Procurement costs: how much sofa manufacturers charge retailers for the full leather sofa
- Logistics costs: how much logistic providers charge retailers for sofa shipping and delivery
- Retailer operating costs: how much costs retailers incur to run the business
Apart from the costs, retailers also adds a desired profit margin he or she hopes to achieve. Together with the costs, it forms the final selling price to consumers.
For retailer operating costs, it is a matter of the business model chosen by retailers. Is it heavy on service? Does it own a large storefront? Are there large investments on marketing? Does it have its own warehouse or delivery team? All these factors combined form the retailer operating cost.
We will focus on giving you with a detailed breakdown for procurement and logistic costs. We then apply a markup to account for retailer operating costs and profit margin targets.
Procurement cost breakdown
Sofa manufacturers work on cost plus pricing to determine the procurement cost. The key cost components include the following:
- Cost of raw materials
- Cost of labour
- Cost of facilities
Cost of raw materials
Most sofa manufacturers are assemblers. They buy the required materials from upstream suppliers.
Key materials include:
- Leather
- Foams used in seat and back cushions
- Wood used in wooden frames
- Zigzag springs and other miscellaneous items
Note that we did not factor in the cost of down feathers used in full leather sofa. Inclusion of additional features like it will further add on to the cost.
For leather, the cost depends on the type of leather that is used to make the sofa. Leather are charged on a per inch basis. A 200cm sofa, requires around 250 inches of leather. Cost of leather based on the type of leather is as below:
- Top grain leather: $2.50 (per inch cost) x 250 (inches required for full leather sofa) = $675
- Full grain leather: $4.00 (per inch cost) x 250 (inches required for full leather sofa) = $1,000
- Full aniline leather: $6.00 ([er inch cost) x 250 (inches required for full leather sofa) = $1,500
Leather is the main cost for raw materials. Note that it is possible to find leathers that cost lower on a per inch basis. But, we find that the quality of leathers cannot be assured if we go below the cost level listed above.
If you do not know the difference between these types of leathers, read our comprehensive guide on leather to find out more.
For a 200cm sofa, foams, wood, zigzag springs and other miscellaneous items cost estimates are as below:
- Cost of foam: $105
- Cost of wood: $44
- Zigzag springs and other miscellaneous items such as webbing, plywood: $50
- Total cost excluding leather: $105 + $44 + $50 = $199
Combined, total cost for a leather sofa is as below, based on the type of leather used:
- Top grain full leather sofa: $874
- Full grain ful leather sofa: $1,199
- Full aniline full leather sofa: $1,699
Cost of labour and facilities
Labour and facilities costs are fixed costs that sofa manufacturers incur. A 40% markup is commonly used to factor these fixed costs into the procurement costs for each sofa.
Total labour and facilities cost is as below based on :
- Top grain full leather sofa: $874 * 40% = $350
- Full grain full leather sofa: $1,199 x 40% = $480
- Full aniline full leather sofa: $1,699 x 40% = $680
Ultimate procurement price
Taken together, retailers need to pay the following prices to get the full leather sofa based on leather type:
- Top grain full leather sofa: $874 (raw material cost) + $350 (labour and facilities) = $1,224
- Full grain full leather sofa: $1,199 (raw material cost) + $480 (labour and facilities) = $1,679
- Full aniline full leather sofa: $1,699 (raw material cost) + $680 (labour and facilities) = $2,379
Logistics cost breakdown
On a per volume basis, about $150 is required per cubic meter for end to end shipping. This includes the cost of warehousing, shipping from manufacturer country to Singapore and delivery and assembly at the consumer's home.
For a 200cm sofa, the cost is: $150 x 1.5 (cubic meter space) = $225
Retailer operating cost
We used a 30% markup to procurement and logistics costs as estimate for retailer operating costs. This takes into consideration all operating costs such customer service, storefront rentals, and marketing costs.
As a result, retailer costs is as below depending on the type of full leather sofa:
- Top grain full leather sofa: [ $1,224 (procurement cost) + $225 (logistic cost) ] x 30% (retailer markup % for operating costs) = $435
- Full grain full leather sofa: [ $1,679 (procurement cost) + $225 (logistic cost) ] x 30% (retailer markup % for operating cost) = $571
- Full aniline full leather sofa: [ $2,379 (procurement cost) + $225 (logistic cost) ] x 30% (retailer markup % for operating cost) = $781
Total retail price
The retail price is the summation of all prices listed above.
Retailer price based on type of full leather sofa:
- Top grain full leather sofa: $1,224 (procurement cost) + $225 (logistic cost) + $435 (retailer markup for operating cost) = $1,884
- Full grain full leather sofa: $1,679 (procurement cost) + $225 (logistic cost) + $571 (retailer markup for operating cost) = $2,475
- Full aniline full leather sofa: $2,379 (procurement cost) + $225 (logistic cost) + $781 (retailer markup for operating cost) = $3,385
Consider us for your leather sofa purchase
We offer quality top grain full leather sofas that can last for 5 years under regular use. If you are looking for a quality 3 seater full leather sofa under $2,000, why not browse through our selection of leather sofas.
Last update: 14th Aug 2023