Domestic vs overseas furniture manufacturing: how does the math work?

Six cost lines in a landed-cost comparison

Per unit, the full cost of a piece is the unit price plus freight, duty and customs spread across the run. Add the cost of financing the inventory through production and transit, and the expected cost of reworking pieces that arrive wrong. Minimum order and lead time aren't on an invoice, but both change what you end up paying.

Only the unit price usually appears on a factory's quote. The notes below explain each cost line, and the table after them compares overseas and domestic side by side.

Unit price

Often the only number compared, and the least complete of the six.

Freight and duty

On an overseas program this line covers ocean freight, drayage (trucking a container between the port and a warehouse), customs and duty. Tariff rates and freight costs change over time, so recheck them each time you compare quotes.

Working capital

Deposits and balances paid before the pieces can be sold stay tied up through production and then transit. On a long ocean crossing, that financing cost is worth putting a number on.

Minimum order quantity

Filling a container pushes overseas minimums up, and buying more than you need only lowers your cost if you sell it. The guide to how furniture MOQs work explains what else sets a minimum. E and J Furniture has no minimum order.

Lead time

Whether lead time is weeks or months decides how early you commit to quantities and how much a forecasting error costs. Our lead time is 4–8 weeks, plus freight.

Cost of a bad run

This cost is often left out. Estimate what it would cost to rework or return a run that arrives wrong, and set out who pays in your program agreement.

Overseas wins on long, stable runs; domestic on shorter or changing ones

Overseas manufacturing wins on long runs of a settled design on a predictable schedule, when the saving on unit price is bigger than the added cost of freight, duty, financing and rework.

Domestic manufacturing wins on shorter runs, on programs that reorder unpredictably, on designs that are still changing and wherever it helps to see pieces in person, such as when a color isn't right. Our page on domestic furniture manufacturing in Los Angeles sets out those cost lines for our factory in Los Angeles County, and you can ask about a visit.

Before comparing quotes, ask how often the design will change

A design that's finished and will run unchanged for years is a different problem from a line you expect to revise each season. The first rewards the lowest landed cost you can find. The second rewards a factory close enough for quick revisions and reorders, and that can be worth more than the unit price gap.