Several barriers are hindering independent appliance dealers from achieving record growth and long-term profitability. The most damaging one is this: Allowing someone else to define what healthy profitability looks like. Whether it’s a buying group, manufacturer, or industry organization, too many dealers have adopted outside narratives that simply don’t align with the reality of running an independent business.

The expectations of a group shouldn’t dictate healthy profitability; your own financials should determine it. Your operating costs, goals, and risk tolerance are what define the margin you need, not what someone else says is “standard.” And yet, owners across the country have accepted shrinking margins as inevitable, even though those margins no longer support growth, expansion, or even a strong profit model. 

The industry has undergone significant changes, and not for the better. Margins today are significantly tighter than they were a decade ago, despite rising overhead. Dealers need to remember that gross margin directly dictates net profit. That means your gross margin should account for internal costs, such as shipping, warehousing, or delivery, not just product markup. Many dealers smartly “load” these internal costs into their margin by one to three percent, ensuring that the hidden expenses of doing business do not erode it. Costs like freight and labor don’t flex with your promotional calendar. If you set your margins properly and consistently, your bottom line should reflect real, available cash—not a rebate, not backend VRs, but true, retained earnings.

After 16 years of working closely with independent dealers, AffluentBridge has gained insight into how gross margins impact dealer operations in the real world. Across the industry, gross margins of 20 to 22 percent generally cover only your fixed and operational expenses. So when a manufacturer presents a line with a 20% margin, it may sound viable, but it’s barely keeping you afloat. You’re not building a healthy business—you’re treading water.

Dealers who truly understand how to build up and maintain a profitable business treat gross margins with respect and establish them as non-negotiable benchmarks. They track margins precisely, update them often, and let them guide what stays on the floor. They don’t build their business around the expectation that low margins can somehow be profitable. They know which product lines increase profitability and which drag it down. As a result, they focus on achieving steady year-over-year improvements in net income.

Additionally, dealers who control their gross margins also manage their sales team. Too often, we see dealers complain about poor gross margins yet fail to stop their sales team from engaging in endless discounting. Sales teams that set the margins are the future of the company, not the owner. Relying on your sales team to set prices is a recipe for business failure. Establish minimum discount standards and stick to them—if a salesperson regularly discounts, you need to question whether they are truly a quality salesperson. Managing gross profit to achieve a solid net profit becomes possible when the sales team stays within the discount boundaries you set.

If you want to close the year with an actual profit, the cash you can reinvest or take home, you need to be operating at a gross margin of 25% to 30%. Anything less, and you’re just covering costs, not building a business. Dealers who obsess over cutting costs instead of raising margins don’t grow—they shrink. It’s that simple. And while manufacturers, reps, buying groups, and co-ops will keep pushing their agenda, you don’t have to make it yours. Their priorities aren’t your priorities.

At AffluentBridge, we’ve helped dealers step out of that trap by connecting them with buyers who don’t flinch at full price: the Affluent Audience™. These customers come ready to spend on premium and luxury appliances. They don’t need coupons, they don’t chase discounts, and they don’t destroy your margins.

Dealers who commit to this model consistently achieve gross margins of 30% or more. Why? Because they’ve taken control. They’ve stopped letting outside forces define their profitability. They’ve built margin strategies that support their team, their growth, and their future. And here’s the truth: if you don’t own your margin structure, someone else will. And they won’t do it in your best interest.

Consistency is what separates top-performing dealers from the rest. The ones who stay disciplined—who protect their margins and resist the race to the bottom—don’t just have a good year. They build momentum. They dominate their markets. And they grow real, bankable profit.