Sofa is fit for use, it is however not of satisfactory quality. Which has no relevance to the usage charge, which they are perfectly entitled to apply, allowing for the amount of time OP has had use of the sofa.
I do however think that £549 is ridiculously high for a £899 3.5 yr old sofa. I am in the process of doing the same with a 3 yrs TV, and Grattan has applied a 40% usage fee, which seemed a bit steep.
It all boils down to how long a sofa is expected to last in relation to is price. If I were you, I'd argue that a sofa that expensive should last at least 10 years, and therefore argue that:
£899 / 10 = £89.90
£89.90 x 3.5 (yrs) = £314.65, and therefore I would stand my ground and say that you will only accept a deduction of a minimum of, say £350 to go towards the purchase of a new sofa.
Let us know how you get on.
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Advice & opinions given by Bookworm are personal, are not endorsed by Consumer Action Group or Bank Action Group, and are offered informally, without prejudice & without liability. Your decisions and actions are your own, and should you be in any doubt, you are advised to seek the opinion of a qualified professional.