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Alan, I love it! It really drives home a point I have been trying to make with my boss for years. Why let the supplier tell you how you are going to buy their product. even to the point of pushing what products you feature, especially when I see every time I meet with a burial family how they think and what they want.
How come in most other businesses vendors are placed by the customer on even playing fields (many even have purchasing agents) and must submit bids that meet the customers criteria. No games no smoke and mirrors, no discount “incentives.”
As you say ” you can not spend a discount.” I suspect that any agreement that is not simple and straight forward should be suspect.
I always prefer a vendor who works like a partner, not one who acts like a salesman. Looking forward to the next installment!
The bottom line is the comfort level. You can massage the numbers to reach the objective, but one must still have a comfort level in whatever method they apply. Yes some people comfort level is based upon the cost of sales, giving more merchandise value. The objective should be based upon what you want your average profit to be, or the difference between your cost including all incentives and the selling price. The other distorting factor is absorbing some of your operational costs in the merchandise, which again is another comfort level, due to being uncomfortable with one’s current operational costs. By encompassing and achieving a desired average merchandise profit level including all incentives and absorbing in some instances part of the operational cost to a desired level one can achieve a win win application commensurate with their comfort level.
If what you are saying is: “in the end, you have to go with your conscience” i agree. In the end the casket plan that will work best for you is the one you are excited about.
What I have never felt comfortable with are the pricing “games.” I have understood discount levels..buy $10,000.00 worth of merchandise and get a larger discount. etc.I never have liked the rebate game of buy $10,000.00 worth of product and get 2% back at the end of the year based on a sliding scale. For many smaller funeral homes where cash is still king a set dependable purchasing price can mean a great deal to the bottom line. Knowing what your variable expenses dependably are will go far in helping you to calculate your selling price for your merchandise.
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