Creedy Commentary

18
Apr

How To Be Smart About Buying Caskets

It has now become routine for me to analyze what they are paying in “True” wholesale prices for caskets. In the process I typically save tens of thousands of dollars for them over the course of a year. But what I do isn’t rocket science. Nor does it always require they change vendors…although it often ends up that way. (People get sore when they discover they have been overpaying.)

Vendors realize that math is rarely the strong suit of the practicing funeral director. So they most often express their “deals” as a percentage discount on total wholesale. But because virtually everyone I have encountered is already receiving a minimum 25% discount the discount price is really the new gross.

What people fail to ask is “What is the price in $$ that I am actually paying.”

I use a simple process:

  1. I compare the cost of merchandise (caskets, vaults and urns only) with the gross revenue minus any cash advances (net sales)
    1. The result should not exceed 17% by much but it is situational to some extent
    2. The new ratio for savvy operators should be in the range of 15% or less. I know some that are in the 12% range but they are the exception
      1. If net sales is $1,000,000 a 2% savings is $20,000
    3. If I can (not always possible) I also determine the average $$ after rebates and discounts they are paying for caskets
      1. The average overall wholesale for the nation is less than $1,300.
  2. If the results of the first step are out of line (which they almost always are) I recommend we “bid” the business.
  3. The bidding process involves a multi step process
    1. create a generic list of caskets using either a description or the actual manufacturer and model number
    2. Determine how many of each unit you sold for the last year
    3. DO NOT show what you paid for each unit
    4. Send the generic list to as many vendors as you like asking them to list the $$ price for each unit after discount and rebate
      1. I prefer to eliminate rebates. You are only lending them your money.
    5. When you have received all the responses then create a spreadsheet with multiple columns.
      1. list each casket and the number of times the unit sold
      2. have a column for each vendor showing the price they gave you.
      3. Multiply each unit price column by the number of times you sold each unit
      4. total each column for the total you will pay for the units you sold and compare the totals only.
      5. see link below for a copy of my spreadsheet
      6. you will be surprised
    6. Vendors will immediately try to visit with you. Here is what you need to do:
      1. it’s ok to meet with them
      2. It’s ok to consider longer term contracts
      3. if annual price increases have a known ceiling
      4. It’s ok to consider offers to re merchandise your selection room but it should be priced separately
      5. Tell them you will not consider discounts expressed as percentages
      6. They should show only their best price in $$ including delivery
      7. If the prices they quote are contingent on a minimum number of units that’s ok. You can still usually fit in multiple vendors
      8. If they require exclusivity the prices and potential price increases better get your cost of goods closer to 12% than 15%

Some clients ask me to do this process for them so they can remain anonymous. Frankly, it’s just as easy for them to do it themselves.  Just stand in front of the mirror for 15 minutes a day and repeat “no” to yourself. Eventually it will become second nature

Caveat: there are services that are worth paying extra for. You don’t have to go for lowest price. At least now you  will know what those services or advantages are costing you.

You can download a copy of my analysis sheet from the link below: (for a small fee I will complete it when you have all the prices)

generic casket analyst

2 Responses

  1. With so many caskets offered by each company do you find it difficult to compare apples to apples? I would think the comparison would be easier on the lower end units. For example comparing the Matthews value line with the Batesville Newpointe line.

    1. Alan Creedy

      Bill, great question! Let me clarify.
      First, the system requires you compare caskets you are already selling. You don’t have to keep selling the same caskets but you now have an apples to apples benchmark.
      Second, you will find that if you want to keep your exact showroom you may have to use multiple vendors
      third, I prefer to use generic descriptions of material, corners, bars and interior rather than make and model so vendors will give you their apples to apples offer.

      Finally, the goal is NOT to save money on EACH unit but for the total you spend on caskets for the year is less (usually substantially) than you have been paying. It is conceivable you could spend more on a particular unit but your savings on the total would be lower. I haven’t seen this happen but it is possible.

Leave a Reply

css.php