Ever since it was revealed that SCI enjoyed a big discount the discussion around the convention lunch table has been preoccupied with the subject of discounts and rebates.
For more than 15 years I have heard a lot about percentages but never about dollars. It’s not my dog much less my hunt but I think it’s time everyone faced the fact that it’s not the size of the discount but how much you pay that counts.
Not long ago I was working on a project with a client that enjoyed something in the range of a 25% discount. I needed to find cash for them so I decided to bid their business myself. Very, Very interesting results. Here are the wholesale averages on just 3 companies:
- Current vendor @ 25% $1,630
- Vendor B $760
- Vendor C $1,363
There is an old saying:
“You can’t spend Percents”
Here is what you need to do what I did:
- A generic description of each casket in your selection room
- The number of times each casket sold during a recent period (for large funeral homes I use 3 – 6 months for small funeral homes I use a year)
- The current wholesale price of each casket including freight AFTER discounts and rebates
- Multiply the wholesale price of each casket times the number of times it sold
- Total this last column and divide the result by the total number of caskets sold
You will end up with the weighted average price you are paying currently for caskets. Take the generic list AND the number of times each casket was sold WITHOUT the information about what you are paying and MAIL it to however many companies you want to compare. When you receive a response enter their wholesale prices in another column on your spread sheet and multiply them the same way you did for your current vendor. Then divide by the total caskets to get their weighted average price. NOW and only NOW you are comparing apples with apples.
Here is what your spread sheet might look like: CLICK HERE
WARNING:
- I don’t recommend switching to the lowest bidder until your current company has had a chance to make a new offer.
- I expect every company to ask for an opportunity to change out your selection room to make it more effective. No problem but only AFTER you have selected their company as your vendor. Do not do this before you make your comparisons or you will not be comparing “apples to apples” any more.
Exactly Alan! Something I have been on a soapbox for 6 years now. It is interesting to me that some almost are more proud of the discount they receive rather than the money they can make and ALSO save the client family. There is a win – win out there, it just takes a little work, thought and effort.
I may be a little biased, but I disagree about going back to your current supplier, they have had the opportunity to give you their best deal all along, but instead have been cashing in on you. Why would you reward them with another chance to give you a new price for the same product and the same service? They should have been fair with you from the start.
Today’s vendor climate has changed. Aurora is aggressively seeking sales, Batesville is doing what is needed to do business with you, as is Matthews. The problem might be that as funeral directors we are letting the vendors control our purchase choices. I would suggest to you that if you sat down with each supplier and explained how their high prices or low rebates, made them less affordable to your clients, the suppliers might be willing to provide you with increased rebates or pricing. They are even willing to provide lower pricing or higher rebates even if you are not 100% with them. Would not that even the playing field if we all purchased from all the suppliers rather than just one.
I know what you are thinking, that the big three will not do what I suggest. I am proof that they will and do. P.S. 25% really you can do better. Much better.
I appreciate your comment but you are still stuck on %’s. Without a base number %’s are irrelevant. I also want to make clear I am not championing any vendor. I am simply trying to help you understand how math works.
Ron, I agree with you completely. That’s a game where both sides usually end up feeling cheated.
As Alan says, discounts are smoke, dollars are real. I would also encourage funeral homes to reduce the number of models they offer. This limits your flexibility and can complicate decision making.
Well said Alan. I continue to be baffled by the discount % discussion. It’s like some dark-side of the force mind control going on.
It seems to me that the comment section is filled with “dogs in the hunt”. But I have also always been baffled by a desire for discounts. Years ago I said to all my casket folks wouldn’t it be easier and better to just tell me how much the caskets cost and forget about all the rebates and %’s. But unfortunately the american market place for everything still thrives on sales and discounts and rebates and specials and coupons and bogo’s and etc. etc. etc.