The Fallacy of Casket Discounts

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:

  1. A generic description of each casket in your selection room
  2. 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)
  3. The current wholesale price of each casket including freight AFTER discounts and rebates
  4. Multiply the wholesale price of each casket times the number of times it sold
  5. 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.

7 thoughts on “The Fallacy of Casket Discounts”

Leave a comment

Your email address will not be published. Required fields are marked *