So, it’s not my hunt…not even my dog; but I just hate being played.
A few weeks ago I was working with a client in the Midwest:
50 to 60 calls
30 – 35 caskets sold a year
He was so proud of himself. He had just negotiated a 25% discount from one of the big 3 but not Batesville.
Besides being annoyed that he had no idea how the 25% related to full price I had to leave the room just to bang my head against the wall. Sometimes external pain can temporarily relieve angst.
Isn’t anybody else wondering…or is it just me…if a guy who sells 30 – 35 caskets a year is getting a 25% discount and everyone else (large and small) is getting a 25% discount who the heck is paying full wholesale?
or
is the net price after the 25% discount really the new full wholesale?
Just sayin’
A few years ago through a friend, I posed a question to a very credible vendor. What percentage of customers are (1) not making discount, or (2) beyond 30 days, or (3) C.O.D. for product? The answer I received (4 out of 10) is the not insignificant. Your question may have been rhetorical but that stat seemed to me to be a profound statement about either the financial condition of the profession or the management disciplines of the profession. In either case, to your question, it means that about 40% are paying stated wholesale OR more thanks to the magic of compound interest.
to your second point. too many are in real financial trouble.
Alan, I am sure you educated the owner, or at least tried to. I have a feeling that the casket supplier world might be changing even more with the buyout combining of two of the “Big Three” nation companies. Many Funeral Directors are GREAT Funeral Directors but are not the best at the business end of their operations.
Alan,
That the whole “discount” thing is a sham is evident. A problem is that there has not been a wide scale collective discussion of it. Another is the understandable, if regrettable, reluctance of the funeral service “media” to confront the issue. Thanks for bringing it to the table.
Not only is it patent silliness, it breeds paranoia and distrust, resentment and discontent; not to mention the insult to our intelligence. Sometimes it’s difficult to know which is the more insulting: that someone ties to sell us this bill of goods or the presumption that we’re dumb enough to buy it.
It’s not unlike the contrived value progression of metal casket material. Does 18 gauge steel really cost that much more than 20, bronze that much more than copper?
There are countless unwilling participants because it’s the only way to pay close to the actual value of the product. Close.
Casket manufacturers have more than recovered their losses from their initial foray into the discount and rebate game.
That an agreement with a supplier to purchase their products at a savings from artificially inflated wholesale prices requires a signed document disallowing any discussion of the agreement with other parties speaks loudly to the inequity of the system. Many of us know of occasions where a “new” customer has received terms far friendlier that a loyal “old” customer.
After being courted by a “special accounts” rep of one of the big three, he was never to be seen again when told that there would be no agreement requiring 100% of the floor, a time commitment of any sort, or the signing away of the right to discuss the arrangement with anyone we chose.
Then there is, pun intended, the death spiral of wholesale casket pricing in general. Suppliers are selling fewer caskets, fundamentally because they cost too much and the consumer is choosing options which don’t include them. The solution? Why, charge more for the ones being sold, of course.
It will be interesting, if perhaps not surprising, to see what will result from the recently announced “merger.” In many instances we have seen the result of consolidation on the service side: higher prices, tighter payment terms, lowered service delivery and a failure to pass along to the consumer savings realized from economies of scale. Will there be the same result on the supply side, particularly as the the concentration is far greater?
There, now. I feel all better.
bravo. But there is a solution: stop talking discounts and start talking net price
After trying to find the real price after discounts and rebates, we found an independent that has the lowest overall cost on quality merchandise.
Alan:
Great point that continues to “rear it’s ugly head” in the funeral industry. Interesting that most of the big boys follow the industry “show more value and charge more” however they discount their products significantly. I have recently seen discount/rebate is as a high as 40% for less than 700 caskets which is a testament of the market stress.
Bottom line, the days of expensive caskets are over if the funeral home owner will make the effort and have the intestinal fortitude to initiate changes. Otherwise the old saying “what we allow will continue” which seems to be a mantra for so many.
Alan – After reading your post, I picked up the July issue of American Funeral Director magazine. The opening to Dan Isard’s article, “The How and Why of Cremation Pricing”, offers a glimpse back to the “good ol’ days” in the casket industry, thirty years ago. Fast forward twenty five years – and I think we had at least one thing right at the last casket company I worked for – a “one casket price for all” policy – regardless of volume purchase, showroom representation or home ownership.
Joe, I wonder if it isn’t still one price fits all masked as a discount?!