Steve,

Being in the burial vault business, I am not sure how I should answer this question.

I know with some of the funeral directors I deal with (that live near Cosco) they run into families that have alredy purchased a casket because they headr the funeral home marks them up to high.

In speaking with one director who has encountered this problem more that once, he came to the conclusion that if he sold all his merchendise at cost and just marked up his service fees he could still be cheaper than his competitor and make a larger profit.

If this is true, then I think he should try an make more off his service than off his merchendise.

Posted by:

Ryan Thogmartin (Huppstiverson)
Connecting Directors, Co-Founder

I asked this question because our firm is currently debating this question. We actually do a pretty good business in Merchendise, by usually selling a minimum vault and a mid-line casket.

The question has been do we, as a firm, charge more for what we specialize in, our service, which at this time is competitive with the market area, and charge less for our merchendise (which will be sold reguardless) or visa-versa.

I realize that the transition will take a period of years to complete, but where should the bottom line come from.

I Think you should still make some profit off of merchandise. But your largest profit should be made off of your service.

As cremation continues to rise and the cost of merchandise, (vaults, caskets, ect), continues to rise, making more profit off of service is going to be easier than making it off of merchandise. If merchandise continues to get marked up 100% or more in some places, the cost is going to continue to drive more families toward cremation. But if your service prices rises, but your merchandise is only marked up a low percentage you can make more "profit" and still be competitive if not cheaper than other funeral homes in your area.

Example (true story):

In the largest city in my area, the cremation rate is 35 - 40%. I have a client (funeral home) in that area that is only seeing about 16-18% cremation rate. Why is this? Their merchandise mark up is less than their competitors and their service prices are about the same as their competitors. Which puts their total cost of a traditional service and burial below their competitors. They are not making as much total "profit" off each service, but they increased their number of burials last year by about 30% from the year before, when everyone else's number of burials decreased.

Like they say "The numbers speak for themselves". I hope this helps out.

Posted by:

Ryan Thogmartin (Huppstiverson)
Connecting Directors, Co-Founder

I agree! Profit on Merchendise is also important to the bottom line.

I have seen this firm, and others in the local market are using merchendise as a major profit center. In my opinion, merchendise is not what we sell, as a full service funeral home. Our pride should come from the service we provide (the Deli tray to the family, the Ice Chest, the care we provide to the family from frist call to flower delivery after the committal is completed, the cookies during visitation, and the kindness and compassion we show each family). This is what sets a funeral home apart from ABC Funeral Home down the road.

Merchendise profit is important, but our service far outweighs the merchendise sale. It is what is remembered. How many times has a family arrived that was served by your firm five years ago, and the family did not remember what casket 'daddy' went in? Here it happenes more often than not, but the family always seems to remember the cookies, or the extra care provided to them.

Just the opinion of little ole Steve...

Very well put Steve!!

I agree. I often say in our business that our customers don't always buy our product because they just love Wilbert Burial Vaults (all though that helps), they buy our product because they love the service that comes with our product. We have nice, well maintained equipment, new clean trucks, nice uniforms, bigger tents then the other guy, and most of all we do what we say we are going to do.

Thanks for the great conversation Steve.

Posted by:

Ryan Thogmartin (Huppstiverson)
Connecting Directors, Co-Founder

I agree with you Steve. We are not located too close to a casket store so we really aren't threatened. Our families look for the service we provide. We look at each case and offer them something free they don't want to pay for or possibly can't afford. A free visitation, or funeral for a direct cremation, filing life insurance claims, paying the minister, the list goes on and on. A little time and attention goes a long way with a family.