Packet- Purchasing and Funeral Pricing Flashcards
To obtain by paying money or its equivalent to buy for a price.
Purchasing
Will help to maintain a balanced line in the selection room. It is having a strategy for the product before buying it.
Planned Buying
Beware of bargains, sales and conventions.
Do not Over Buy
Be careful not to do this financially.
Over Extend Yourself
Should be assigned to purchasing, however, different people can be assigned to purchase different items.
Only one Person in Each Funeral Home
- Pick only reputable manufacturers
- Pick suppliers who give prompt delivery
- Avoid the manufacturer that has floating prices. The supplier will usually take the difference out on you.
- Avoid the supplier that sells inferior or damaged merchandise.
- Pick a supplier that backs up and services the product.
- Avoid the gossip.
- Buy local if possible.
- Avoid all high pressure sales persons
- Never let a sales person in the selection room.
Relationship of Funeral Directors to Their Suppliers
One who gives special prices to special funeral directors.
Floating Prices
If the supplier talks about your competitor, he is also talking about you.
Avoid the Gossip
- Never let them see what you are buying
- Never let them see who you are buying from
- Never let them see your retail prices
Never Let a Sales Person into the Selection Room
- Cash Discount for prompt payment
- Quantity discount
- Rebate
- Consignment
Payment Terms
To give to an agent (funeral director) to be care for or sold. No payment to casket supplier until the item is sold.
Consignment
Requires funeral directors to use an itemized pricing system.
- Does not forbid offering special packages that may use the unit, bi-unit, or functional pricing systems as long as the family receives the general price list that has everything itemized on it.
FTC
The method of price quotation by which each unit of service and/or merchandise is priced seprately.
Itemization
A method of price quotation in which one price includes both service and casket.
Unit Pricing
Developed between 1925 and 1937 to overcome multi unit pricing (full itemization). The great depression was most significant in the development of the packaged funeral.
History of Unit Pricing
- Eliminates arbitrary division between services and merchandise.
- Shows families total cost without bothersome details- bottom line philosophy.
- Simplifies accounting and billing.
- Simplifies explaination and is easily presented.
Advantages of Unit Pricing
- Exaggerates the importance of the casket and minimizes the importance of service.
- Economically depressed consumers are usually subsidized by the more expensive packages.
- Consumer is unable to make a free selection of components.
- Total price is the only basis of comparison with competition.
- Fails to educate consumes on the true value of merchandise and service on the retail level.
Disadvantages of Unit Pricing
A method of price quotation showing seprately the price of the service to be rendered and the price of the cakset.
Bi-Unit Pricing
The funeral directors that had no selection room were forced into this system out of necessity. Also extensively used in the 1960’s as funeral directors wanted to be seen as professionals, thus a professional service charge began to appear on funeral bills.
History of Bi-Unit Pricing
- Emphasis on service rendered as well as merchandise sold.
- Consumer recognizes the value of service. The funeral is more than the casket.
- Permits equal charge for equal service.
- Facilitates comparison betwen cakets and other commodities.
Advantages of Bi-Unit Pricing
- Division between service and merchandise is still arbitrary- question remains where the put overhead, where to put profit.
- May in effect create confusion for the consumer.
- Still not enough to give the consumer a free selection of components.
Disadvantages of Bi-Unit Pricing
Each and every function, unit of service and item of merchandise is priced seprately. It is sometimes referred to as the historical pricing method.
Full Itemization
- Professional services
- Use of facilities
- Automotive equipment
- Merchandise
Common Units in Full Itemization
- Funeral directing
- Support staff, paperwork
- Embalming
- Other preparation of the body
Professional Services
- Funeral/memorial service at the funeral home
- Visitation/viewing
Use of Facilities
- Removal
- Hearse
- Flower car
- Family car (limo)
- Clergy car
Automotive Equipment
- Casket
- Outer burial container
- Clothing
- Marker
- Printed materials
Merchandise
- Clear understanding of the charge- criticism free by consumer groups.
- Services and merchandise are more thoroughly discussed, consumer is made to realize all the components of a funeral.
Advantages of Full Itemization
- Often difficult to explain to family only interested in the bottom line.
- Complex billing and accounting
- Rates difficult to establish because time involved and duties not standardized.
- Items omitted might be regretted at a later time.
- Elimination of items by families leads to a loss of fixed overhead recovery.
Disadvantages of Full Itemization
Charges broken down into several major component oarts- usually four- professional service, use of facilities, rolling stock, merchandise.
Functional Pricing
Became more extensively used in the 1960’s. It was initiated to impart more knowledge to the consumer.
- Designed to bring uniform order in response to legislation at the time.
- FTC requires further itemization
- Designed as a compromise to reduce pressure against funeral service by memorial societies.
History of Functional Pricing
- Newest and most progessive form of pricing.
- Generally considered criticism free.
- Emphasizes funeral director as professional offering service to public, not just seller of merchandise.
- Funeral director has recovered overhead and most of his profit prior to entering the selection room.
Advantages of Functional Pricing
- Declinable charges
- Indigent funeral swill have to be priced seprately
Disadvantages of Functional Pricing
Items obtained from a third party and paid for by the funeral provider on the purchaser’s behalf.
Cash Advanced Items
- Clergy offering
- Death notice in newspaper
- Certified copies of death certificate
- Cemetery or crematory charges
- Shipping costs
- Flowers
- Any other cash accommodation
Examples of Cash Advanced Items:
