Funeral Merchandise (Lesson 7)

Casket company invoices you with the following: Terms: 2/10 Net 30

-Funeral home will get 2% discount if paid within 10 days -If funeral home fails to pay invoice within 10 days full payment(net) is due in 30 days. *cash discount example*

Markup

-also known as *gross casket margin* or *margin* is the difference between merchandise cost & selling price. *retail-wholesale= MARKUP* -Occasionally referred to as *profit* Wholesale = $100.00(purchased amount) Retail = $125.00(selling amount) $125-$100 = $25. Profit margin is $25

range of merchandise varies from firm to firm depending on

-funeral home's merchandising philosophy -demands of clientele -nature of its competition

consignment

-to give merchandise to an agent to be cared for or sold -(i.e.) *funeral director has merchandise to display but does not pay for it until it is sold*

Steps in Merchandise Planning Process

1. Evaluate the market 2. Evaluate sales history 3. Determine product availability. 4. Consider supplier recommendations 5. Establish product and service mix

quatrile

A division of the total into four intervals, each one representing one-fourth of the total

Consumerized Pricing

A method of pricing so that actual price figures are familiar to the consumer. Special importance to funeral service.

Cash Advance Items

Any item obtained from a third party and paid for by the funeral provider on the purchaser's behalf. Most states do not allow handling fee, TX does allow if it is disclosed to the family.

Supplier Payment Options

Cash Discount, Quantity Discount, Rebate, Consignment

Cash advance examples

Cemetery or Crematory Services, Casket Bearers, Transportation, Clergy Honoraria, Flowers, Musicians or Singer, Nurses, Obituary Notices, Gratuities, Certified Copies of Death Certificate

merchandise planning

Developing a merchandising plan also known as "sales objectives" or "sales plan" *Planning equals profit*

funeral merchandise

Goods sold by a funeral home in conjunction with the disposition of a dead human body

Methods of Price Quotation

Itemization Bi-Unit Pricing Functional Pricing Package Pricing Unit Pricing

What to consider when selecting a vendor/supplier

Payment terms, Availability of product, Product support, Product quality

SERVICE (FEE) PRICING:

Staff services for obits, DCs, paperwork,etc plus. Overhead Costs such as: Salaries, office supplies, rent, maintenance, utilities, etc.. Sum of these costs divided by number of services(historically or projected) Equals service fee. Should be reasonable.

Consumer Value Index (CVI)

The percentage derived by dividing the wholesale cost of the merchandise by the retail price of the merchandise. *Wholesale/Retail = CVI* *expressed as percentage* Spending more money should provide more value for each dollar spent

Package Pricing

The pricing method which groups together selected services and/or merchandise and meets criteria for FTC if General Price List is given to the consumer

Mode

The value that occurs most frequently in a given data set.

unit pricing

a method of price quotation in which one price includes both service and casket. Historical Method used prior to FTC regulations.

Functional Pricing

a method of price quotation in which the charges are broken down into several major component parts such as professional services, facilities, automobile and merchandise

Bi-Unit Pricing

a method of price quotation showing separately the price of the service to be rendered and the price of the casket

Fixed Multiple (Straight Line)

a price determination method whereby the casket cost is multiplied by a constant factor

graduated recovery method

a pricing method where the markup varies. increasing graduated recovery, decreasing graduated recovery and modified graduated recovery.

Declining Price Structure

a pricing method where there is an inverse relationship between the markup and the price of the casket. Higher priced caskets given a lower markup

cash discount

a reduction of the price given for payment of an account within the time limits established by the sales contract

Median

a value in an ordered set of numbers which represents the midpoint, whereby there are an equal number of values above & below the midpoint value

increasing graduated recovery

entry-level merchandise receives a relatively low markup while higher-end merchandise receives a comparatively higher markup

Modified Graduated Recovery

essentially the same as Decreasing method, with an exception: the first entry-level offering (& perhaps, the second & third units) receives a slightly less aggressive markup. a bit of a compromise.

vertical merchandising

is concerned with providing consumers with a selection of prices, with steady and obvious value progression at each rung on the price ladder

Horizontal Merchandising

is more concerned with the actual number of choices available a each price rung on the vertical merchandising ladder; the greatest number of model choices exist at or slightly above the target sales objective

quantity discount

the amount by which the bill or invoice will be reduced when a minimum quantity of merchandise has been ordered. (10% off for 10 caskets order embalming fluids may qualify)

Itemization

the method of price quotation by which each unit of service and/or merchandise is priced separately. Meets requirements of the Federal Trade Commission (FTC)

value progression

the more a consumer spends the more value he should receive. mirrored by the philosophy of relative value "you get what you pay for"

Sales Frequency

the number of times sales in a given price bracket occur over a fixed period of time

Sales frequency data

the number of times sales in a given price bracket occur over a fixed period of time

merchandising

the purchasing, pricing, display and sale of merchandise. caskets, vaults, clothing, urns, and sundry item.

Merchandise Value Ratio (MVR)

the relationship between the wholesale cost of the merchandise and the total cost (both service and merchandise) to the consumer. Wholesale divided by (Service + Merchandise) = MVR

rebate

the return of a portion of a payment. Usually at end of the year

Average (mean)

the sum of a group of numbers divided by the number of units

range

the upper and lower limits of a series of numbers. The caskets sold in the 2nd and 3rd quartile