One of our readers from New York emailed me with a pressing question:  “How can I, as an independent funeral home owner, negotiate a better casket price, like SCI does?”

She wanted to know if I thought she could be successful building a coalition or “buying collective” of independent funeral homes to negotiate a lower price from a casket manufacturer.

I’ve condensed our conversation here:

Michelle: 

First, any outside-the-box thinking should be applauded, not scoffed at.

Secondly, you might be reinventing the wheel. 

When I think of a great idea, I usually do a little research and find that someone else has already thought of it.

In this case, I think you might consider looking at some of the national organizations like Order of the Golden Rule, Selected Independent Funeral Directors and others to see what type of discounts they may have already collectively bargained for.

Yes, SCI gets a big discount from Batesville on caskets, but they also bring the buying power of many, many firms with them.   Batesville or any other maker is willing to offer discounts to a large corporate group because they know that once they do the hard work of getting the person in charge to say “yes, we’ll use your caskets exclusively” they’ll have the account (for thousands of caskets a year) for a long time.

And while you might be able to organize a group of independents to collectively negotiate, any one of them could decide next month to go back to Milso/York or to use the local guy because he’s ticked off at the manufacturer with whom you secured a collective deal.

A manager for SCI cannot just cut and run.  Well, she can’t if she wants to keep her job.

So there lies your problem.

Having run a 160 call funeral home for a few years, I know how much a casket costs, even wholesale.  But I’d suggest that the best bet isn’t trying to get the big guys to come down on price, but finding the casket line that will provide you with the best options for your clients and the best possible margin for your firm.

Because, at the end of the day, most families can’t tell the difference between a Batesville, a York/Milso or one from another maker. 

No one says “it was a beautiful Stainless steel Primrose by Batesville.”

They say “It was pink and white with pretty flowers embroidered on it.”

I’d suggest looking for the most reliable casket seller (you can’t sell a casket unless someone can deliver it on time!) and one who has a modular sales system (but don’t pay for it – make sure they’re “hungry” enough to give it to you) and a real desire to break into your territory.

Does that mean Aurora?  I don’t know if they’re available in your area, but I know they’ve started giving away showrooms to new clients.

Of course, I have no allegiance to any casket maker.  When I took over the funeral home the owner was installing a York display room (for which he paid $20,000).  It allowed him to cut his display room in half, but get 30 more caskets in because it used corner cuts.

The first year, he saw average casket sale go up $200 because clients had more midrange options.  They didn’t have to choose between one cheap, one reasonable and one expensive any longer.  They had one cheap, ten reasonable, three upscale and two ridiculously expensive.  They almost always chose one of the higher priced reasonable caskets.

Some funeral professionals complain that “my clients won’t like corner cuts.”  

In my experience, that wasn’t a concern.  While one or two clients a year might ask to see a full-sized unit, far more (about 50%) are relieved to walk into a room and not have to look at a full-size casket. 

In fact, the most common thing I heard walking into the selection room was “I’ve been dreading walking in here because I didn’t want to see a casket, but this is so much better.”

Interestly, I think most consumers expect that the casket you show them won’t be the one they actually get.  Which means they believe that caskets in a specific model are interchangeable.

Much like home electronics (televisions, iPods, brand-new computers) caskets don’t take on special characteristics until the body is placed inside.

Of course, you might occasionally have that client who wants to touch all parts of the casket and “kick the tires” but I’ve met few of them.

I do, however, suggest that funeral homes keep a casket or two on hand (preferably from the middle of the price range) to appease these families and in cases of emergency.  And it never hurts to have an example that you can show clients who want to examine the quality of the manufacturer’s work.

One more thing to consider:  Suppose you did negotiate a great deal with one company and all the independents in New York got a 10% discount.  Where would all the other casket sellers go? 

They’re not going to close up shop and leave without a fight.  Which means they might start picking off members of your buying consortium by offering sweet deals.  At the end of the process, you’d be right back where you started. 

Yes, you might have a nice discount, but 10% of even 100 $1000 caskets is still only $10,000 a year for your troubles.

Is that a lot of money?  Maybe. 

But is it worth all the time it’d take to get it?

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