We have always done it that way…

Why be efficient at something that does not need to be done in the first place?  The answer is often: “we have always done it that way.”  At the beginning of my funeral service career, I used to work with funeral home owners on their product displays, how to present the products, merchandising, etc.  Beyond that, I had absolutely no experience of funeral home operations, processes and costs.   I often posed a question; “if a family did not buy a casket or vault, how much profit would you net from services alone?”  The reason I wanted to know was if there was a deficit, then the pricing of the casket and vault needed to be proportionate to the profit margin of services (or lack thereof).

Most of the time, I received a benign answer which meant that the person I asked the question did not know.  Along that same line of questioning I would ask “how much does an embalming or a cremation actually cost?”  When I asked “if you charge $450 for embalming and the cost to open and close a grave is $700, are you shortchanging your firm?  Embalming can only be conducted by an educated and trained professional in regulated conditions, yet someone with a backhoe on a tractor gets paid more for their services.”  I often got the response “well, we’ve just always done it that way…”

Alan Creedy (www.funeralhomeconsulting.org) wrote a fantastic piece recently and referenced declining profits.  By taking your total funeral home revenue (minus cash advances) and divide that number by your total number of calls over a three year span, comparing year over year, Alan would bet that the overall average revenue per call has declined.

This is the time of year when many funeral homes update their GPL’s and product pricing.  Does your firm perform the serious work of evaluating every aspect of operations, overheads, cost of goods to retail price, and revenue generated per director, etc?  If you use Alan’s suggestion, conduct realistic evaluations and compare, the exercise should reveal the necessary changes that need to be made for profitability and viability of your business.  Then the real hard work begins of implementation, training staff and measuring the results.  Now as a funeral home owner/partner, I can’t fathom any other way doing business.

Or, does your firm just take a look at how much a vendor raised their wholesale prices and raise the price (just a little) of a few services offered on your GPL?  Of course not adding too much because it’s not about what you need to charge and additional revenue needed, it’s more about what the other firm charges. Then you can be proud and say “we’ve always done it that way.”  Please share what your firm is doing do stay on top…

Happy Thanksgiving!

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