Businesses adhere to “GAP” Generally Accepted (accounting) Principles. Therefore, all categorized businesses reflect an average R.O.I (return on investment). This R.O.I. can be calculated though the businesses’ overall expenses and revenues. A particular funeral home’s service charge is based upon a proportionate share of general costs, such as, the mortgage, advertising et al., and the predetermined R.O.I (the amount the business owner has targeted as her profit). Nationally, for small businesses this averages between 7 and 14%. Additionally, operating expenses are then added; utilities, personnel etc. Then you add any merchandise (casket, vault), plus their mark-up, and any additional costs specific to the current client. This is a very general explanation, of which volumes have been written and many an MBA granted. Suffice it to say, to remain competitive, small businesses, funeral homes no exception, must continually strive to provide quality, low cost service to all those in need. Most people agree that businesses are entitled to reasonable profit. All reputable businesses are willing to discuss their formulas for operation. In short, revenues (-) expenses (-) taxes = profit (or loss). Thanks!
