Funeral Directors Association has released its 2018 Cremation &
Burial Report with very interesting statistics for the funeral industry
and consumers. This year the cremation rate is predicted to
reach 53.5 percent, with a forecast that the national cremation rate will
now reach 80% by 2035.
This is a staggering shift
in the funeral industry, where traditional burial has long been the preferred
funeral option for families, with a price ticket of around $7,000 - $10,000.
The NFDA figures for the average cost of a burial funeral in 2017 are
$8,755 (including a vault but not cemetery plot fees). The profit-margin
to be made in traditional funerals has sustained many funeral homes for
years, even if not performing a high number of funerals. The NFDA
report that the average NFDA member funeral home handles 113 funeral cases
We are already witnessing
an era of funeral homes closing, or being acquired, as funeral businesses
scramble to respond to their decline in profit-margins. In 2017,
there were 19,322 funeral homes in the United States, and this number is
down from over 22,000 several years ago.
What do you need to understand
about cremation prices in the U.S.?
The average cost of a cremation
service varies significantly. This depends on what type of cremation
service is selected and which funeral services provider is providing the
services. A cremation funeral costs on average $6,260
(NDFA 2017). This service is similar to a traditional burial however
the deceased is cremated after the service.
A cremation memorial service
is where the cremation is conducted and then a memorial service held with
the cremation urn present. This type of service generally costs less
than a cremation funeral, as preparation of the deceased’s body for a funeral
service is not required. The average cost of a cremation memorial
is not as well-documented, but research indicates that the average cost
is around $3,300.
A significant growth area
in the cremation trend is the demand for direct cremation. A direct
cremation is where no ceremonial services are provided by the funeral home.
The deceased is cremated and the cremated remains returned directly to
the family. According to the Cremation Research Council, the average
cost of a direct cremation in the U.S. is $1,100.
What does the growth in cremation
mean for a funeral business?
Considering the average prices
for cremation services as highlighted above, the cremation trend can only
mean a drop in revenue for a funeral home. If the average NFDA member
did 113 funeral cases per year as average traditional funerals, his gross
revenue would be $989,315. If he does 50/50 traditional burial vs.
cremation, and is still performing full-service cremations, his revenue
decreases to $848,347. By 2035, when the cremation rate is forecast
to reach 80%, his revenue has decreased to $763,767 (based on 2017 average
However, this is not taking
into account that the growing consumer demand in the cremation trend is
for direct cremation. The DFS Memorials network of independent affordable
cremation service providers report that 80% of their cremation cases are
direct cremation. If we consider the demand for simple, no-fuss,
affordable direct cremation, then revenue forecasts for a typical NFDA
member funeral home in 2035 could be nearer to $300,000. This, surely,
indicates a need for a major business strategy change for funeral business
owners, especially full-service funeral homes with high overheads, that
have been sustained by the high profits made from traditional funerals!
How does the shift to cremation
affect funeral consumers?
The cremation trend is making
death care more affordable and more flexible for American families.
Cremation, especially a cremation memorial or a direct cremation, can alleviate
the time-critical logistics and overwhelming arrangement, of organizing
a traditional funeral service.
As a nation, we have become
more transient and less traditional, so the notion of cemetery plots for
families to visit holds less significance. Baby boomers could be
said to be leading a change to cremation, simplicity, and less conventional
funeral rituals. But at the same time, many families in the U.S.,
faced unexpectedly with funeral expenses, simply cannot afford $8755, or
even $3,300. A simple, direct cremation is the solution to overcoming
the burden of funeral expenses.
A direct cremation takes
care of the immediate need to arrange a dignified ‘disposition’ of the
deceased. Once the cremated remains are returned to a family, they
are free to coordinate a memorial service of their own choosing, or simply
decide to inter an urn or scatter the ashes. This puts the family
in the driving seat of personally conducting a memorial that befits their
lost loved one. And, all at a fraction of the cost that a traditional
funeral would have cost!
So, largely this shift towards
cremation means that funeral consumers can take more control over the ritual
of a funeral or memorial. As the interest in cremation increases,
funeral consumers are becoming more clued-up about searching online for
cremation prices. This is already leading a change to how funeral
homes operate. The FTC funeral rule has been in place since 1984,
but has not always been fully complied with by funeral service providers.
This rule requires a funeral home to disclose prices, but still you can
visit a funeral home website that has no prices, or call a funeral home
and struggle to get clear pricing information over the phone.
Still some in the funeral
industry are resisting this shift by consumers. Largely, I believe,
driven by their fears over the diminishing importance of the role of a
funeral director/funeral home in the death and grieving ritual.
Several industry forums have invested heavily over recent years in the
need to “educate” funeral consumers. This education is chiefly about
encouraging consumers that the services of a funeral director to conduct
a ‘personalized’ funeral or memorial are important to the grieving process.
In other words, in order to heal, you need to spend money with a funeral
There once was an era when
a local funeral director knew every person he conducted a funeral for.
In rural America, this is likely still the case. But, in many large
metro areas, families have no connection with a local funeral home and
therefore the significance of a stranger performing a personal memorial
service has no value. In fact, it can be more meaningful to conduct
a direct cremation, and then hold a personalized memorial service with
input from family and friends.
Direct cremation and online
With the consumer trend for
direct cremation, there is also a growth in online arrangements.
If arranging a simple, direct cremation some consumers have no desire to
visit the funeral home, or are making arrangements from another city or
state. More funeral providers are adapting their websites to cater
to online cremation arranging. This can reduce costs for the funeral
home, which can in turn be passed onto the consumer. Online arrangement
portals can be both invaluable and disempowering. The industry has
a reputation for wanting a funeral consumer to enter their funeral home
to have face-to-face opportunity to ‘up-sell’ funeral products and services.
We are witnessing that some families now prefer to handle the disposition
planning without having to cope with what can be an overwhelming experience
in the funeral home.
What is the future of the death-care
industry in the U.S.?
This is an interesting question
right now! The death-care industry is experiencing an epoch of change
and there is a price-war going on in the industry! Let’s look first
at the corporate death care market.
For many years, the largest
death-care corporation, Service Corporation International (SCI) has been
on a significant acquisition strategy. SCI trades as Dignity Memorial,
alongside other brands. In 2006, it acquired the Alderwoods Group,
a significant competitor. 2010, and it acquired Keystone North America
and then in 2011 it acquired 70% of the outstanding shares in The Neptune
Society (a national direct cremation company). In late 2013, it acquired
Stewart Enterprises, its then nearest corporate competitor.
Dignity Memorial, operating
in the U.K, announced in February this year, that it was cutting the
price of its cheapest funeral by 25%, in a response to concerns over
2018 forecasts and declining market value. SCI has also been expanding
its Neptune Society locations and very actively marketing direct cremation
Across the U.S. there are
also smaller regional corporate funeral companies, and you see the same
pattern. Acquisition, (even if to take another funeral home out of
competition), and investment into direct cremation brands.
Even some large full-service
independent funeral homes are dividing their operation in different brands
to be able to capture all markets. A full-service funeral home is
also operating an affordable cremation company, under different brands,
and often without making it clear to the consumer that the 2 businesses
are owned and operated by the same family.
The 2018 NFDA report states
that 30% of funeral homes already own and operate their own crematory,
with just under 10% stating they intend to install a cremation machine
in the next 12 months. These figures still reflect only 40% of funeral
businesses operating their own crematories by the end of 2019.
In our article on Cremation
becoming the preferred choice in 2014, I wrote about the prospect of
‘Super Crematories’. Visiting DFS Memorials providers over the last
3 years, I have now witnessed this prospect becoming a reality. I
have visited with funeral owners in Miami, Houston and San Francisco who
have all up-scaled their operation to increase cremation volume by installing
multiple and high-speed cremation retorts that can complete a cremation
in half the time of a standard retort and operate 24 hours a day.
are likely to lose business.
It is likely we are going to see an increase in small funeral businesses
closing over the next few years.
||These are independent funeral
operations that are conducting over 500 cremations per month, with a large
proportion being direct cremations. In some cases, the family never
visits the funeral home or crematory, all arrangements are made online,
by phone and fax, and the cremated remains are mailed back to the family
or scattered by the funeral home. They have expanded their original
service area to increase the volume of cases they handle, and the core
of their operation is a call center and a fine-tuned logistics operation.
As these operations upscale, the smaller funeral homes who cannot compete
So, interesting times for
a once very stoic business! Those funeral business owners that adapt
and embrace this shift towards cremation, and deliver exactly what consumers
are demanding, are likely to be conducting 80% cremation cases in 17 years’
time and servicing much wider service areas than they originally covered
when they started in business.
For the funeral consumer,
the current shift to cremation is making death-care more affordable, and
it is possible we will see cremation prices decrease over the next few
years. However, if the big players take out their competitors as
they upscale, we could see prices rise back up. Also, gas prices
will continue to impact on cremation costs and there is the probably that
county fees for issuing cremation permits could increase as cremation becomes
the preferred choice.
||Expert Author: Sara
Sara is the Editor in Chief
for US Funerals Online and has been researching and writing about the death
care industry in the US for the last 10 years.
Cremation is becoming the Nation’s preferred Choice
on The Rise (NFDA) 2018
Cremation and Burial Report Shows Rate of Cremation at All-time High 2018