With a cremation rate at 57% and growing, we thought it is time to reflect on some important things about cremation that could affect cremation costs in 2022 and the continued future demand for direct cremation services.
Why has cremation become the popular disposition choice for families?
There are several reasons cited as to why cremation has become more popular as a funeral option. A demand for greater flexibility for migrated families, a decrease in religious attitudes, belief that cremation is more environmentally friendly than traditional burial, and the significantly reduced cost of cremation as opposed to burial.
By far, I would propose that cost is the primary driver for the growth of the cremation rate. Opting for a direct cremation saves families from the burden of an expensive funeral. A cremation service reduces funeral costs by at least 40%. If a family opts for a low-cost direct cremation service they can often keep funeral costs below $1,000. If cost is indeed the primary driver for the shift to cremation, will the demand for cremation services remain the same if cremation costs increase in 2022?
Continuing changes and challenges we face in our modern world have also served to help escalate cremation as a funeral alternative.
#1 Has COVID & social restrictions affected the funeral ritual?
Our world has changed profoundly since 2019 and Covid has had a dramatic effect on our notion of the funeral ritual. For many months families simply could not hold a funeral gathering, and in some cases even attending a funeral home for a funeral arrangement consultation was prohibited.
Some families ended up with no choice other than to arrange a cremation in order to take care of the disposition of their loved ones. Some funeral homes were already positioned to meet these challenges, while others did adapt quickly to this radical change in their industry. Adopting technology at a speed not witnessed before, where online arrangement, electronic signatures, and electronic filing of documents have now become a new contactless means of arranging a cremation.
So, it could be said that an effect of the pandemic has been to alter the funeral ritual and lead to an increase in the cremation rate.
#2 Is the cost of cremation likely to change in 2022?
Yes, I would forecast that we are likely to see the cost of cremation increase moving into 2022. The cost of cremation services, especially low-cost direct cremation, could be considered a key reason for the shift from traditional funeral services to cremation as an affordable alternative. In many cities, a direct cremation can be conducted for less than $800, and many cremation service providers report that 70% of the cremations they perform are indeed direct cremations.
At US Funerals Online we have already witnessed cremation price increases in a number of areas in 2021. Some of these are small increases of $25 and others have hiked their basic cremation price by $100 or more. Read on to learn more about why cremation prices may rise in 2022.
#3 What is impacting on cremation prices and the funeral industry?
In the last 6 months, we have seen a subtle increase in cremation prices. Some budget cremation providers report profit margins being squeezed as overhead costs increase. Below we will explore the key changes impacting cremation costs.
Increase in Gas Prices
The most significant overhead cost increase has been the rise in gas prices. This not only affects the cost of performing a flame cremation in gas retorts, but also the transport costs for collection services. Church Funeral Services in Louisiana (who operate their own crematory) had to rise their direct cremation price when the supply cost of their natural gas increased by 50% in October, and the price per gallon for filling their transport fleet increased from $2.00 to $3.00. Other funeral homes in the DFS Memorials network of affordable cremation providers have experienced the same, and we have seen price increases in a number of states.
County Budgets & Increases in Permits
It has been widely reported how many counties are struggling to manage budgets to deliver all the public services required of them. The County Coroner or Medical Examiner’s office is required to provide a cremation permit for a cremation to proceed. Before the demand for cremation grew to today’s level, many counties provided these permits at little or no charge.
As cremation grew in popularity permit fees were introduced and/or increased. These permit fees still vary hugely by state and county, but in some counties, these fees are doubling. This has an impact as this cost has to be recouped, and some funeral homes that included a small permit fee in a cremation service package, are now forced to increase their price.
Competition for the Cremation Market & Acquisitions
As we explored in our article An Industry in Change: How Cremation is becoming the Nation’s Preferred Funeral Option competition for the booming cremation market created cremation ‘price wars’ in some areas. Those funeral companies with the resources and deeper pockets could afford to drive down the price in an area and force other small funeral homes out of business. The shift from a traditional funeral to cremation was already hurting many small funeral businesses. When a typical funeral case has declined from $10,000 to $3,000 (or lower) many funeral businesses are coping with a significant drop in revenue, and the only way to combat that is to increase the volume of cremation cases.
We are witnessing an era of acquisition by larger funeral companies. Foundation Partners Group has strategically invested in acquiring funeral businesses with a strong cremation portfolio, adding 8 new brands and 25 locations in 2020 alone. With a growing network of locations (160 locations in 20 states), they are also heavily investing in and developing their online direct cremation brand – Tulip Cremation. Enabling them to enter local cremation markets without the overhead of a brick and mortar set-up.
Acquisition and innovation such as we see from Foundation Partners Group may initially be a positive for the cremation consumer but ultimately could lead to a control of the cremation market in certain locales. At that point, the lack of competition could lead to a control of cremation price-point.
Supply Issues for Funeral Homes Planning Installation of a Crematory
As we near the end of 2021, we are all becoming aware of supply chain issues. The December 2021 edition of Funeral Home & Cemetery News reports that ‘Delay in Cremation Systems Installations Expected’ across the whole nation as price increases and supply chain issues are impacting the schedule for materials and affecting the planned budgets for installations.
This delay in new installations could likely affect cremation prices into 2022 if there is a stall in the planned expansion of crematory facilities nationwide. This will leave many funeral homes still without cremation equipment dependent on trade services and could affect the continued demand on existing crematories, especially as the cremation rate is forecast to keep growing.
Will families consider green eco alternatives to reduce the carbon impact of flame cremation?
This is an interesting question. The current climate agenda and rising gas prices could both serve to re-align our attitudes to death care options. As posited at the start of this article, cost has been the determining factor in the shift to cremation services, if gas prices force cremation costs up, will we then consider other alternatives?
A recent survey by the National Funeral Directors Association (NFDA) reported that 72% of funeral homes report an increased interest in green burial options. The average cost of a natural burial is around $3,000. There are less expensive options, but due to the low demand at present, natural burial sites have to charge fees in relation to maintaining perpetual care. There are also other eco disposition alternatives. Aquamation (alkaline hydrolysis) has largely been extremely niche for human disposition but is legal in some 20 states as of 2021. This low carbon-producing alternative to flame cremation can be conducted for between $1,295 and $2,995 (depending on the location), so could potentially offer a reduced cost disposition. Again, should demand increase we should see more funeral service providers offer the option.
Human Composting, also referred to as Natural Organic Reduction (NOR) has now been legalized in Washington, Colorado, and Oregon with several other states considering passing legislation. At present, costs and availability limit access to this as a death care alternative.
In conclusion, I think we may witness some changes in the cremation market moving into 2022. Be it price changes, further acquisition in the market, or the beginning of a growing interest in greener alternatives.