How Much is the Funeral Industry Worth?

In today’s world, there are conflicting market reports about what is necessary with the average funeral home profit declining as the population seeks better and more personalized death care services. In recent years, more people opt for cremation services or eco-friendly ways of being buried over the traditional funeral service, prompting funeral directors to innovate or be left behind as a new generation of funeral homes take over the market.

4BSF is the leading source for funeral home financing and consultation. When you need help with your funeral home, whether you are looking for management ideas, or want to sell or buy a home, the 4BSF team is ready to help you navigate the death care industry with ease.

How Much is the Funeral Industry Worth Today?

The funeral service industry was once prized as being a recession-proof industry because eventually, everyone dies. Whether the deceased planned their funeral with pre-need services, or if the grieving family is fronting the bill, funeral services cost money. (1) It is a funeral director’s job to not only provide these services but also comfort the family and help facilitate their mourning.

In total, the industry market is worth an estimated $20 billion with 2.4 million funerals taking place each year.

“In 1997 the industry pulled in $12.6 billion (about $18.6 billion in 2015 dollars), according to the National Funeral Directors Association (NFDA). In 2012, revenues were $16.3 billion (about $16.9 billion adjusted for inflation). The industry also lost about 20,000 jobs over that period.”

–Shane Ferro

Unfortunately, many funeral directors have seemingly forgotten the personalized touch it takes to make a funeral home successful. As the population grows more and more unhappy with the services provided in a traditional funeral market, seeking a personalized service for every step of the way, funeral homes have been losing money in the 21st century.

This decline in profit has only continued to grow as newer funeral homes are catching onto the innovative industry trends and offering death services that speak to their clientele. However, prospects are looking up if funeral directors continue with this innovative trend, even in the face of a pandemic.

Declining Profits in Recent Years

While funeral service industry revenue has decreased in recent years due to a misalignment of service and needs between funeral home and clientele, the cost of entering the funeral industry has not changed in generations.

The retail price of funerals has increased to compensate for a growing cost to the funeral homes as well as economic inflation, but this has only caused a further rift between funeral homes and their clientele. (2) More families today are getting their loved ones cremated, an option viewed as the “inexpensive” alternative to a full burial service.

“Death is a dying industry with an economic phenomenon.  As Americans’ perceived value of “traditional” funerals diminish, the cost of funerals has increased nearly 1,328% in just four decades.  In 1960 the average cost of a funeral was $706 when only 3.56% of bodies were cremated.”

—  Perianne Boring

To close this rift between clientele and funeral homes, the funeral costs must be mitigated as much as possible, and methods shifted to better suit what the new generations want out of a funeral service, such as eco-conscious options, more personalized end of life care, and post-funeral loss therapy.

How Big is the Death Industry Today?

The death industry encompasses many types of businesses, not just funeral homes. Crematory services, funeral homes, cemeteries, and memorial homes are all wrapped into this term. Providers of end-of-life care, headstone craftsmen, and coffin makers are all considered in the death industry as well.

In the United States alone, despite a recent downtrend in the overall revenue generated by the death industry, it is still estimated to generate $20 billion each year. Some sources predict that the downtrend will reverse after the pandemic recedes, and by 2023 the death care market is estimated to reach 68 billion dollars in revenue generated.

The funeral industry is still considered to be a recession-proof industry, surviving so long as funeral directors can adapt to what their clientele market wants. Innovation will be key to keeping the death industry profitable in a new, much more conscious generation that cares more about their carbon footprint than where they are buried.

The pandemic forced individuals to wait on their loved one’s funerals or denied them the ability to mourn in the presence of friends and family, and many funeral homes are expecting these services to be booked once it is safe for large groups to gather again.

The funeral service industry accounts for a large portion of the revenue generated in the death care industry as families get better at seeking out deals from other areas of the death care industry. Furthermore, these funeral hacks have become widely known, such as Walmart caskets and discount memorial urns which funeral homes are inclined to accept as it lowers their cost of operation. Several companies have made it their business to purchase funeral homes so that they can cash in on the innovative new trends emerging in burial styles and methods.

Necessary Changes to the Industry

Starting a funeral home in today’s modern market is seen as a form of hospitality and care rather than a profession. Part of this is because of the recent declines in profit, and the other part is a more holistic, open view on death and mourning as a society.

Nowadays, individuals who want to become a part of the funeral industry are not doing it for the money, though it can be lucrative if done right, they are doing it for inherent care in helping families through the mourning process.

For the industry to thrive in the coming years, it will be necessary for several changes to be made in the industry. These changes are largely centered around innovation in how mourning families are allowed to – and encouraged to – celebrate the life of the deceased.

Pre-need planning is becoming more popular as individuals are seeking to take care of their funeral arrangements earlier in life so that they can have peace of mind knowing their family will not need to shoulder the burden of paying for the funeral, whether the arrangements are made for a full traditional service or an emerging type of funeral service.

Funeral home directors must be prepared to offer these emerging burial services to families, as well as a new outlook on healthy ways to mourn the death of a loved one, such as altering traditional funeral services to accommodate the deceased’s personality and connections to therapeutic services to help the family cope with the loss of a loved one.

Funeral Home Outlook for 2021

In the new year, many funeral directors are wondering whether they should continue their funeral home practice at the same moment many aspiring directors are wondering whether it is a good time to purchase their first funeral home.

With the pandemic, 2020 wrought destruction on the funeral home business as many homes could not keep up with the volume of bodies coming through their doors, and profits were at a record low as they could not provide any services for families of the deceased.

Many funeral homes are still not set up to participate in an online world, and that will cause many to fail as others provide online viewings and memorial services to bereaved families.

If funeral directors can shift to better encompass what their clientele wants out of their services while also setting themselves up for success in an online market, they will be better able to thrive in the coming years. The current year-over-year growth rate for 2021 is estimated to be 6.03% by the end of 2024.

New Funeral Home Trends in 2021 to Battle Declining Profits

Many new trends have been growing in popularity over the recent years, and the pandemic has shifted how families have to think about funeral services, with many not allowed to host a viewing or see their loved one’s burial. The mourning must be done virtually, without the company of friends or family to help them through difficult times.

If every funeral home follows the new trends emerging in what the clientele wants out of death care, they will stand a chance against the “death” of the death care industry. These new funeral service industry trends will help battle declining profits and help achieve the predicted spike in profits for funeral homes in 2023:

  • Creative alternatives to burial of cremated remains
  • A larger focus on pre-planning
  • Online grief support and counseling services
  • Environmentally friendly burials
  • Jewelry incorporated cremated remains of loved ones

What Are Issues the Funeral Industry is Facing?

One of the biggest issues the funeral industry faces today is the fact that many families are beginning to move away from the traditional services that have been offered for generations. (3) Now, families are looking for new, emerging burial options that are more environmentally friendly, or more personalized death care, such as at-home care or burial. 

“Families are increasingly abandoning traditional religious funerals, which are typically organized by funeral directors, in favor of secular ceremonies they may arrange themselves. Natural burials, which avoid embalming and concrete burial vaults, are more commonly considered than they once were, while a minority of families are bypassing funeral homes altogether to take care of their dead themselves.”

 —  Gabrielle Glaser

While this is an ominous sign for funeral home businesses, there is hope. For funeral homes that are willing to adapt to these market changes and offer services that are complementary, not exclusive, of this emerging trend, there is the potential that a new innovative approach to death care can be provided.

Additional issues the funeral industry market faces are an unwillingness to adapt to the tools of the generation. Many funeral homes are working with the same outdated websites and marketing techniques that they did ten to fifteen years ago, and this has cost many funeral homes a new generation of clientele.

Many families go out of their way to find a funeral home, often settling for the one closest to home. Funeral homes are not going out of their way to get in front of their audience, advertising on social media platforms and other web properties, where their target audience is searching daily. By adding online search and social media to their marketing channels, funeral homes can adapt to the current generation and reduce or thwart the decline in profits seen over the previous years.

Why Do Funeral Prices Vary So Much?

Before the burial of a body, it must go through several steps to even get to the funeral home. Transportation and preparation of the deceased’s body are two of the most expensive parts of a funeral service to the funeral home. These funeral costs can vary depending on where the body is, the condition it is in, and what services the family wants to opt into.

Transport of the body costs the funeral home any time the body needs to be transferred. From the morgue to the funeral home will consist of one trip, and if the body is being transferred to a separate cemetery, it will need to be transported again, this time with the casket. Additionally, if the crematory is off-site for bodies that are being cremated, transport will be required for that trip. Optionally, families may pick up cremated remains at the crematory and place the urn in a niche themselves, saving the additional trip to the burial site.

Depending on the market location of the funeral home, it can also be more or less expensive for the funeral home to have the body transported, and rental of equipment or hiring independent services can significantly raise the cost for funeral homes who are unable to supply all of the equipment themselves.

If the funeral service includes a viewing, embalming and other preparatory steps must be taken in the funeral home to present the body to the mourning family.

Most funeral directors have a limit to how much they are willing to discount services, but they are often willing to negotiate with families who need assistance in paying for the full cost of the funeral service. This can cause a significant variation in the price of a funeral as well, as many funeral directors will take stock of the family’s situation and provide a discount, often without notifying the family of the discount outside of the invoice total.

Median Funeral Cost in 2021

For many funeral homes and their clientele, the funeral costs are a concern for the future. Traditional funerals already have a reputation for being overpriced and unaffordable by the general public, only exacerbated by lowering wages and rising costs of living.

In 2021, the average cost for funerals is expected to remain the same as in previous years, averaging between $7,000 and $12,000 for the full suite of services, from burial to transporting the remains, embalming, a full-size casket, and other preparations that might be requested by the family. The viewing is traditionally included in this cost.

For those affected by the pandemic, costs may be able to be offset as many funeral directors are proposing a discount for those who were unable to have their loved one’s funeral at the time of death. They were unable to mourn their loved one properly, and many funeral directors are taking this situation in kind with a variety of offers. Some funeral homes are planning to offer discounted viewings and memorial services for the deceased once it is safe for people to gather together again. Others are connecting family members with virtual therapy sessions after the death of a loved one and providing online mental health services to help families cope with the loss of their loved ones.

With the recent move many businesses in the industry have made to virtual or online sessions, funeral homes are now offering virtual services at a discounted rate compared to the traditional in-person service.

References

  1. HuffPost
    https://www.huffpost.com/entry/things-to-know-before-you-die_n_568fd2cde4b0cad15e646a20
  2. Forbes
    https://www.forbes.com/sites/perianneboring/2014/04/25/the-death-of-the-death-care-industry-and-eternal-life-online/?sh=33e391991c1a
  3. New York Times
    https://www.nytimes.com/2009/04/19/business/19death.html