Learning from, and planning for, your funeral business in this economy



According to this recent article from USA Today “discretionary” consumer spending is down, consumer savings rates have fell, and use of consumer credit card debt has shot up in the last quarter with its largest jump since 1999. . . . That’s probably all good information to know, but what does it tell us and can it help us plan for at need funeral clients going forward?


Have you ever thought about funeral and cemetery expenses and wonder whether they would be considered necessity purchases or discretionary purchases? . . . . . I think the train of thought to use here is the same train of thought one might use when thinking about outerwear in a cold Minnesota winter.


Tom Anderson
Funeral Director Daily

There is no doubt that a winter coat and winter boots are a “necessity” in the months of January and February in Minnesota. . . . . however this decision could become a “discretionary” or luxury purchase if one chooses  to buy and wear a “Canada Goose” or “Tommy Hilfiger” branded jacket rather than a jacket to simply solve the problem of cold weather.


Can the same thought process be made in death care?. . . . For a human disposition one could always opt for a direct immediate cremation with no services for the “necessity” of a human body disposition.  But we all know that that type of disposition does not serve the entire death care consumer public. . . . .  So, would we classify anything more as a “discretionary” death care purchase?


However, it is even more complicated than this in death care. . . . .If one chooses earth burial than a casket almost always moves from being a “discretionary” purchase to an “essential” or “necessary” purchase. . . the same with a burial vault.  And then that “essential” purchase of a casket or vault becomes a “discretionary” purchase dependent on style such as cloth-covered, hardwood, or precious metals.


So, I think defining death care purchases as “essential” or “discretionary” can get complicated. . . . However, there are probably some take-aways we can get for our funeral businesses when we look at the current situation of the economy as told in the aforementioned USA Today article.


  • Discretionary spending being down —  Might this tell us that when families do choose to purchase that casket, vault, or urn, they may look to the lesser priced items?  The article tells us that “discretionary” spending is down 7% from one year ago. . . .If we don’t feel as “flush with cash” will we purchase less expensive items?  If you are a funeral home that relies on large margins from casket and vault sales for profitability you might want to look at putting more margins into non-declinable services and less margins into merchandise sales in this economy.


  • Falling Consumer Savings Rates —  The USA Today article tells us that pandemic-related savings may be lessening.  One estimate in the article estimates that American’s consumer cash cushion is down to $1.3 trillion from a pandemic high of $2.7 trillion.  And, that same estimate states, “Low-and middle-income Americans have depleted most of their trove” (of the cushion).

If funeral consumers feel less wealthy from this aspect, they may also look at purchasing lower priced merchandise at-need from your funeral home.  Where I think that this situation may really come into play in the death care market, however, is with pre-planning and pre-financing.  It just makes sense to me that the less I have in savings the more opposed I might be to putting some of that savings into a funeral plan.  In essence, it is quite possible that pre-planning with financing could suffer because of the lower savings balances among Americans.


  • Increased Credit Card usage — The USA Today article states that “Credit card debt shot up by $154 billion in the third quarter”.  It also mentions that 8% of credit card balances are at least 30 days past due.

I think that this fact will play itself out with those client families who may want to spend on a funeral or cemetery item but not have the funds or credit available to pay for such.  What do you do in that situation?   You can either extend company credit to the family which will increase the sale, but might not be collectible or you can get the family to spend less so that it will fit within their credit card limits.


Both of those options will limit your profitability. . . .but what other choices are there.


Don’t get me wrong.  I think the position of the American consumer is still pretty good as wages are up and employment still seems plentiful. . . . . However, knowing some of the macro-issues in the economy certainly can help you plan how your business will handle a situation if it does occur. . . . .It would be smart to think about these situations as they might apply to your individual situation.


Remember, “Hope” is not a plan.


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