Tom Anderson
Funeral Director Daily

I graduated from mortuary school in 1980 and in June of that year entered the funeral profession.  Life was pretty simple, families were of the nuclear type, services only differed dependent on what religion the deceased belonged to, and there was no cremation in my little area of Minnesota.  I tell this story often — in the summer of 1982 – virtually two years after I started working, a family walked in to the mortuary, told us that mom had died, and calmly explained, “We want her cremated”.  So now, 37 years later, our mortuary is climbing up to close to a 60% cremation rate.

However, cremation doesn’t scare us anymore.  In the death care industry, like almost all other industries, things change and the good operators will change and modify their operations to change with the times.  I’m often reminded of the railroad business – they were the business that moved mass amounts of people prior to the affordability and availability of air travel in the 1960s.  While many railroads are doing fine operating freight transportation today, just think if they had thought of themselves as being in the “Passenger Transportation” business instead of the “Railroad” business.  They would have probably morphed their business line to include air passenger travel and be in that business today.  My point — don’t get stuck on being in the “Funeral” business. . . move your  brand along.

So, we were somewhat scared of losing funeral business for cremation business.  But, is it so bad?  It appears today that even the big guys like SCI are embracing it and, from what I see, moving to be even a bigger player in the large, low cost areas of it such as the Neptune Society brand – of which they own.

Let’s just take a quick look at a 100 call funeral home that is doing 20% cremation/memorial services.  For the sake of this discussion they do 80 funeral services at $10,000 and 20 cremation memorial services at $4,000.  That is a total revenue of $880,00.  If they can maintain a 30% margin then they will profit $264,000 per year.

Now, let’s consider the same firm the next year that has moved to a 40% cremation rate.  That firm does 60 funeral services and 40 cremation services at the same prices for a total revenue figure of $760,000 – almost a 15% decrease in sales.  However, because of less casket and vault sales they have been able to raise their margin to 35%.  That would equal a profit of $266,000 per year — more profit on less funerals.  You can take this exercise even farther and find that by continuing to raise your margins you can survive at the same profit level at a 70% cremation rate.

The point here is don’t get so wrapped up in losing funeral calls to cremation calls.   A little work on the budgeting and pricing end and you may find out that business is not so bad.  Instead of bemoaning the loss of funerals for cremations look at how to gain market share in your community, whether funeral or cremation, and you will see the additional sales, in the fixed cost environment of the funeral business will pay big dividends to the bottom line.[wpforms id=”436″ title=”true” description=”true”]