I operated my funeral home from 1980 to 2013 and in that time period we increased prices every year.  I always looked for an average of about 3% but was able to increase my cremation prices more than that as cremation was growing in popularity.  And, it seemed that our price increases also increased margins as the inflationary rate of our costs, on average, were less than we increased prices.

As our number of services increased, so did our average margins, and profitability also did.  There is no doubt that as you set your budgets for 2026 growing margins may be somewhat difficult to realize when you consider the costs of your goods and services to operate your funeral home are continually rising.  According to Gemini artificial intelligence the average annual rate of inflation from 2000 to 2020 was about 2.2% annually. . . .meaning a 3% rise in prices would theoretically increase margins.  However, when asked the average inflation rate from 2020 to 2025 Gemini AI aswered “approximately 4.53%” to the same question. . . . .  That would make a 3% average increase in prices result in a loss of margin per case.

And of course, the traditional funeral home business is somewhat unique in that the choice of use and services consumers use is a one-time decision for each person.  So, if your highest priced and highest margin services are increased too much one ramification is that a consumer may choose a different service — such as direct cremation — to move their price point downward. . . . and with it, lower your margin on that case.  In the reality of this dynamic, setting price-points for your various services can be a difficult dance.

And at least for the short period of time I don’t see these inflationary costs going away anytime soon.  As you can read in this notice from the Bureau of Labor Statistics “The all items index rose 2.9 percent for the 12 months ending August, after rising 2.7 percent over the 12 months ending July.”  That means that in spite of our hopes of it receding, inflation was at a higher rate in August than it was in July.

I’ve also noticed in some articles, that I’ve linked below, predictions that other cost items will increase as well.  Items such as employer health care plans and commerical property insurance are expected to become more expensive moving forward.  Here’s some quotes from those articles:

 

• The total health benefit cost per employee is expected to rise 6.5% on average in 2026 — the highest increase since 2010 — even after accounting for planned cost-reduction measures. 

 

• Employers estimated that plan cost would increase by nearly 9%, on average, if they took no action to lower cost. 

 

• Based on the projections, 2026 will be the fourth consecutive year of elevated health benefit cost growth following a decade of moderate annual increases averaging only about 3%. 

 

• (a survey showed) 59% of employers will make cost-cutting changes to their plans in 2026 — up from 48% making changes in 2025 and 44% in 2024. Generally, these involve raising deductibles and other cost-sharing provisions, which can lead to higher out-of-pocket costs for plan members when they seek care.

 

• Employees are likely to see higher costs for their health coverage in 2026. 

 

• Employees could expect their paycheck deductions for health coverage to rise by about 6% to 7% on average. At the same time, because many employers will raise deductibles and copays to limit premium increases, higher out-of-pocket spending may also be a factor for some employees.  

 

• Commercial insurance rates in the US continued their upward trajectory in the first quarter of 2025, with the composite rate rising by 3%.  Umbrella and excess liability coverage, along with commercial auto, saw the most significant increases, both climbing by 6.7%. 

 

• Commercial property insurance premiums rose by 3.6%, with business interruption coverage seeing a similar increase of 3.6%.

 

Related Articles:

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  I would suggest that the least favorite responsibility that I had in operating a small business took place every October when I received the employee health insurance quotes from our providers and had to make a decision on how we would handle employee health insurance for the next year.

I also knew what I would take for insurance if I was making the decision simply for my family. However, in a small business every employee has a different situation and trying to make a decision that could please all of them was virtually impossible.  I don’t envy any of you having to make that decision.

And, the decision brings other decisions that are also difficult to make.  For instance, if you pick a plan that is quite a bit more expensive than the plan you had for the calendar year 2025 then you also have to figure the costs into your prices and try to figure out what the increased prices may do to your selected product mix (i.e. burial/cremation).

It’s a delicate balance between providing the best situation for your team members while also understanding that your fixed costs drive your price points and that the price points for differing types of services make a big impact on not only if consumers will use your firm but what services they will select.

More news from the world of Death Care:

Enter your e-mail below to join the 3,201 others who receive Funeral Director Daily articles daily

“A servant’s attitude guided by Christ leads to a significant life”

A recent survey found “mixed cost and price trends in the funeral sector”.  The survey conducted by the Competition and Markets Authority (CMA) of Great Britain probably has some correlation with the same trends happening in the USA.

The regulatory authority (CMA) concluded that profitability for large funeral directors fell between 2015 and 2023. . .driven by rising costs and a shift towards lower-cost unattended funerals or what we would call in the U.S. “Direct Cremations with No Services”.

The “rising costs” most often cited were higher wages, energy bills, regulatory compliance, and vehicle maintenance.

The CMA has the ability to pull information from the companies that it regulates and I found it interesting that as to prices to consumers they found four main and differing patterns by funeral homes:

• Some firms had raised prices in line with their increased costs.
• Some firms reported no significant change in their prices.   (They absorbed the price increases)
• Co-op Funerals reported that their average prices fell in “real terms” to consumers
• Dignity Funeral reported that they had lowered their prices for standard funerals and direct cremations

The CMA also mentioned that prior to these pricing situations, prices to consumers had risen above inflation for more than a decade.

Co-op, Dignity, and the National Society of Allied and Independent Funeral Directors all reported to the CMA that there were “unprecedented” or “exponential” inflationary pressures in recent years.

Tom Anderson
Funeral Director Daily

Funeral Director Daily take:  There is nothing surprising about this report.  As has been widely reported across the United States, whether you need to buy eggs or you need to buy a new truck — prices have increased.

One observation that I’ve had in my lifetime is that once prices increase, with the exception of widely traded commodities, the prices are not coming down.  If you have raised wages from $12 an hour to $15 an hour, you will never be able to go back to the $12 rate again.  That’s why when we let inflation into the economy. . . it takes hold.

It’s the same in the funeral or cremation business.  When wages or property taxes or supplies go up in cost  —  they are not coming back down.  Owners and managers need to understand that.

I’ve really noticed these price increases in fast food restaurants.  Those type of rising wages and increased costs have came to the fast-food business and you will never see your McDonald’s Quarter Pounder at $4 again.  What is of some relevance about fast food and grocery prices rising is that your death care clients see them everyday also.  While a funeral home or cremation provider or cemetery has to be judicious about price increases and their potential ability to chase away customers or move them to lower services — your clientele knows that your expenses have gone up.

If that is the case, you can absorb costs for awhile but, at some point in time prices to consumers need to be increased or you have to supplant those margins with more business.

And, in the funeral home business, price increases can be even more tricky and complicated because of the ability of consumers to choose lower priced services such as direct cremation.  I recently read an article where a funeral home executive mentioned that if he chooses to have a 3% retail price increase across the board, it nets out at about 2% because of the increased choice of cremation or other lower cost services chosen.

So, be aware.  There continues to be an argument in the U.S. as to whether inflation is “under control”.  Until we know it is your costs are continuing to rise — make sure that you understand that and price accordingly.

Inflation related articles from last week:

More news from the world of Death Care:

Enter your e-mail below to join the 3,199 others who receive Funeral Director Daily articles daily

“A servant’s attitude guided by Christ leads to a significant life”

There was a lot of talk at the recent National Funeral Directors Association (NFDA) Convention about the Federal Trade Commission (FTC) and the upcoming review of the “Funeral Rule”.   While it is true that we don’t know when the FTC will make a final ruling on the “Rule”, the consensus of those who stay on top of the “Rule” at the NFDA convention seem to expect the final result to include mandatory pricing disclosures on funeral home business websites.

With that as a backdrop, here’s a recent podcast from our friends Alan Creedy and Danny Jefferson on their podcast “Two Guys and a Question” about the issue.  It’s a short 8-minute listen and gives some of their opinions and expectations on the potential ruling.

Enter your e-mail below to join the 3,145 others who receive Funeral Director Daily articles daily:

“A servant’s attitude guided by Christ leads to a significant life”

I’ve talked about the book, Megatrends, by John Naisbitt before.  It was published in 1982 and sold 14 million copies and after reading it about the time it was written, its “Social Forecasting”, and my belief in that concept, played a major role in building my funeral business and other businesses I was involved in.

I became a huge believer in Naisbitt’s trends and bought hook, line, and sinker that I should incorporate them into how I made decisions to move my business forward.  For instance, one of those trends was moving from “Centralized” leadership to “Decentralized” leadership or another was moving from “Hierarchies” (a pyramid structure with few at the top) to “Networking” (every employee gets a say).

Here is a summary of Naisbitt’s “Megatrends” that will move society.  Remember, these were written in 1982.

This might sound strange today, but in 1982  centralizing the leadership and then giving commands to employees was the way business was done. . . .and generally the owners of companies joined the business clubs like Kiwanis and Rotary with the business paying their dues and membership fees and the employees generally were not involved in those business clubs.

Reading Megatrends gave me two initiatives that greatly brought my business positive momentum. . . First of all, I changed from a “Centralized and Hierarchal” system of making arrangements whereby the owner made the arrangements and was on the front line with the families and then ordered employee funeral directors on how to handle the funeral to a “Decentralized and Networking” process whereby all funeral directors made arrangements and dealt with families. . . Each funeral director made their own decisions, without having to ask the owner, on how the funeral service would go.

Secondly, I made available a pool of money for all employees, not just the owner, to join business or social clubs at the company’s expense within the dicatates of Internal Revenue rules.  And, followed up by giving employees time off from the facility to attend the functions that their club(s) was/(were) busy with.

Those decisions sound like a simple smart business modus operandi today, but it was not how things happened in the early 1980’s.  Especially, in small family operated businesses. . . It was generally the owner out front taking credit and the funeral director employees in the back room doing the work.  It’s just the way it was. . . . When I think of that time I cannot help but think of the cartoon classic “The Jetson’s” and the relationship between Mr. Spacely, owner of “Spacely Sprockets” and his employee George Jetson. . . or of the relationship on the 1960’s “sitcom” Bewitched between the boss Mr. Larry Tate and his employee Darin Stevens.

That gets me to another of Naisbitt’s Megatrends that is still taking place today.  He had the incredible insight to realize that our society would move at some point in time to an “Information Society” – after our country had passed through an agriculture society, an industrial society, and a technolgical society.  Here’s what Naisbitt said back in 1982 about “Information”:

“Information is an economic entity because it costs something to
produce, and because someone is willing to pay for it. Value is
whatever people are willing to pay. If an economy built around
information seems less real than one built around steel &
automobiles, it doesn’t matter so long as people are willing to pay
for information.

In the 1930s, society became organized around the automobile.
All that the automobile contributed was transportation. Today’s
society is becoming organized around the computer, which has
an orientation to expand your brain power through growth,
education and learning. The computer age will deal with
conceptual space, connected by electrons as opposed to
physical space connected by the motorcar.”

In my opinion we are continuing to live in that “Information” society today. . . .and relying on it to a greater and greater extend each day.  As we continue to move forward consumers are showing a greater reliance each day on “Information” when they make their consumer purchases.

For instance, my wife and I spend three months each winter in South Florida.  We still don’t know the area that well, but when we want to do something like go to a movie theatre, we get all the “information” that we can get through “conceptual space” on our computer or mobile phone without moving through “physical” space.  Here’s what we do:

1. Look on a map to see where theatres are located in relation to where we are at.
2. Once we locate theatres we look to see what movies are playing there.
3. Once we find the movie that we like, we look for specific times that fit our schedule.
4. Once we are satisfied, we look for seats, pricing, and then purchase our ticket.

Now, we are ready to go.  However, think if the movie theatre you owned didn’t have a website or did not put the movies and times that they were offered on that website your theatre, regardless how wonderful it is, would not be chosen.  I can guarantee you that we would have skipped right over your theatre because we are no longer comfortable or see value in going through the efforts to call or drive by your theatre when we can make other choices from the comfort of our home chair.

Tom Anderson
Funeral Director Daily

It’s my opinion that that is exactly what is happening and will continue to happen at a higher occurence rate to death care providers that do not offer enough “information” on their website. . . and that includes pricing.  While I don’t agree that the federal government should mandate website pricing as a consumer protection, I do believe it is in a funeral home’s best interest to put pricing on their website on a voluntary basis.

I’ve gotten stronger with my belief on this subject and every time I write something like this I will get a couple of emails from funeral directors who tell me they like having potential clients call them so they can explain what they do, how it benefits the client family, and how they charge for it.  They tell me that “many times the consumer will tell me that even though those prices are a little higher than what I saw online, I like the personal touch and will be coming to your funeral home because of that.”

I don’t doubt that that happens because it happened at my funeral home exactly the same way. . . . What I’m concerned about today as we get more and more into the “Information” society is that for every call you get like that, you probably have a dozen potential clients who, like me with my movie example, have passed you by because they did not see the “information” that they wanted on your website and were not willing to call or drive over because it was so simple to find their answers on competitor’s websites.

Here’s an article from Forbes that I found while doing this article entitled, “What John Naisbitt taught me about the Future“.  I found it interesting and also found this Naisbitt quote in it which I think explains why you should look at consumer trends, like online pricing, for your funeral home business modus operandi:

“Trends, like horses, are easier to ride in the direction they are going.”

More news from the world of Death Care:

Enter your e-mail below to join the 3,484 others who receive Funeral Director Daily articles daily:

“A servant’s attitude guided by Christ leads to a significant life”