Over 55% of Americans now choose cremation as their ‘preferred’ disposition and death care option. This shift from traditional burial to cremation is having a huge impact on the funeral industry. Because, while cremation means that funerals are becoming more affordable for families, it means that funeral homes’ revenue is declining. What we are starting to witness in 2019 is the impact of cremation in terms of pricing.
Cremation saves on funeral costs
Often families think of cremation as a way to save costs. And, although there are different reasons why a family chooses cremation, the lower cost of a cremation funeral is by far the primary reason. A cremation service is generally at least half the cost of a burial service, if not more. But, direct cremation is what is revolutionizing the funeral industry at present. A direct cremation is the most economical cremation option. And, what the industry is not telling us, is that direct cremation is now accounting for around 70% of all cremations performed.
What is a direct cremation? And why is this challenging the funeral industry?
A direct cremation, is where a simple cremation is conducted, without any ceremony or services. This means the funeral establishment (or crematory) simply handle the collection of the deceased, complete the required legal administration, and perform the cremation. The cremated remains are then returned directly to the family. What this means is that it can be delivered at a much-reduced cost. The demand for direct cremation is challenging an industry that once did not even feel a need to provide up-front funeral pricing. Now, cremation consumers are shopping around to compare cremation prices, and seeking out the most affordable direct cremation service they can find. As within other consumer sectors, why would you opt to pay hundreds (if not thousands) of dollars more, for the exact same product or service?
How much should you expect to pay for a direct cremation?
A direct cremation ranges in cost in any one area. If you conduct a simple comparison between 5 funeral homes and cremation providers, asking for the cost of a direct cremation from their General Price List, you will see a difference in price. Especially if you select a range of different providers from the small funeral home to large corporate funeral home. In most major cities, a direct cremation can be conducted for between $595 to $995. Rural areas tend to be more expensive, as there is less competition for the cremation market.
Comparing cremation prices
The chart below highlights the comparison between a DFS Memorials independent low-cost cremation provider and the average cost for a direct cremation in a city.
|AREA||DFS Provider direct cremation price||Average direct cremation price*|
|New York City NY||$485||$1,969|
|Los Angeles CA||$625||$1,524|
|San Antonio TX||$595||$1,856|
|San Diego CA||$600||$1,358|
|Dallas-Fort Worth TX||$755||$1,944|
|Oklahoma City OK||$945||$1,914|
|Las Vegas NV||$595||$1,526|
*Average direct cremation price 2019 obtained from Parting Funeral Home Comparison website
Are cremation prices likely to rise in 2019?
The market for cremation services will continue to become more competitive. Cremation has continued to disrupt the funeral industry in 2020 as this article explains.
Most funeral businesses need to increase their volume of cremation business to sustain their revenue. This is already leading to cremation ‘price wars’ in some cities, where funeral homes are reducing their direct cremation price to increase their volume of cases.
However, at the same time, we are also witnessing an aggressive approach from corporate funeral entities, who need to acquire their own share of cremation business. Corporate death care companies, such as Dignity Memorial and The Neptune Society, can afford to enlist the expertise of professional marketing services and ‘dominate’ in the domain of online advertising and direct mail. Corporate and privately-owned funeral entities across the U.S. are acquiring successful independent cremation businesses to dominate a cremation market in a specific area.
We observed an example of this recently with Foundation Partners (a privately-owned funeral business with 80 locations in 17 states) acquiring a longstanding family business in Tucson. The family business had offered the lowest cost direct cremation to families in Tucson and continues to operate under the existing funeral home name. I would anticipate that once these large funeral entities position themselves to dominate a market, we are likely to see cremation prices rise again.
Pre-arranging cremation services
Taking out a pre-arrangement cremation plan today could potentially save you on the possibility of rising cremation costs. A direct cremation plan can be funded by an insurance product or a trust and ensures you lock in today’s prices. The terms will differ, depending on your state legislation on funeral plans, and your personal circumstances for making payment.
An important aspect of pre-arranging a cremation is to pre-authorize the cremation. For a cremation to proceed, the legal next-of-kin must sign a Cremation Authorization Form.
But, when pre-arranging, you can pre-authorize your wish for cremation. Saving the surviving family from the decision when the time comes. Typically, a direct cremation that costs $650 today at-need, would cost approximately $1,200 to pre-plan and pre-pay over 24 months.
Alternatively, you can pre-plan by doing some research to determine an affordable cremation services provider near you, and put aside the required funds for an ‘at-need’ direct cremation in a POD (Payable on Death) account at your bank. Many funeral service providers are happy to prepare the necessary paperwork for cremation and keep it on file for when the need arises. This allows you to retain control of your funds for cremation while having made the proper provision for your surviving family. Read more about pre-planning a cremation or funeral with a POD account.
So, the key ‘take-aways’ from this article are that you should ensure you compare cremation costs before deciding on a cremation service provider and be aware that the cremation market is likely to change over the coming years.
Further information on the impact of the increasing cremation rate in 2020, how COVID-19 has dramatically disrupted the cremation market, and how direct cremation has become the number one option for families, can be found in this article ‘Cremation Costs in 2020: How cremation is disrupting the Funeral Industry.’