Cremations offer service choices with a unique pricing structure based on their included services. It is estimated that a funeral director invests an average of 58 hours to accomplish a traditional funeral. He or she also utilizes support staff to accomplish the filing of necessary permits, insurance policies, and arrangement details. In comparison, the average time spent to accomplish a direct cremation by a funeral director is less than five hours. In other words, the funeral director’s involvement and time are scantily utilized to accomplish final disposition when services are excluded.
The line title reflective of service fees is listed as “Professional Services of Funeral Director and Staff” on the General Price List (GPL) as controlled by the Federal Trade Commission (FTC). In the case of partial services such as immediate burials or direct cremations, this line title is listed as “Proportionate Share of Professional Services of Funeral Director and Staff.” As indicated, in these cases, the surviving family is only utilizing a portion of the funeral director's time and funeral home’s assets, and are, therefore, only charged a reflective portion of that fee.
This logic indicates that the pricing of cremation should remain low, however, current trends suggest otherwise. To understand why cremation costs are rising, one must look deeper into the structuring of death care cost of goods. In particular, one must dissect and understand the “Professional Services of Funeral Director and Staff” line fee and the role government regulation plays in affecting the price of doing business. To explain this charge, I will separate it into two different categories. The first category will explain what the charge encompasses and how it applies to a survivor’s service regardless of the service chosen. The second category will address obsolete government regulations that affect the cost of operations.
The line title “Professional Services of Funeral Director and Staff” is misleading. It is a “word for word” required term, as dictated by the FTC in their official publication “Complying with the Funeral Rule” (FTC, June 2004, page 7). The line title indicates that this charge is for the professional services of the funeral director and staff. Unless one reads the additional allowable print accompanying the line title, one does not realize that this particular charge also includes operations overhead for the funeral home that has not been included elsewhere on the GPL. In this case, this fee may be non-declinable. Operations overhead for a funeral home can suddenly add a hefty fee to one’s final bill.
What exactly is operations overhead and how does it contribute to the cost of goods for a funeral home? Operations overhead is the total sum of costs a funeral home sustains to perform and provide services to its clients. For example, when a funeral director is assigned to a survivor’s case, his labor fees are obviously associated with the service costs for the funeral home's bottom line.
Additionally, the funeral home has other overhead expenses that must be deducted from your charges before they realize a profit. There are secretaries, receptionists, housekeepers, lawn keepers, fleet keepers, vehicle purchase and lease contracts, vehicle maintenance, vehicle insurance, vehicle drivers, heavy lawn equipment, furnishings, essential equipment, office equipment, utilities, gasoline, mortgages, business insurance, employee insurance (health and unemployment), taxes (state, federal, and employee), accounting, legal, building maintenance, community involvement, charitable giving, advertising, professional licensing fees, continuing education fees, and a host of other items included under the ineptly named line item title. At the end of the day, the funeral home must cover these expenses to remain a viable business and continue providing final disposition services to its clients. The FTC allows the inclusion of these expenses in the “Professional Services of Funeral Director and Staff” line title, and, therefore, the funeral home divides the total sum of these fees and charges a proportionate share to each of its clients. Until recently, the bulk of this fee has been carried by those utilizing time within the walls of the funeral home. As these numbers are now decreasing, we see an effectual shift in the allotment of these expenses.
One may wonder, “If one only desires a direct cremation, why does one need a large funeral home and its huge overhead expenses to accomplish that wish?” That is a very good question. The answer is the second part of the expensive cost of goods equation; government regulation. I am a licensed funeral director in the state of Texas, so I will use Texas’ regulations for the answer.
Have you ever been to one of those restaurants where there is no restaurant at all? These establishments are convenient for people who are always in a hurry. Their food is fast and inexpensive. You just drive up, order, pay, grab your food, and drive out. The absence of a huge building with a large staff keeps their overhead down. Keeping their overhead down allows them to keep their prices down. It would be wonderful if that were the case in funeral service, but it is not. A funeral establishment must maintain a large building, a large staff, and tons of service-based equipment, even if their clientele and general populous trends are non-service based.
In the state of Texas, a funeral director must work out of and attach his licenses to an established and licensed funeral home.
A Texas funeral home must meet the following criteria.
1. Obtain and pay for a professional establishment license
2. Maintain a licensed and registered funeral director in charge
3. Meet fire, building, health and safety codes for municipalities and state
4. Locate in a fixed place that is not tax-exempt
Include facilities in which funeral service may be conducted for a minimum of 10 people (totally not needed for non-service cremations)
5. Have access to rolling stock consisting of at least one motor hearse (totally not needed for non-service cremations)
6. Include a preparation room containing the facilities, equipment, and supplies required for the provision of adequate embalming of decedents (totally not needed for non-service cremations)
7. Include other facilities as necessary to comply with the sanitary codes of the state and municipality (again, totally not needed for non-service cremations)
8. A display room containing sufficient merchandise to permit reasonable selection (totally not needed for non-service cremations), including at least five adults caskets (again, totally not needed for non-service cremations)
9. Sufficient licensed personnel to conduct business (that would be the funeral director).
As you can see, several of these requirements for a licensed funeral home are unnecessary for accomplishing non-service based options such as direct cremation. Without having to provide these unnecessary items, a funeral director could substantially lower his pricing.
These unnecessary requirements cause a rise in the cost of good as produced by the funeral home. As funeral homes find their caseloads tilting toward cremations, they are faced with the outrageous expense of providing oversized facilities, equipment, and staffs required by state and federal regulations that are obsolete. Even if they were to scrub their investments into these facilities, the same requirements exist for new facilities, and therefore, so do the same expenses.
As consumers, we are now faced with the reality of government overreach in the funeral profession. Rather than allow the market to determine what a business offers its clientele, the government stepped in and insisted that every funeral home, offer every option, to every consumer. This across the board offer guarantee to every consumer, imposed by regulation rather than market trend adjustment, has now forced upon them the expense of that operation. Now the consumer is faced with the consequences of such folly. In order to obtain and maintain regulated service options and equipment that do not generate cash flow, the costs of salable funeral goods are beginning to adjust to market trends.
That is why cremation prices are rising.
My name is Tracy Renee Lee. I am the owner and Managing Funeral Director at Queen City Funeral Home in Queen City Texas. I am an author, certified grief counselor, syndicated columnist, and co-founder of Heaven Sent, Corp. I write books and weekly bereavement articles related to understanding and coping with grief. I am the American Funeral Director of the Year Runner-Up and recipient of the BBB’s Integrity Award. I deliver powerful messages and motivate audiences toward positive recovery. It is my life's work to comfort the bereaved and help them live on.