Funeral Costs – What I Didn’t Get to Say
March 19, 2008
I had the opportunity to be on the Seattle NPR Weekday radio program this morning. The show was hosted by Steve Scher with guests, John Eric Rolstad of the People’s Memorial Association and Char Barrett of A Sacred Moment who performs home funerals. The show covered three main topics: Embalming, Cremation, and Funeral Costs. If you want to get the gist of what is happening in the Pacific Northwest, I would recommend that you have a listen to the program.
To listen to the Replay visit: “Funerals on Weekday at KUOW 94.9”
A couple things that weren’t mentioned but should be noted. The home funeral movement I feel is appropriate for those families wanting something private and under the ideal conditions. Dry ice might retard decomposition, but I would question if the family was prepared to deal with purge, urination, defecation, or the more unpleasant things that funeral directors have quietly looked after like tissue gas and maggots.
I give credit to Char for carving out a niche that she is serving – her website is informative and the families that she looks after will be the benefactors of her passion. Her website is: http://www.ASacredMoment.com.
When it came to funeral costs, John, from the People’s Memorial Association, referred to its price survey of funeral homes from western and central Washington state. He stated that there is such a wide range of prices for similar services – 300 to 400% compared to other industries that are 10 to 20% citing Target, WalMart and Costco. Unfortunately, it was the top of the hour and the host, Steve couldn’t see the disappointment face when I was unable to expand upon funeral costs – but this is what I would have said:
John is referring to commodities – things that do not have a qualitative differentiation in a given market. Funeral services couldn’t be further away from a commodity. The flaw in their survey is that they have requested a stripped down service to try to compare apples to apples. What aren’t considered are the differentiation factors like the level of service, the location and quality of facilities, and time frame and number of transfer staff dispatched to a residence, to name a few. Also, not considered in the price survey are other items such as DVD tributes, online memorialization, facilities, equipment, and knowledge of creating and facilitating events that are very personalized.
A more relevant comparison would have been to look at other service / experiential oriented industries like hotels – Motel 6 vs. Crowne Plaza or McDonalds vs. Seattle’s El Gaucho Restaurant – and oh, what about a cup of coffee? I am not saying that one has to choose the most expensive, but not everyone is shopping purely on price. Research that I have seen indicates that only 17 to 22% of consumers are truly shopping on price but the majority of consumers are value shoppers.
“With a more educated consumer and with a wide variety of funeral service providers, the business model of a Memorial Society is obsolete!”
Memorial Societies were formed to give people the opportunity to choose a simpler, less expensive option. A generation later funeral homes are either serving specific niches or offering a wide range of service options. Now with so many different choices, families can get whatever service they want. Just as funeral homes 50 years ago assumed that everyone wanted “traditional” funeral services, Memorial Societies should be aware that not everyone wants the cheapest! For someone who wants the absolute cheapest, I would forgo a Memorial Association membership fee and compare prices – save your 25 bucks.
It is a consumer-driven market so only those funeral providers who cater to what their community wants and what they are willing to pay will survive – if they are too expensive or too cheap they won’t.
I would like to thank the host, Steve Scher and the producers, Sage Van Wing and Katy Sewall of KUOW for inviting me as a guest on their show. I would invite comments from Char, John, other listeners, and my readers and fellow funeral professionals to continue this conversation.
Final point: I believe that any dialogue that serves as a catalyst for the general public consider how they would like their last wishes to play out is a benefit to them, their families, and to the funeral industry.
Robin: It was great having you on the show, however I beg to differ with a couple of the points you made in this blog. Simple cremation IS a commodity with virtually NO variation in end product–so, why then do prices vary from $470 to over $2,800 in the Seattle for the same thing. Many funeral homes operate their traditional business as well as a separate discount business under another name or DBA–virtually the only difference is the phone number you call. Your body may be picked up by the same staff, with the same van, stored in the same refrigerator, have your family meet with the same funeral director and be cremated in the same retort. The only difference is that the price that you pay varies wildly depending upon which phone number they called in on.
Yes, if people want the prestige of a certain address or particular funeral home or even the fancy interiors, brand new hearse and limos–they should expect to pay more for that, however with more and more consumers choosing cremation, those are amenities that are not really relevant to most families here in the Northwest.
Regarding your statement that “With a more educated consumer and with a wide variety of funeral service providers, the business model of a Memorial Society is obsolete!” With all due respect, Robin–Obviously you haven’t had much interaction with the general public around these issues. The role of People’s Memorial Association is not only to offer discounted, quality services to our members but also to educate the general public so that they can make informed decisions. Some of our membership choose to go with a high-end funeral home, rather than one of our contracted facilities. I have no problem with that as long as it was a decision that was made with a full understanding of the options and they have the financial resources to pay for such services. Unfortunately, I have seen too many families unknowingly get sold waaaay funeral than they can afford–end up putting it all on credit cards–then having to default and ruin their credit rating because they can’t keep up with the payments at 21% interest.
I regularly speak to senior groups, hopice staff and other community organizations. What I find is that most people are shocked to hear that there is such a wide variation in funeral prices. They assume that like other services, there is only slight variation depending upon which establishment you choose. They don’t realize that the one down the street may be 3-4 times more expensive than another one nearby. They are even more shocked when I inform them of what their rights are as a funeral consumer–such as the fact that they can perform their own home funeral, purchase or make their own casket, view the body without embalming etc. While consumer’s may make very educated decisions when it come to buying new appliances or a car–most people in our culture have an aversion to delving into anything related to death unless they absolutely need to.
The death care industry counts on the fact that most consumers don’t plan ahead and don’t shop around. That is the only way that the industry can defy general laws of economics. For example:
The law of supply and demand says that if there is a surplus of a certain commodity prices will go down, whereas if there is a shortage, prices will go up.
Ironically, in the US there is a gross oversupply of funeral homes, so you’d think they’d all be dropping prices to try and compete. No instead, the industry has with a wink and a nod colluded to raise prices drastically so that even though they may be doing less funerals, their profit margin is greater on each one.
Same goes for cemetery plots in many areas–here in the Northwest where we have such a high cremation rate, you’d think that cemetery plots would be going at fire-sale prices! No–what do the cemeteries do, they raise the price of plots so that even though they’re selling less plots, they make a higher profit margin on each one.
The only reason the industry can get away with this kind of highway robbery is because most consumers are not well-educated about funeral costs and don’t shop around. Once the death has occurred and the funeral home has picked up the body, it’s generally too late to start shopping for a deal. They’ve got you where they want you–between a tombstone and burial vault!
In many states, the funeral industry has been lobbying to eliminate the rights of families to care for their own dead, purchase caskets from a third party or use a discount cremation service. If it were not for the voices of Funeral Consumer groups around the US, the funeral industry would virtually eliminate consumer choice.
NO–if anything there is a greater need today for Funeral Consumer Organizations like People’s Memorial than there ever has been–to educate and protect the rights of consumers and advocate for consumer-friendly funeral laws.
I really agree with John Eric on this one. The object of true memorial societies (as opposed to the faux ones operated by corporate funeral homes) is to inform consumers of their rights, to help them make intelligent decisions and to watch the legislative and regulatory groups to protect the rights of funeral consumers.
Very, very few people will do comparison shopping at time of death. They either don’t realize the huge price differences or just can’t be bothered at their time of grief. To say that funeral prices are consumer driven is just not accurate!
As John Eric said, to think that someone is getting better service from a huge brick and mortar funeral home with their enormous overhead and staff just isn’t true. We have volumes of satisfaction surveys from family members at People’s Memorial Association that show high levels of service from smaller funeral services and poorer service from some of our previously contracted big mega-death care companies. And we don’t have any high pressure sales staff to “visit” with the family to sell them fancy urns or caskets when the funeral director is through as the big guys do!
People’s Memorial Association and our sister organizations across the US perform an increasingly valuable service for our members, to keep a downward pressure on prices and to keep an eye on governmental laws and regulation which tends to faovr funeral homes over consumers. Talk to the families of the 75,000 families we have served in Washington State over the past 69 years. I think you will come away with a very different picture of the value of memorial societies.
Ruth E. Bennett
President,
People’s Memorial Association
People’s Memorial Funeral Cooperative
Austin Memorial and Burial Information Society (AMBIS) receives regularly (about once a week on average) letters, often with donations, thanking the organization for all of the assistance it provides. Our information is used constantly by hospice social workers and others working with long-term care clients and end-of-life clients to assist them in providing help to those clients. Requests for presentations are continuous, often at rates beyond our capacity to immediately satisfy. It is the family-oriented and consumer-oriented information we provide – information not tainted by profit motives – that cause many people to see us as a reliable source of such information. No profit-oriented funeral service will ever achieve that status. I trust Consumer Reports to tell me about the reliability of cars, not General Motors.
Just a couple of thoughts about Mr. Rolfstad’s economic and “collusionary” concerns about funeral service.
Cemeteries for instance can’t follow a standard “supply and demand” curve. Many/most businesses have the right and the opportunity (and shareholders would say the obligation) to close down an unsuccessful location and move operations to a different part of town or shut down altogether if volume slips. Cemeteries, by contrast, have to keep on functioning no matter what happens.
To make matters worse, the costs of maintaining and operating a cemetery change little with a decline in volume and so a smaller number of burials must support the ever increasing costs of things like worker’s comp insurance and fuel and pay rates as they rise year after year. Rising costs divided among fewer burials equals rapidly rising fees. There is no other economic fix. You can’t consolidate cemeteries, the remains have to stay where they are.
Funerals and funeral homes have a somewhat similar economic challenge. For a substantial majority of consumers in America, funerals remain a non-commodity choice. Most still choose a funeral home for ethnic reasons or social reasons or religious reasons or neighborhood reasons or quality of service reasons or some combination thereof, and in many communities, people are reluctant to shift those allegiances. So if for instance an ethnic population declines in an area, fewer people pay to support the functioning of a business which otherwise costs more and more to operate (the building has to be maintained basically the same whether 20 families or 200 use it for instance). Funeral prices must rise in order for the business to remain open.
Now at some point that economic balance fails and either the funeral home learns how to extend its reach to other people or it goes out of business, but that process can and often does take many years.
As for price differences from business to business, please keep in mind that the funeral home which sets a $2,800 price for direct cremation isn’t trying to “put one over” on the consumer. In all reality, they do not expect to service many direct cremation families at all and have instead focused the structure of their pricing on other forms and formats of service.
Based on the surveys I have seen, funeral home profitability has steadily declined over the last several decades. If “collusion” were at work, profitability would at least remain steady over time. No, taking care of human remains in an ethnically/socially expected manner is very expensive to accomplish. One day, if those social needs go away, disposition will indeed become a commodity and prices will fall. Of course, perhaps some day everyone in America will turn to camping on their vacations and all the hotel chains will go out of business as a result. Possible I suppose, but that kind of social transformation only happens once in a while and usually very slowly.
Some people find great satisfaction in setting up a tent, lighting the Coleman lantern, and cooking over an open fire; others prefer a downtown, highrise hotel with room service. The cost of those two overnights vary astronomically.
Consumers of funeral services ought to know they have just as wide an array of options, and if memorial societies help accomplish this, I think that’s wonderful. At the same time, inaccurate economic reasoning and unfounded accusations of “collusion” helps no one make better decisions and indeed undermines the credibility and effectiveness of the accuser.
Peace,
BT Hathaway
John Eric, Ruth, and Lamar…
Thank you for furthering the conversation about this topic. Although many of your comments were valid in the past, today – especially in the Pacific Northwest – memorial societies seem to have lost their steam. Both your “association” and the Memorial Society of British Columbia once relied on the economies of scale that SCI had so that they could then provide discounted prices for your members. Now that the two of you were not happy with SCI as your service provide – or SCI was not happy providing services that were not economically viable, you find yourselves between the fore mentioned rock and a hard place.
MSBC has scrambled to try and fill the void with other providers and knowing that its membership numbers are on a slippery slope, want funeral homes to sign up 2 new members or charge them a $50 fee for every time they provide services for a member. Hmm, doesn’t seem to be a sustainable business model.
In Washington State, faced with the same issue, you have decided to cross over the fence and become a funeral service provider. I am not sure which way that will go – first, a potential conflict of interest, and second, you will realize that there are some capital costs and overhead to tend with. You have already asked members to reach into their pockets once to get started – at what point would it have been cheaper for them to fore go their membership and just pick the cheapest provider – saving $25 + donations.
Lamar seems to have a similar problem; he cannot sustain the demand for presentations to educate the people in Austin. Well, its seems to me that the business model is faulty, you need to hire more staff, so you will have to increase the membership fees or ask for more donations.
If every funeral home was unethical then your societies would be flourishing. The truth is that most funeral homes and funeral directors are good, honest people who are serving their communities. I, like many of my peers, have boxes full of thank you cards for providing reasonably priced services. Funeral associations receive more accolades for their members than complaints.
Maybe in Jessica Mitford’s time there was a need for more options but now consumers have many options to choose from. I am not saying that every funeral director “gets it” and that yes there are some too that think cremation will go away. You see, I am not just picking on memorial societies; I have that same tolerance for those funeral homes. In the end, the consumers will speak, and those – funeral homes & memorial societies – that do not have relevant business models will just slowly fade away.
…Rob
I’ll respectfully disagree with the comments from John Eric Rolfstad and Ruth Bennett and the People’s Memorial Association and here’s why. Their sentiments were that people do not shop for a funeral in an at-need situation and that at the time of death consumers are not savvy. I’m here to challenge that first hand. Each day as an owner of multiple funeral funeral homes and funeral related business – each of our business received call daily both at the time of death and before death price shopping. Heck – my son even receives price shopping calls at the crematory in the middle of the night from well educated people who want to by pass a funeral home entirely. This trend is happening-period. For this reason, in my opinion I feel that as a funeral professional who wants to remain profitable and have sustainability, we need to change our paradigms and come up with a new business model that will adhere to the several consumer mindsets, traditional burial, high end cremation with memorizations and yes the all might low end direct cremation. None of the consumers mindsets are “wrong” they are just innately different from what previous funeral generations were used too . It is our job to provide the consumer with the options they are looking for and figure out how to be profitable in doing so. It is not unusual for a consumer during the at-need arrangement conference to barter with you or attempt to have you bring the price down for what -ever their reasons are. This is why I believe within the Life Story Funeral Home model/brand – we are on to something. Our model is similar to the hotel chain – Marriott, Courtyard and Fairfield. We have a full service boutique if you will funeral home, a self directed funeral option through the Today Center and with eCrematory we fulfill the low end. In today’s “turbulent financial times” it is the non-educated consumer who doesn’t shop around at the time of death.