The average gross profit margin across the funeral industry is 62.5 percent, as of 2010. This ranks just above the midpoint compared to other common industries. However, independent operators may barely squeeze a margin of 10 to 30 percent.
Factors Affecting Gross Margin
Since the global population in the Western world is aging, death rates and the demand for funeral services will continue to increase. There are a variety of factors affecting the profitability of funeral homes such as the type of casket, burial versus cremation, tombstones and flowers.
Burial Versus Cremation
Burials have traditionally cost more than cremation, but gross margins are also typically lower. Apart from the differences in the cost of materials to produce caskets, cemetery plots are becoming increasingly expensive to purchase and maintain.
The cost base of eco-friendly burials is substantially lower than traditional burials, sometimes by as much as 50 percent. Depending on the location and natural flora and fauna of the burial site, however, green burials can boost the gross margins of funeral operators.