Thai funeral image by Adrian Hillman from Fotolia.com
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.
Green Burials
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.
References
- Bplans.com: Funeral Home Business Plan
- Butler Consultants: Free Business Research Statistics, Free Industry Statistics Sorted by Name, Net Profit, Gross Margin, Personnel
- Funeral Business Advisor: Home, Editorials, Feature Editorial, Embrace Cremation
- Greenconomist: Marketing, Natural Burials, To Hell in a Handbasket
Writer Bio
Gideon Sarantinos began writing professionally in 1995. He has been published in various peer-reviewed scientific journals. He later studied film and TV production and is published in "Connections" audio visual magazine. He holds a Master of Science in public health and an Advanced Diploma of Arts in screenwriting and audio engineering from Australian universities.