Service focus could put life into mortuary industry

Funeral directors urged to change business approach to stay profitable.Funeral homes are charging 12 percent more for their basic services compared to last year, but profits are still only about half what they were two decades ago, according to Ed Horton, managing partner of the funeral services industry group of the Springfield CPA firm Citrin Cooperman & Co. LLP.

Less than two-thirds of respondents to the firm’s 2009 Funeral Directors Survey “are aware of the severity of the basic, bottom-line issue in the mortuary industry,” according to the report. “While controlling costs continues to be a major issue, 2009 shows a decline in the share of respondents who cite that concern — one that grew considerably in 2008.”

The problem, Horton said, is that many funeral homes price their services to cover overhead, and seek to generate profits from high-margin items like caskets.

“But caskets are a commodity, and the pricing has dropped to reflect that,” he said. “Also, the shaky economy has made more people price sensitive, so more are opting for cremations, which have typically been a low-profit margin service.”

Horton’s advice: recognize that the service itself is unique, and price accordingly.

“Funerals used to be one-size-fits-all, but today, people are looking for — and are willing to pay for — customized services,” he said. “Instead of a memorial of death, they’re looking for a celebration of the decedent’s life.”

E-mail Martin C. Daks at [email protected]