Why Funeral Homes Are Losing $12,000 Per Family : The Direct Cremation Revenue Crisis
- Anna Ciboro
- Jan 20
- 6 min read
Cremation rates hit 60.5% in 2023. They'll exceed 80% by 2035.
And funeral homes are pretending this isn't a crisis.
Here's the math: a traditional burial generates $10,000-$15,000 in revenue.
Direct cremation? $800-$1,500.
When 8 out of 10 families choose cremation, your revenue model collapses.
But here's what funeral homes are missing: families choosing direct cremation still want to memorialize their loved ones. They still want to honor them. They still want support through grief.
They just don't want your $12,000 package, your pressure sales tactics, and your rigid funeral home timeline.
The cremation revenue crisis isn't about families choosing "cheap." It's about funeral homes refusing to sell what modern families actually want.
This is how the industry shifts - and what funeral homes can do before it's too late.
The numbers funeral homes DONT want to see
Cremation rate in 2023: 60.5%
Projected cremation rate by 2035: 80%+
Average revenue loss per cremation vs burial: 50-70%
Source: Cremation Association of North America, 2024
Let's do the math on a funeral home serving 100 families per year:
2015 business model:
70 burial families × $10,000 average = $700,000
30 cremation families × $5,000 average = $150,000
Total revenue: $850,000
2026 business model (same funeral home):
40 burial families × $10,000 = $400,000
60 cremation families × $5,000 = $300,000
Total revenue: $700,000 (-$150K revenue drop)
2035 projection (if nothing changes):
20 burial families × $10,000 = $200,000
80 cremation families × $5,000 = $400,000
Total revenue: $600,000 (-$250K from peak)
And that's the optimistic scenario where you keep all 80 cremation families.
In reality, 40-60% of cremation families are already bypassing funeral homes entirely for $600-$1,200 direct cremation from providers who do nothing but logistics.
Your actual 2035 looks more like:
20 burial families = $200,000
30 cremation families through your funeral home = $150,000
50 cremation families who never called you = $0
Total revenue: $350,000
You just lost 60% of your revenue in 20 years.
Why families are choosing direct cremation (it's not what you think)
Ask most funeral directors why families choose direct cremation and you'll hear:
"They can't afford a real funeral."
"They don't understand the value."
"The internet is ruining our industry."
All wrong.
Here's what families actually say when you ask them:
"We didn't want to be pressured into buying things we didn't need."
Translation: Your package model forces them to buy the casket, the viewing, the service, the flowers—all or nothing. They want à la carte. You're selling combo meals.
"We wanted to do the memorial our way, not the funeral home's way."
Translation: Church service on their schedule. Celebration of life at the lake house. Backyard gathering with close friends. Your funeral home chapel and rigid 2-hour service slot don't fit modern families.
"We still wanted to honor them, we just couldn't afford $10,000."
Translation: They DO want memorialization. They just don't want it at funeral home prices with funeral home limitations.
"The funeral home felt like a sales pitch, not support."
Translation: Your staff is trained to upsell packages, not listen to what families actually need.
This is the part funeral homes miss: Families choosing direct cremation aren't rejecting memorialization. They're rejecting YOUR VERSION of memorialization.
What direct cremation providers understand (that funeral homes don't)
The direct cremation providers winning market share aren't competing on price alone.
They're competing on what families actually want:
Transparency:
Flat pricing. No hidden fees. No "packages."
Everything online. No pressure sales.
Clear options. Families choose what they need.
Flexibility:
Cremation happens fast (24-72 hours).
Family does memorial service when/where/how they want.
No funeral home dictating timeline or venue.
Modern memorialization:
Digital memorial pages families can update forever
QR code plaques linking physical markers to online tributes
Support that extends past the cremation transaction
Learn how to create a meaningful digital memorial that loved ones can access and update for generations.
The best direct cremation providers—like Choice Cremation (in Tennessee) with their year-long grief support program—are doing what funeral homes claim to do: supporting families through loss.
They're just doing it without the expensive building, the casket showroom, and the pressure to spend $10,000.
When faced with cremation revenue loss, most funeral homes try (hint this doesn't work):
Response 1: Raise cremation prices
Logic: "If we're doing less volume, we need more margin per cremation."
Result: Families go to the $800 direct cremation provider. You get $0 instead of $3,000. Brilliant.
Response 2: Bundle cremation with services families don't want
Logic: "We'll require a viewing and service with every cremation."
Result: Families feel trapped. They choose direct cremation elsewhere. You get $0.
Response 3: Blame consumers for "not valuing tradition"
Logic: "Families today just don't understand the importance of proper funerals."
Result: You sound out of touch. Families choose providers who actually listen. You get $0.
Response 4: Compete on price with direct cremation providers
Logic: "We'll offer $1,000 cremation to match them."
Result: You've destroyed your margins and you're still losing to the $800 provider. You make $200 per family instead of $5,000. Congratulations, you're broke faster.
None of these work because they're all trying to save a dying business model instead of building a new one.
What actually works: the memorialization pivot
The funeral homes thriving in high-cremation markets stopped selling disposition and started selling memorialization.
Here's the shift:
OLD MODEL (DOESN'T WORK):
Lead with: "Let's talk about burial or cremation."
Revenue driver: Casket/burial vault/plot
Service model: One-time event at funeral home
Relationship ends: After burial/cremation
NEW MODEL (WORKS):
Lead with: "How do you want to remember them?"
Revenue driver: Memorial services, products, ongoing tributes
Service model: Flexible memorial options, digital legacies
Relationship continues: Ongoing support, annual memorial updates
The families choosing direct cremation will pay $800 for cremation logistics.
But they'll pay $500-$2,000 for:
Professional digital memorial with lifetime hosting
QR code memorial plaque linking to their tribute
Celebration of life planning and coordination
Memorial jewelry, urns, keepsake products
Grief support and ongoing memorial updates
You just turned an $800 direct cremation into a $2,500 memorial relationship.
And unlike burial vaults that get purchased once, memorial services can generate ongoing revenue:
Annual memorial page updates ($50-$200/year)
Additional memorial products as families grow
Referrals to other families seeking modern memorials
The memorial products direct cremation families actually buy
Stop trying to sell them your traditional funeral package. Start offering what they actually want:
Digital Memorial Platforms:
Families want online tributes they can share with relatives across the country. They want to upload photos, videos, and stories. They want it accessible forever.
Price point: $280-$500 for professional digital memorial
Your cost: $50-$100 (software platform)
Your margin: 400-500%
QR Code Memorial Plaques:
Physical marker (on urn, grave, memorial spot) with QR code linking to digital memorial. Modern families love this—permanent physical tribute connecting to living digital legacy.
Price point: $150-$355 for plaque + digital memorial bundle
Your cost: $40-$80
Your margin: 275-440%
See how QR code memorial plaques work and why families are choosing them
Celebration of Life Planning:
Families want help planning meaningful memorial services at non-traditional venues. They don't want your funeral home chapel—they want the park, the lake house, the church, the backyard.
Price point: $500-$1,500 for planning services
Your cost: Staff time
Your margin: 70-90%
Memorial Keepsakes:
Jewelry with ashes, fingerprint stones, memorial artwork, custom urns. These are high-margin products families want.
Price point: $100-$800 per item
Your cost: $20-$200 wholesale
Your margin: 300-500%
Ongoing Grief Support:
Monthly check-ins, grief resources, memorial anniversary reminders. This builds relationships that last beyond the initial cremation.
Price point: $200-$600 annual subscription
Your cost: Minimal (automated + occasional staff time)
Your margin: 80-90%
Notice something? None of these require a casket, viewing room, or embalming.
You're selling memorialization that works for cremation families—at margins that actually make money.
How to transition your funeral home business model
You can't flip a switch overnight. But you can start the pivot now.
Month 1-3: Add modern memorial options
Partner with digital memorial provider (like Memorial Tribute Legacy)
Stock QR memorial plaques
Train staff to lead with memorialization questions, not disposition logistics
Add "celebration of life planning" to your service menu
Month 4-6: Rebuild your pricing model
Unbundle services. Offer à la carte pricing.
Create memorial packages that work without traditional funerals
Price cremation competitively ($1,500-$2,500 with memorial options)
Make digital memorials your default offering, not an upsell
Month 7-12: Market the new model
Update website to lead with memorial services, not casket gallery
Create content showing modern memorial options
Build relationships with churches, event venues, hospice programs
Position yourself as "memorial experts" not "funeral home"
Year 2+: Build recurring revenue
Annual memorial page updates
Grief support subscriptions
Memorial product line expansion
Pre-need memorial planning (not just pre-need funerals)
This isn't abandoning tradition. It's building a business model that works when 80% of families choose cremation.
The funeral homes that will survive vs those that won't
Funeral homes that will thrive by 2035:
Lead with memorialization, not disposition
Offer modern digital memorial options
Price transparently and competitively
Build relationships that extend beyond the cremation
Meet families where they are, not where they "should" be
Funeral homes that will close by 2035:
Still anchored to burial-centric revenue models
Treating cremation as "discount funerals"
Forcing package pricing when families want flexibility
Dismissing modern memorial options as "not traditional"
Competing on price with direct cremation providers
The choice is clear. The timeline is now.
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