NCPA - National Center for Policy Analysis

Killing Competition In The Funeral Industry

October 8, 1999

Traditional funeral homes and casket suppliers are seeing new competitors usurp their role in the "death care services" industry -- and they are fighting back. They want the Federal Trade Commission to make the newcomers publish price lists, guarantee goods and services and face thousands of dollars in fines for violations.

While the rules also apply to traditional undertakers, increased regulations generally favor incumbent firms by increasing startup costs for would-be competitors.

Critics say funeral homes are trying to protect their hold on casket sales, which make up much of their profits. The nation's 14,000 funeral directors run a $10 billion a year industry.

Here are some of the ways new competition is shaking up the industry:

  • Cremations now account for one in four American funerals.
  • Discount casket stores often sell their wares at half the average $2,176 price of funeral homes -- and still make a profit.
  • As well as offering grave sites, cemeteries are expanding into flowers, ceremonies and other services that once were the exclusive domain of funeral homes.
  • Funeral management is certainly not a "growth" industry -- since deaths in America are projected to increase by only 21, 000 a year for the next 10 years.

Caskets can even be ordered over the Internet for overnight delivery, in some cases. Proprietors of these cyber-stores say they are willing to come under FTC regulation -- provided traditional funeral directors stop trying to compete with them unfairly.

That would involve ceasing to offer phony packages -- such as cutting their own coffin prices to match those on the Internet, then making up the difference by raising embalming, cosmetology and professional fees.

Source: Richard Willing, "Funeral Homes Fight for Life," USA Today, October 8, 1999.

 

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