Nicole Vullo
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Written by Taylor Weber, Financial Analyst
In our latest, Ask the Analyst blog column, we were given the question on what business-related tasks are needed to be done during the final month of the year. Financial Analyst, Taylor Weber provides her insights on this important topic.
Question: Do I need to focus on any specific business elements in the last quarter of the year?
Taylor Weber: As we head into the final quarter of the year, it’s important to assess where your business stands and take strategic action. While it’s tempting to remain cautious, especially when faced with market changes such as increased cremation rates or a fluctuating death rate, now is the time to make moves that will set your business up for long-term success. Many funeral home owners are hesitant to raise their prices, fearing they’ll lose calls to lower-cost competitors. But is that hesitation holding you back from profitability?
In a recent case study, a mortuary business owner was initially resistant to increasing his prices for 2024, despite being priced lower than his direct competitors in the market. The owner’s goal is to grow his enterprise value and potentially sell the business within the next three to five years. However, with an 80% cremation mix, he worried that even a modest price increase would drive families to lower-cost, direct cremation competitors. After reviewing a market analysis, it became clear that his business was already underpriced compared to full-service competitors, many of whom had recently raised their prices again. While he ultimately decided to raise his prices on January 1, 2024, it would appear he left some pricing power ‘on the table.’ Through the end of June 2024, despite a 29% drop in call volume during the first half of the year, the minimal price adjustments helped offset the volume loss, resulting in only a 6% revenue decrease. Thanks to a 14% increase in avg. revenue/call, this decision to raise prices—albeit somewhat haphazard—recovered nearly $68,000 in revenue that would have otherwise been lost.
It’s important to understand that low-cost providers offering the $995 direct cremations are not true competition for a full-service funeral home. These businesses still face similar fixed costs and overhead, including staffing, facilities, and operational expenses. While they may capture price-sensitive families, their model is unsustainable without scaling volume to very high levels. The more volume they take on, the greater the strain placed on staff and resources without improving profitability. In the long run, low-cost direct cremation operators, competing solely on price, are bound by the common saying ‘race to the bottom.’ Constantly operating on such razor-thin margins restricts direct cremation operators from growing the value of their enterprise. This is why we don’t consider these operators to be ‘real’ competition and advise against competing with their low-price-for-volume approach. Focusing on higher-value services—even if it means losing a few low-cost calls—is the smarter move.
The lesson here is simple: strategic action beats inaction every time. Losing a few price-sensitive calls is worth the trade-off if it means maintaining profitability and easing operational strain. As the busiest quarter approaches, now is the time to act. Whether it’s reviewing your market position, adjusting your pricing, or planning for future growth, small steps can make a significant difference to your bottom line.