How Do Cemeteries Make Money?
Cemeteries are starkly different from other enterprises. To start one involves a great deal of investment. To maintain one involves eternal commitment. All the while, you as the owner, must manage the expectations of of grieving/somber friends and family members. Sounds fun :-). And yet everyday, cemeteries handle millions of people at the twilight of their lives.
To explore this more in-depth, let's break down cemeteries into three main categories:
- cemeteries that are less than full (have available plots),
- cemeteries that are close to full or filled up (few or no plots available),
- and cemeteries that are public or not for profit.
Let's see how cemeteries make money in each of these three circumstances.
Lastly, we will look at trends that are changing the industry in new and never-before-seen ways.
A Cemetery's Growth Phase
During the '"growth phase" of a cemetery, it is clear to see where most if not all the revenue comes from: selling plots. What's not so clear is just how involved and complex selling a plot actually is. It is truly an intricate dance and marketing and customer service.
Just take a gander at this list of all the items and services that are involved in the typical burial:
- Purchase of Marker/ Headstone
- Placing of Market/ Headstone
- Purchase of Burial Plot
- Digging & Filling the burial hole
- Purchase of burial Vaults (optional)
- Post-burial opening and closing of graves.
Of all these activities, the purchase of the burial plot is probably the least of your worries. Why? Well it just so happens that many cemeteries will minimize the cost of burial plots as a marketing ploy. Ever heard of buying family plots? Yep, that's just one example. Also, minimizing the cost of the plot make sense because in many places at least 10% of the plot cost has to go into a "perpetual care fund." (More on what this is later).
Everything else on the list, however, can cost you a hefty penny. Depending on what you want, headstones can be expensive. Moreover, actually placing the headstone can cost 2x as much as the cost of the plot itself. Undertakers and their staff must be paid, which explains the cost of digging and filling the burial hole. Meanwhile, if the grave must be re-dug or reburied at any future date; most likely this will also incur extra charges.
Now let's look at the interesting case, a cemetery with little to no available space.
A Cemetery's Operating Costs
A cemetery has quite a few operating costs. Just think about it.
- Groundskeepers and landscapers must be paid to keep grasses and shrubbery neat and clean.
- Undertakers and their crew must be paid for their services.
- Building projects such as burial vaults and crematoriums also cost money.
Yet at the same time a cemetery's main revenue source, selling and servicing burial plots, has one huge limiting factor...available space.
How a Full Cemetery Makes Money
Once a cemetery is filled to the brim with deceased loved ones, that revenue source ends. So how does a cemetery pay for its own operation after its filled to the max? There is some variation in how many cemeteries do it, but for the most part many cemeteries rely on some kind of "perpetual care trust."
What Are Perpetual Care Trusts, and How Do They Work?
A "Perpetual Care Trusts" as defined by the International Cemetery, Cremation and and Funeral Association (ICCFA) are: "funds, to be held in perpetual trust, the income of which is to be expended in keeping up forever the necessary care of the individual lots and graves, and maintenance, repair and future renewal of the borders, drives, water and sewer systems, enclosures and necessary buildings."
As I had mentioned before, as much as 10% of the cost of a burial plot is often placed into a perpetual care trust; but this figure can vary depending on state, county and municipal laws. After the cemetery is full, it is the interest from the perpetual care fund that pays for upkeep. Just so we're clear.
To Bury or Not to Bury?
Generally speaking, the burial and interment industry is very slow to change. However, there is at least noticeable change that has been occurring for a while and has only accelerated during the new millennium. What I am referring to is the reversal in the demands for burials vs. cremations.
For right now, a traditional burial is still the most popular option in sending off those who have passed away. However, the demand for cremation services has made literal leaps and bounds. For instance, of the 2.5 million deaths that occurred in 2007, 32% were cremations. That figure is up from 29% back in 2003. And the number of cremations continues to rise.
Experts claim that people are demanding more cremations and less burials because of three main factors: the high cost of caskets/plots/and burial services, the relative cheapness of cremation services, and changing religious attitudes. Currently, the average burial/funeral service costs $7,300.00; while the average cremation costs $1,650.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.