What does the charge for Basic Services of Funeral Director and Staff mean?
I can’t count the times I have been
asked this question by consumers who are looking over a funeral bill. While
intended to make the itemized bill more easily understood, it usually does
anything but. I would like to explain what the real meaning is and why it is
there.
I think a much better description for this item would be Overhead Allotment or something similar. The Basic services charge is where funeral homes apportion a percentage of their overhead to each funeral. This includes things like payroll, taxes, insurance, rents or mortgage payments, utilities, upkeep, administration, supplies, etc.
Most businesses just include overhead in the total price of each unit sold. For example, the dollar you pay for a McDonald Value Menu hamburger (or part of the price of everything on the menu) includes a percentage for the overhead of operating the store and paying franchise fees. Because McDonalds sells huge amounts of food, the individual percentage can seem quite low so you never even think about it. The same holds true for all businesses. A portion of the price of a good or service is to pay company overhead.
Because funeral and cremation services are sold at a much lower volume than most consumer goods or services, the percentage as a dollar amount is going to be much higher. Considering that funeral homes must be available 7 days a week / 365 per year / 24 hours per day it is no wonder that costs of doing business is higher and must be offset by allowing the percentage in pricing. The bottom line is that it is very expensive to operate a funeral home. Contrary to what many people think, the average profit for a funeral home is only about 5% and that’s if you are lucky.
I hope this clears up some of the
mystery and/or confusion surrounding the Basic Services of Funeral Director and
Staff charge. Please email any questions to me at
shane.ritchie@carriageservices.com
