Misrepresented Pricing

February 28, 2018
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Dead Ringers, a data-based mystery phone shopping service which secret shops funeral homes and cemeteries across North America, has compiled data from October 2015 covering multiple factors including online pricing among funeral homes. In its data, Dead Ringers found that approximately 21% of funeral homes post prices online (this includes the General Price List and any limited pricing such as packages or merchandise).

This is comparable to the results of The Funeral Consumers Alliance and the Consumer Federation of America’s recently published FCA Study which found that 27% of funeral providers post their General Price List or some prices online. The Funeral Consumer Alliance wants greater transparency in deathcare including posting General Price Lists online. Dead Ringers encourages funeral providers to post pricing online because this offers the consumer transparency. However, with the advent of websites like Parting.com, a free consumer service which provides pricing information for funeral services in a user’s specific area, pricing has become readily available and accessible to consumers. In addition, Dead Ringers’ research revealed most funeral homes provide pricing over the phone (Dead Ringers data collected shows 62% of funeral providers disclose pricing information even if the provider is not directly asked for pricing).

What is not comparable is the belief that all Direct Cremations are the same.

In a press conference held by the Funeral Consumers Alliance in January 2018 announcing the results of their recently completed FCA Study, Josh Slocum, Executive Director of the Funeral Consumers Alliance, said that they were surprised at the vast difference in direct cremation prices. The Funeral Consumers Alliance and the Consumer Federation of America pointed to Washington, DC as an example and cited a range of prices from $1295 to $7295. Slocum stated that this range was unfair to the consumer because, by definition, direct cremations must contain the exact same services. The Funeral Consumers Alliance continued by stating that there should be no difference in pricing as the FTC requires direct cremation packages to be identical for all funeral and cremation providers.

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Poul Lemasters, Esq., an owning partner of Dead Ringers who also attended the press conference, asked why there was an expectation for all direct cremation prices to be within the same range. “If we were to call every hotel in Washington, DC—the same city used in the FCA’s example—and we asked for a standard queen-sized room—wouldn’t we get a vast range of prices?” said Lemasters. “Wouldn’t we also expect and want hotels to have different prices for the same type of room due to many different factors? It would be like comparing a queen-sized room in a 1-Star hotel to a queen sized room in a 4-Star hotel. There would absolutely be a price difference, a difference in service and quality—even though every room would have a queen-sized bed within it.”

The Funeral Consumer Alliance and Consumer Federation of America base their study on various Federal Trade Commission Funeral Rule requirements including handing out a General Price List and offering direct cremation but did not explain the Funeral Rule basic service fee. The FTC requires funeral homes to list their non-declinable basic service fee. This required fee, per the FTC states:

The fee for the professional services of the funeral director and staff that are added to the total cost of the funeral arrangements. This basic services fee can include a charge for the services performed in conducting the arrangements conference, planning the funeral, securing the necessary permits, preparing the notices, and coordinating the cemetery or crematory arrangements. This fee also may include overhead that you have not allocated elsewhere.

(Please note that the FTC allows the basic service fee to either be a non-declinable fee or the fee for services and overhead can be included in the price of the caskets. Almost all providers handle this under the first option—listing their fee as a non-declinable fee).

“Why is the basic service fee important? Because, by definition, this fee includes all the costs a funeral incurs for such common things as getting paperwork filed, making arrangements, plus, overhead,” said Lemasters. “It is not hard to imagine that the basic service fee could be, and typically is, different from business to business. And it makes sense, as no business has the same overhead costs or employee costs for providing services.”

The basic service fee is a critical point in understanding how direct cremation is represented, but it’s not the only factor. “We see a wide variance among funeral home basic service fees and direct cremation fees across the United States,” said Tyler Yamasaki from Parting. Yamasaki went on to say that when shopping all the funeral homes across the United States, “We also see a variance between funeral home sizes, location, aesthetics, all of which explain why costs can be different.”

This basic service fee is also important because it serves as the foundation for pricing direct cremation. When determining the price for direct cremation, a provider’s basic service fee must be included. The funeral provider has the choice, per the FTC, to either include their entire basic service fee, or if they believe the entire basic service fee is not appropriate, then the funeral provider can charge a portion of their basic service fee. But, this fee is determined based on the providers costs, which varies. Some funeral homes are brand new facilities while some are old facilities, some have a handful of employees while others had dozens, some are online providers while others have 10,000+ square feet of physical space. All of these items can affect the prices a funeral home may charge.

In addition to the funeral homes basis for setting a price, Dead Ringers’ data also showed a number of factors the consumer considers when making a purchasing decision.

“Pricing is not always the only factor a person uses in making a purchasing decision,” said Cole Imperi, part owner of Dead Ringers. “It goes back to the hotel analogy, some people choose a 1-Star room for the night while others might choose a 4-Star. Their reasons for doing so are all just as unique as the differences between the hotel room choices themselves.”

Dead Ringers collected the following information, based upon Washington, DC data, and it confirms the vast similarities in pricing structure. (See Chart 1 and Chart 2) Dead Ringers data shows that hotels and funeral homes both share a similar range among the high and low available price. The data shows that each have a median range—where most competition exists. For hotels, the data showed a median average of $199.00 and 52% of all hotels at or below 10% of the median. It also showed the highest priced hotel is over 8 times the price of the lowest priced hotel. For funeral providers, this data showed a median of $1,995.00 and 56% of all funeral homes pricing themselves at or below 10% of the median. The data also showed a range of $6,550.00 between the high and low. Additionally, the data showed the highest priced funeral home at just over 7 times the lowest priced funeral home. The data shows that approximately 50% of both funeral homes and hotels exist within a common median price. The data also shows that there are high priced and low priced providers, outside the median and average price. Finally, the data shows that outliers (the high and low priced businesses) are comparably the same distance from the median.

What does it all mean? Services and products in ANY service category are very different—and the consumer should have the option and right to decide what they are willing to pay. Consumer groups are questioning why direct cremation prices are different, and are representing to the consumer that all direct cremations are the same. The fact is that not all providers are equal—in any service category. Why would one family choose to pay $7,000 for a direct cremation versus another family choosing to pay $1000? That is truly a choice the consumer should be allowed to make. The real question is how do you properly explain your charge—$7,000 or $1,000 for direct cremation is relative to not only what you offer, but how you offer it.

“Educate your consumer so that they see there is a difference, and then let them decide what that is worth to them,” said Imperi.

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