The Preneed Guide to Navigating Inflation

Part 3: The Funeral Home Impact

Over the past several months, we’ve learned that there are some things inflation just can’t touch. Hot dogs for instance. Costco has raised prices on some of its other popular food items, but CFO Richard Galanti says the $1.50 price tag for the hot dogs is “forever.”1 The same appears to be true for AriZona Iced Tea, which has been 99 cents a can since 1994.

Yet for almost everyone else, deciding how to successfully navigate inflation is not so clear-cut. Funeral homes across the country are already facing the combined challenges of declining average funeral values and the increased costs of doing business. These are the result of numerous factors including shifting consumer norms that are simply heightened in a dynamic economic environment.

To help, we’ve been in conversation with leading funeral homes, field managers, and advance funeral planners to share their strategies and insights. Last month, we focused on the key ways funeral homes can support advance funeral planners so they can build the total value of funeral service with families. This month, we shift our attention to funeral homes. Read on to learn more about proven tactics funeral homes can use to thrive in any environment.

Why It’s (Mostly) Still Business As Usual

Economic uncertainty still permeates much of the conversation around money. You need look no further than the grocery store aisles to see that price increases are still widespread. But those increases are not spread out evenly.

After all, inflation is an average. Medical expenses are rising at an average annual rate of 5.6%, but apparel rises at an average annual rate of 1.3%2. How you’re affected by inflation really depends on what you buy and where you live. For example, the U.S. Congress Joint Economic Committee shows that families in Texas are facing the highest energy inflation costs while families in California are facing the highest food inflation costs.3

Those differences are reflected across the funeral industry, as well. If your business has a large geographic footprint with multiple locations, your bottom line is affected by gas prices more than a single-rooftop funeral home. And if your operation sustains a higher-than-average burial rate, you may be more adversely affected by increasing casket prices or supply chain issues.

But as we’ve discussed in previous articles, inflation and economic uncertainty have a less direct impact on preneed. The fact is, consumers are more interested in preplanning than ever before. This is due to many contributing factors, the COVID-19 pandemic being perhaps the biggest, and our preneed pipeline metrics show increased demand across every market.

Funeral homes with longstanding proactive preneed programs know there are ups and downs in the cycles of inflation. For passive programs where the bulk of preneed policies are in force for shorter durations, inflationary price increases have a different impact.

Being proactive keeps you less exposed to these short-term increases. It also helps your funeral home build the value of funeral service at a time when fewer families fully recognize or understand that value.

  1. 1 Hearing, Alice. “Costco claims its $1.50 hot dog combo is ‘forever,’ laughing in the face of inflation.” Fortune. 27 September 2022.
  2. 2 Wolla, Scott. “What’s in Your Market Basket? Why Your Inflation Rate Might Differ from the Average.” Economic Research. October 2015.
  3. 3 State Inflation Tracker: July 2022. United States Congress Joint Economic Committee. 10 August 2022.

The Advantages of Having Options and Building Value

Based on our research, the economic benefit of preneed is often not the primary reason cited by families for choosing to prearrange and prefund a funeral.

And the explanation is pretty simple: most families who want to preplan are in a financially secure position. We find that it takes a certain level of interest to raise your hand and respond to a funeral home-branded lead generation campaign. The families who do typically have the means to preplan. They are less concerned about inflation and more interested in putting an intentional plan in place.

Of course, this is not always the case for families who unexpectedly lose a loved one. During an at-need arrangement, there are many families facing a significant financial decision that they may or may not be financially prepared for.

Still, price does play a role in a prefunded funeral, as it does with any purchase. In a situation where a funeral home has chosen to guarantee prices for their preneed program, advance funeral planners can help families by presenting preneed as inflation-proof. And even when pricing is not guaranteed, preneed is still inflation-resistant.

It also helps to have preneed payment options available. Some families may want to pay in one lump sum, while others prefer to pay over time. Preneed insurance carriers typically offer numerous payment solutions that allow families to stay fully protected while paying off their policy.

That said, the most important benefit of proactive preneed to both families and funeral homes is often overlooked. Average funeral values are on an overall decline for most funeral homes as more and more families choose direct disposition. Preneed can slow, halt or even reverse this trend.

A Shortfall on Policies or a Shortfall of Families?

It goes without saying that no one can predict the future. In the 1980s, a Time Magazine article projected that in 2015, a complete funeral service with vault, casket, cemetery space, and grave marker would cost $26,141. This assumed 6% annual inflation, a rate that has hovered closer to an annual average of 2%-3%. In fact, in 2015 the annual average rate of inflation was only 0.12%4!

This brings to mind another important advantage of proactive preneed, which is market penetration into a younger buying demographic. The result is both market share growth and varying duration for preneed contracts. With policies in force for five years, ten years, or even longer, inflationary ups and downs are dramatically evened out.

What this means for funeral homes that choose to guarantee prices is that shortfalls are a risk that cannot be eliminated, but they can be effectively mitigated. A shortfall is when the death benefit of a preneed policy does not cover the current-day cost of the funeral according to the General Price List. The upside here is that a proactive program results in more prearranged families and higher average funeral values. The varying duration of the policies has a calming effect on inflation, and there is rarely an impact on overhead costs. In other words, when you look at preneed in the long term and not the short term, a shortfall may not be so short.

The other advantage comes from incremental business. A proactive program can bring in a steady stream of new families who you may not have reached otherwise. Especially given today’s competitive landscape and the rising rates of direct disposition, funeral homes benefit from any opportunity to effectively guarantee they’ll be chosen by families at the time of need.

This is all to say that the business objective of a proactive program is not simply to sell more preneed. It is to expand your footprint and deliver a positive brand experience by educating families about the value of ceremony, ritual, and gathering.

  1. 4 CPI Inflation Calculator. U.S. Bureau of Labor Statistics.

The Win-Win of Sharing Your Story

Based on the way many people outside of the profession talk about funeral homes, it’d be easy to think that fewer and fewer families value funeral service. But the truth is quite the opposite. Families still value meaningful connection after a loss, but they don’t always know the role a funeral home plays in facilitating a meaningful service.

And the reason why is that most funeral homes wait too long to share their story. A proactive preneed program can change this. Contrary to popular thought, only 10% of what a funeral home does is for the deceased. The other 90% is for the living, yet so many families forget this. With a proactive program, you can educate families about the importance of ritual, ceremony, and gathering after a loss.

Even better, you can turn the preneed experience into an opportunity to create a meaningful connection with families and make a lasting impact on their lives.

Proactively sharing your story is what you might call a win-win. On top of creating a positive—and, more importantly, memorable—experience with your brand, funeral homes benefit from sustained, or even increased average funeral values. More families start choosing a service because they understand its value. Not to mention the added benefits of more volume, increased market share, and the opportunity to outpace any competitors who have less robust preneed programs.

5 Things Premier Funeral Homes Are Doing Right Now

  1. Be Proactive

    There are clear benefits to being proactive about building the value of funeral service and prearranging as many families as possible. To do so successfully requires creating an effective infrastructure for marketing, appointment setting, and coaching. The result is that you shift the perspective about funeral service throughout your community while also expanding your footprint.

  2. Effectively Reach Families

    Some marketers estimate they waste 26% of their marketing budgets according to a study by Rakuten Marketing.5 This is a problem, but the even bigger problem is this: they’re estimating. It’s one thing to have a proactive multi-channel marketing plan, and it’s another when that plan is driven by reliable data. The only way to effectively reach more families is through measurements that can show you whether your marketing dollars are being wasted. This includes follow-through metrics like appointments set, held, and closed. The highest quality leads are those who you can track all the way through the preneed pipeline.

  3. Build the Total Value of Funeral Service

    Help families see what they’re truly paying for with a prefunded funeral. Beyond the obvious advantages of taking care of most, if not all of the costs, the real value is more meaningful. It’s one of the last opportunities an individual has to help their loved ones. As a profession, we can no longer assume that families automatically value funeral service. It’s up to us to build that value for ourselves and help more families understand that a prearranged funeral is a gift for those who are left behind.

  4. Speak with Families When They’re Ready to Listen

    In their 2020 Cremation and Burial Report, the National Funeral Directors Association projected the cremation rate to be 87% by 2040, many of which will be direct dispositions.6 This means the future of funeral service will be increasingly concerned with changing how families think of funerals. Instead of waiting to try and educate families during an at-need conference, a remarkable preneed experience can change the conversation today.

  5. Deliver the Most Remarkable Preneed Experiences

    A remarkable consumer experience stays at the forefront of your mind. This is why it’s so important to start building relationships with families through preneed. When you continuously build value during the preneed presentation, the appreciation for your brand deepens. Families start connecting your funeral home with much-needed experiences for ritual, ceremony, and gathering. Years before they need you, families understand that you and your staff can help them on their journey through grief. Sharing your remarkable story begins with remarkable preneed.


Economic uncertainty affects everyone differently, and plenty of businesses either make knee-jerk reactions or else plant their feet in the sand. If you’re considering offering preneed, the best strategy right now is to be proactive. After that, it’s prudent to evaluate how you handle guarantees in your market and the value they provide your families. There are creative options around guarantees, including cost-free guarantees, tiered guarantee charging, and non-guarantee options, all of which can make sense based on your unique situation. And the reason guarantees can help is this: your funeral home has more opportunities to meet more families where they are.

Consumer demand for preneed is higher than ever, and there are many advantages to a prearranged funeral for both families and funeral homes. For funeral homes, the biggest advantages come from incremental business. You secure more customers on top of those who would have already come to you, and you do so with higher average funeral values because you capture today’s buying habits while also building the value of funeral service.

That said, it all comes back to the most important stakeholder in this whole discussion: the customer. The fact is, families still want meaningful experiences in which they can remember and honor their loved ones. A proactive preneed program is an opportunity to shift consumer norms by sharing the story of why this is exactly what you provide at your funeral home.

  1. 5 “What Marketers Want: Five Strategic Opportunities for 2018.” Rakuten Marketing.
  2. 6 “2020 Cremation & Burial Projects Cremation Rate of 87% by 2040.” National Funeral Directors Association.

Tyler Anderson is vice president of business development at Precoa. Through his leadership and extensive experience in the funeral profession, his team helps funeral homes see how they can expand market share and grow through preneed.

Jim Schaffer is vice president of product development at Precoa. With his in-depth knowledge of data analytics paired with his expertise in preneed insurance products, he leads the company’s efforts to develop innovative preneed products for funeral homes and families.

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