The funeral home business is not as profitable as it used to be. The market dynamics are changing. People are living longer than in the past decades. Surviving family members are choosing less expensive alternatives to the costly traditional funerals.

Cremation

The rising popularity of cremation services has reduced the profits of traditional funeral homes. The research firm Worthlin Worldwide, conducted a survey in 2005 that found that 46 percent of Americans would prefer cremation to burial. The North American Cremation Association estimates that as of 2006, one third of all bodies were cremated.

Cost Factor

The usual cost in the United States for a funeral service and burial was around $7,000 to $10,000 in 2009. The average cremation cost was $1,600.

Profit Margin

The average funeral home profit margin had declined from 14 percent in 1980, to less than 6 percent in 2009. Some well-managed funeral homes can have a profit margin of 10 to 15 percent or more, based on gross revenue.