The average basic funeral in Australia costs about $6,000 but all regulatory requirements related to the disposal of a body can be met for as little as $1,200.
Research at the University of Sydney’s Business School says the funeral industry uses predatory marketing practices to exploit vulnerable customers who can be hit with cost markups as high as 1000%.
Professor Sandra van der Laan says costs are easily inflated by funeral directors who offer total packages rather than itemised quotes.
“Upselling is also common with funeral directors basically hinting that if you loved the departed, you should consider a more expensive coffin which might be marked up by a thousand per cent,” says Professor van der Laan.
“Upselling also goes on in relation to flowers and a range of other things that you actually don’t need.
“In the end, a lot of what you’re paying for is the funeral director’s fees and all they really do is organise to get the body from the hospital to the funeral service and then to the cemetery or the crematorium as well as ensuring all the paperwork is in order.”
Here’s how the costs of a funeral are divided:
She says most people don’t know that anyone is permitted to transport a body so long as they have the right container.
The research found: “Disclosures (by funeral directors) regarding pricing and costs of the various options for funerals and body disposal will enable consumers of these services to make more informed choices and address the concerns of predatory marketing and price gouging in the industry.”
According to industry analysts IBISWorld, the Funeral Directors, Crematoria and Cemeteries industry is a billion dollar industry in Australia with an expected 10% growth rate over the next five years.
The research paper, “It’s your funeral — an investigation of death care and the funeral industry in Australia”, also details the concentration of funeral business ownership in Australia’s eastern states.
ASX-listed InvoCare controls 40% of the funeral market with the rest made up of with small and family owned enterprises. Businesses owned by InvoCare include White Lady, Simplicity, Guardian, Hansen & Cole, W.N. Bull and Tobin Funerals.
InvoCare grew from Service Corporation International which most of its ownership in the Australian funeral industry to a consortium led by the Macquarie Bank.
This entity listed on the ASX in 2003 as InvoCare and today it is the largest private funeral operator in the Asia Pacific.
Last year the company reported that earnings were suffering because of a lower than expected death rate. The company said it was operating in a challenging environment with a “slow down in growth of deaths in all key markets”.
However, sales were up 3.1%, $6.4 million to $214.5 million in the half year. Reported profit after both tax and outside equity interest increased 50.6% to $27.8 million