Advice on marketing, business strategy and of course info on factor1 projects.

the cemetery business model

business — Posted by: matt adams on July 28, 2009 at 11:02 am

So recently in the news, there was a chicago cemetery moving old graves, to make room for new ones. This got me really thinking about the business plan of a cemetery. And how it applies to other businesses.

cemetery

So I had to lay it all out.

  • The Family pays a fee for burial services and upkeep. Lets call this $10,000.
  • the cemetery does the burial service, and so on.
  • The Cemetery management company continues to keep everything green and pretty for ever and ever. or do they?

Here is where I get lost in why anyone would want this responsibility. It costs money to water, and maintain all that grass. To keep things clean and pretty. At some point, the money HAS to run out right?

If the cemetery ran out of plots to sell, at some point, there is no more income coming in. at all. Sure they could have been saving from all the years they sold plots, to pay for future upkeep. but even that has to run out. then what????

Do cemeteries close? go bankrupt?

In looking at other business models, the same process seems evident. Even in factor 1.

  • Chrysler offers unlimited milage warranty, for unlimited years.
    They are banking on you selling it before 3 years, as the average new car buyer does. And the warranty is non transferable. But what about that guy who keeps his car 15 years. Could be a pricey fix. but probably not a money pit in the big picture.
  • Corsair Ram company offers lifetime warranty as well.
    They bank on the fact that computers dies after a few years. Speed, and technology changes happen so quickly, that the actual life of the product ends long before this ram chip should. So replacements and service should be slim to none.
  • Factor 1 (yes, even us) offers lifetime tech support on our website CMS.
    We assume most people only need to be trained a few times, and upkeep is pretty painless most of the time. And we bank on the fact that most sites need a revamp every few years. But sure, we could be in trouble if someone kept it 10 years, and server technology really changed.

Im sure there are others. and while Factor 1 and Chrysler (the last time i will ever put us in the same sentence together) are probably okay, since we have a end of product life cycle at some point. What is the end of life cycle for a cemetery? Does the management company just go under, and the graves go unkept?

Am I the only odd one thinking about this news story from a business side of things?

3 Comments »

  1. In Europe, you only get the plot for X number of years. After that, out you go and someone new gets your spot.

    Comment by Eric — July 28, 2009 @ 12:41 pm
  2. see, that sounds like a legit business plan to me. then the $10k gets split up appropriately across all fees, and yearly upkeep.

    Comment by matt — July 28, 2009 @ 1:01 pm
  3. most cemeteries are legally bound to establish an endowment care fund which is paid at the time the family purchases a space. This money (usually 10 of 15% of the cost of the space) is then by law placed into a non revocable trust fund of which the interest only can be used for the upkeep of the cemetery when all revenue generation aspects of the property are used up … (all spaces sold)… unless you are a religious organization and then in most states you are exempt from such rules and many times families continue to pay annual dues for maintenance… there have been many cases where the irrevocable trust funds have been ‘stolen’ by the cemetery owners .. (sometimes millions) etc etc. Most states don’t have the funds or staff to properly manage the laws governing the cemeteries and thus protect the public.

    Comment by Lee — July 28, 2009 @ 1:52 pm

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