The Business of Graves

Every day as I am coding on the train (wink) I pass a cemetery. The most interesting thing about the cemetery is the sign on the street corner making a witty remark about driving safely and not wanting your business right away. I am a big fan of witty remarks, especially in unexpected situation, like at a cemetery.

But that got me to thinking about the business of cemeteries. It seams a (very) little bit like the business of software. Once you sell your product you have to maintain it for a long time. Most business sell a product and forget about it. Some like cars, even make money on the support (what a great business, the cheaper parts you put in the more money you make on service, excluding of course your reputation. Sounds like a good post topic). But software (at least some of it) and cemeteries, not so much, you are expected to maintain your product forever unless otherwise laid out in the contract. At least with software once you make one unit, making (if not selling) the rest are free. Cemeteries get all of the same pain, but with none of the upside. Certainly there are overhead costs that apply for having only one grave site, but as we will see a lot of their costs scale with the number of units sold. So how good of business could it be?

By and large most cemeteries are not for profit (but that has been changing lately) ,this strengthened my belief that the business of burying people wasn't such a good one. So I decided to crunch the numbers. The one part of the business that interested me most is the actual plot selling and maintenance part. Everything else (casket sales, preservation services, etc...) seams like a pretty normal business, a one time service or product is provide you make your margin, and that's that.

So lets crunch the numbers for plot sales. Note, I am not an expert in any of this, all these numbers are gotten from a little googling I did, so please don't take any of this as definitive, I am just trying to ball park things. I looked at three scenarios: poor, medium, exorbitant.
Assumptions: land is free, if you are starting a cemetery you probably ain't going to buy land downtown, you are going to pick a nice scenic field somewhere where no plants grow and farmers are willing to part with for very close to nothing, at least that's what I would do.

	Poor	Medium	Exorbitant	Notes
Price	$300	$2500	$5000	http://www.funeralplanning101.com/burial-interment/buying-grave-plot.aspx http://orangecounty.craigslist.org/for/742755513.html
Commission	15%	7.5%	0%
Net Sale Price	$255	$2312.5	$5000
Real Yield	1%	2%	4%	http://planning.tdameritrade.com/srl/tda/library_article.jsp?tid=0034&catid=000649&client=tda
Annual Real Profit Per Plot	$2.55	$46.25	$200
Land Utilization	80%	65%	50%	The nicer need more landscaping to command the higher price
SQFT/Acre	43,560	43,560	43,560
Sellable SQFT/Acre	34848	28314	21780
Plot Size (SQFT)	27	27	27
Plots/Acre	1290.66	1048.66	806.66
Gross Real Income Per Acre/Year	$3291.2	$48500.8	$161333.3
Maintenance Cost/Acre/Week	$40	$100	$200	http://www.lawnsite.com/archive/index.php/t-104651.html http://www.post-gazette.com/regionstate/199905243deathseries1.asp
Cost/Acre/Year	$2080	$2621.6	$4033.3
Net Income/Plot/Year	$.94	$41.29	$187.11
Profit/Plot Sold	$93.84	$2064.57	$4677.68
Profit Margin	31%	84%	93.55%

So as you can see all three scenarios are profitable for the funeral home. This was pretty surprising to me. I was assuming the plot sales would be a loss leader to get people in the door and then they could make up the money with everything else. But even paying just $300 for a site is enough to still make money. Which wasn't really what I would have expected, but is pretty interesting, maybe I'll give up coding and get into the digging business. And with 90+% margins grave digging give software a run for its money.