Bereaved families pay about £3,700 for a basic cremation or burial – are there cheaper options? Here’s an insider’s guide.

Few people shop around for a funeral. In the highly charged emotional state following the death of a loved one, saving money seldom tops the list of priorities. But does this mean that partners and families are left with excessive bills? Just how much should we expect to pay for a funeral in 2016? A basic funeral is currently around £3,700 – and that’s just for the funeral director costs. Add in the crematorium and cemetery fees, plus the price of a small reception or wake, and the total cost can easily exceed £5,000.

Guardian Money research has found that councils have been discreetly raising the cost of burial by far more than the rate of inflation or wage increases. What’s more, our price checking of large funeral directors such as Co-operative Funeralcare has found they charge as much as £1,500 more than independent local firms.

In the past year, the price of cremation has increased on average by 4.8%, while burial costs are up by 4.9%. More than 50 crematoriums across the UK raised their prices by more than 5%, and a handful by more than 20%. These figures have to be laboriously gathered from local councils and private companies as they are under no obligation to report price rises.

The major cost for most people is hiring a funeral director. These are the firms that arrange the funeral, store the body of the deceased, deal with paperwork and arrange the coffin and hearse.

One of the simplest things you can do to save money is to shop around. The two biggest chains are Co-operative Funeralcare and Dignity, which together make up 30% of all funeral parlours in Britain. In terms of price, the differences are marked. We obtained prices from 30 funeral directors in Glasgow and south London in July, made up of five independent funeral homes, five Co-operative Funeralcare outlets and five Dignity branches in each city. Dignity was easily the most expensive, costing around £1,000-£1,500 more than independent firms.

Funeral comparison sites are another recent innovation supporting industry transparency. One such site, Funeralbooker.com, enables users to compare prices for some (though not all) local funeral directors. Sites such as these are a good starting point for arranging a funeral, but you should meet with the funeral director in person before making your final decision.

Similarly, you should not choose a funeral director on the basis of price alone. You need to be able to trust the company and work together to deliver the funeral that’s right for you and your family. If one funeral home isn’t quite right, don’t be afraid to walk away and find another. Any reputable funeral director will have an itemised price list available when you visit, but it’s still worthwhile asking how the end cost is worked out. Some price lists are far from straightforward.

The greatest cost incurred is the professional service fee, which covers the funeral director liaising with third parties, picking up the body within working hours, refrigeration, preparation of body, cleaning, washing, dressing, driving from the funeral home via the home of the deceased to the crematorium or cemetery, and the hiring of pallbearers. The fee might or might not include the cost of a hearse. All this typically costs around £1,000.

In the past, funeral businesses were family-owned operations that would serve whole communities, and in some small towns this setup still exists. However, larger chains have been gradually buying out family businesses, often when members of the family retire.

These large chains tend to keep the name of the family that originally ran the funeral home. Every branch of Dignity is run under a family name and 30% of Co-operative funeral homes trade under a family’s name. When these businesses buy up independent funeral homes, they purchase the use of the family name and, consequently, their reputation. Many customers visit funeral homes with family names in the belief they are supporting a local independent business or because they would rather place their trust in a family-owned organisation.