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How do you decide your Board Rate?

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  • How do you decide your Board Rate?

    Would love some ideas as to how you came up with a reasonable Boarding rate. I have never raised my rates, and I have done many improvements. Do you consider being small and private, an advantage or disadvantage?

  • #2
    I figured out my base costs (including property maintenance, etc, not just food/fencing) and then added an amount on top of that that makes it worthwhile dealing with people.

    Comment


    • #3
      You have to take a look at your competition. What are they charging? Unless you've got something really special that will attract high paying customers, you don't want the highest rates in your area...of course you don't want the lowest either.

      Comment


      • #4
        What are you expenses? What is your labor costs? What are the "going rates" for similar facilities in your area?

        Our rule is break even or else. We'd live on our Wee Farmette regardless, so the tiny number of boarded horses don't have to cover mortgage and some capital improvements, so for me it is covering the cost of hay, bedding, feed, my labor and a bit toward the "repair and recovery" fund.
        Proud member of the "Don't rush to kill wildlife" clique!

        Comment


        • #5
          This is a great question. To add to that I might ask if you try to cover your mortgage payment with board. (House included). And if you do, why tell boarders you do not make a penny profit? Is it normal to roll house and barn payments into board?

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          • #6
            I hope you won't mind if I answer from a non-BO perspective.

            1. Do your costing. Figure out what it costs your to support each stall. That includes that stall's share of everything from the mortgage to the barn's toilet paper.

            2. Figure out what your competition is charging. Sadly, you will be limited by folks who don't charge enough just to keep the barn full. I think you'll find that most barns have almost zero profit.

            To answer your other question: I think private barns have an advantage. Most of the time, folks are looking to just make their horse life pay for itself. They don't need to charge amounts that put them way into the black, as dedicated boarding stables do. Those barns and training barns have helped to undercut the profitability of pure boarding.

            Also (and hopefully), you are supporting the kind of barn *you* want anyway. So, for example, you aren't paying on a huge covered arena loan if you are a trail rider. So when you get tear-your-hair-out tired of being the cleaning lady for other people's horses, you remember that you are getting something out of the deal, but you aren't in over your head.

            IME, the safest bet is to be middle-of-the-road in price and amenities for your area. Being the top is financially imprudent because of the enormous expense of keeping up that kind of a farm. Being at the bottom invites people to your place who are looking for a deal rather than a good standard of care.

            The good HOs, IMO, are the ones who want their horses well-cared for and realize that BOs are charging about what it costs to do that. They can and will pay because it would be stupid not to.
            The armchair saddler
            Politically Pro-Cat

            Comment


            • #7
              Originally posted by ultimateshowmom View Post
              This is a great question. To add to that I might ask if you try to cover your mortgage payment with board. (House included). And if you do, why tell boarders you do not make a penny profit? Is it normal to roll house and barn payments into board?
              I'd say that depends (and quite frankly it's really not the boarder's business how much profit a BO makes) on whether your boarding and training business is your job or a side income.

              Comment


              • #8
                My trainer left her computations on the desk once and she did, in fact, factor in sundries such as TP in the boarders' bathroom (a very nice bathroom). Anyway, her list included insurance, grain, hay, electric, water, just for the pasture boarded horses. Then there has to be a cost averaged out for maintenance of fences and pasture, and a cost of labor if you have to pay a person to throw hay, a cost share for the truck that carries the hay that the laborer throws and a cost share for the tractor that tows the truck out of the mud hole in the pasture, etc. Did I mention insurance? MVP is totally correct that private individuals undercut the market considerably in many cases. You have to be projecting your costs according to the future market value, ie like the supermarket you have to raise the prices of all the stock on the shelves to cover the higher price of goods today, nobody with a private barn does that, they have a good job and a good accountant that helps them write off their barely profitable/break even business. Every single time hay goes up the board needs to go up to offset the future cost of puchasing next year's hay. If hay goes down then I sincerely doubt there isn't something that hasn't been deferred like fence painting, or perhaps you boarded a beaver and have twice as many fence boards to repair. Anyway there are things like operating funds and sinking funds that need to be kept separate purely for running the barn, then as you are able you take a draw for wages for yourself - that's your profit. I'd expect that anybody running a "barn who makes no profit" has zero in the operating fund and is drawing a wage and barely making ends meet at home too.

                And actually the entire cost of the facility should be incuded in the cost analysis. I'd have to ask an accountant how a house on the property would figure in, if the mortgage covers the house plus barn do you charge off a percentage based on the pecentage value of the barn and land (usually mortgages are skewed towards house value). I know for our business we never charged off the house mortgage but we did have a separate structure that was charged off 100% as a depreciable. We built it so it was easy to figure.

                There's a lot more to it than you might think.
                Courageous Weenie Eventer Wannabe
                Incredible Invisible

                Comment


                • #9
                  Originally posted by ReSomething View Post
                  , then as you are able you take a draw for wages for yourself - that's your profit

                  There's a lot more to it than you might think.
                  Interesting discussion. I would only quibble that the draw for your own wages is "profit". I disagree, I think those are "labor costs" because your time is worth something. "Profit" is what is left over when all costs, including labor costs, are paid.

                  I would also add, how you price board depends on your reputation/how full you are. If you are full with a waiting list you probably have a really good product, in fact a better product than other barns who are less popular -- in which case that's a signal to price accordingly. That is, you can probably charge a little bit of a premium because you are offering a better-than-average product.

                  I hope BeeHoney chimes in, she's a boarding guru!
                  https://www.facebook.com/SugarMapleFarm
                  Follow us on Instagram: https://www.instagram.com/peonyvodka/
                  www.PeonyVodka.com

                  Comment


                  • #10
                    SMF I meant to say just that but it came out wrong. The only way a draw would be coming from your profit is if you had all your labor already accounted for, everything, including some fixed sum(s) for disaster preparedness (for lack of a better term). Then if you had anything extra(hah) and drew off that.

                    I'm afraid that still doesn't make sense.

                    But at anyrate, rolling the mortgage payment into the cost of board if board represented the actual cost of operation plus paying for all the labor would only be unfair if you ended up shorting the business - ie the boarders - by say failing to maintain the premises such that all the facilities being rented were available, in good condition and or as advertised. There is no legal cap as far as I know, and a market cap is supply and demand - if you have the nicest, best kept and best run barn with no wackadoo stuff going on, plans for evey contingency including non-payers, then why not charge enough to pay the mortgage.

                    You really want unfair? Get a BO with a drug habit. I'd seriously consider leaving based just on what my money is supporting, not to mention things usually start to slip and get scary.
                    Courageous Weenie Eventer Wannabe
                    Incredible Invisible

                    Comment


                    • #11
                      If the barn is paying for the house percentage of your mortgage and your horses are supported by the business, you are essentially being paid "in kind" by your boarding business. After all, if you had another job, you'd pay for your housing and horsing with post-tax dollars.

                      Maybe BOs who live on the place and own their own horses aren't doing quite so badly, even if they are cash-poor.
                      The armchair saddler
                      Politically Pro-Cat

                      Comment


                      • #12
                        Originally posted by ReSomething View Post

                        And actually the entire cost of the facility should be incuded in the cost analysis. I'd have to ask an accountant how a house on the property would figure in, if the mortgage covers the house plus barn do you charge off a percentage based on the pecentage value of the barn and land (usually mortgages are skewed towards house value). I know for our business we never charged off the house mortgage but we did have a separate structure that was charged off 100% as a depreciable. We built it so it was easy to figure.

                        There's a lot more to it than you might think.
                        Well we did. We had three separate operations our private homestead, the farm corporation and the business which owned the horses paying the farm for care.

                        The farm leased its operation from the homestead thus was a separated operation. The lease payment the farm paid paid enough to cover the homestead's mortgage plus.

                        The farm then used that cost as its bases of costing for the boarded horses which were own by my business.

                        Comment


                        • #13
                          I've had 3 places @ 20 head over 15 yrs and what I'd say is you can charge what people will pay.

                          My house/land is on a separate mortgage, so I know what the facility is costing (and previous farm too). Hubby's income covers normal living expenses. 3x I can't even get a mortgage for horse operations if one of us doesn't have that reliable off- farm income to support.

                          No one knows how much 'mortgage' BO are carrying. Once my arena's interest rate was 11%. Big payment. Boarder's had no idea what is cost to own that place, and surprised when I downsized to something I could afford in the off season too.

                          Comment


                          • #14
                            OP, with regards to raising rates. What you are doing (and the shirt you are losing) has been industry practice for a while.

                            One new-fangled thing that seems to work is writing into the boarding contracts a cost-of-living increase each year. That saves you the angst and surprise of having to tack on surcharges for those years when hay or grain or diesel or whatever leap up.

                            Now if you want to "grandfather" in long-time boarders such that different people are paying different prices for the same services, you are on your own. This is another practice to be found in our industry and I think its a recipe for disaster. But you can keep it even with those annual board increases that everyone pays.

                            I hope you are able to find a happy way to keep your barn afloat. It sux for all of us if boarding barns get nickeled and dimed to extinction.
                            The armchair saddler
                            Politically Pro-Cat

                            Comment


                            • #15
                              Originally posted by mvp View Post
                              If the barn is paying for the house percentage of your mortgage and your horses are supported by the business, you are essentially being paid "in kind" by your boarding business. After all, if you had another job, you'd pay for your housing and horsing with post-tax dollars.

                              Maybe BOs who live on the place and own their own horses aren't doing quite so badly, even if they are cash-poor.
                              Yes, but we've all heard the stories of the disgruntled boarders tired of paying for the BO's horse hobby. And cash poor usually translates to skimping on the business end, NOT the BO eating Ramen and doing without Direct TV.
                              Courageous Weenie Eventer Wannabe
                              Incredible Invisible

                              Comment


                              • #16
                                The only thing that matters is can you be priced competively with other barns in the area? No matter what your costs are, or what the numbers work out to, you can't charge signifigantly more for a similar product than others are.

                                Comment


                                • #17
                                  If you have made improvements in certain areas it should be very easy to raise your board rates. Things like new footing, better jumps, heated wash rack, etc. that directly improve conditions for your clients are usually very well understood as increasing the value of board at a facility. Equally important improvements that are less important to clients, like new water lines, updated wiring, or new auto-waterers are a harder sell in terms of a reason to raise board rates.

                                  Comment


                                  • #18
                                    If I ever become a barn owner, I would probably establish board by doing the following:

                                    Calcuating how much it would cost me to live there *without* any boarders but just my own. 5 empty stalls still cost some amount of money and time (mortgage, spring cleaning, time and equipment for dragging the ring so I can ride, whatever). Or how much it would cost me to board my horses in a similar level of care if I *didn't* own a farm.

                                    Calculate how much it costs per horse to live on the property (feed, bedding, pasture wear, time involved in care, etc).

                                    And charge minimally the difference. If that minimal is very low, I would consider upping it a bit to cover the incidentals of farm life, and to attract the clientele you would want.

                                    And I will never, never open a boarding operation if I can't afford to run the whole place without boarders. Their income is the icing on my (hypothetical) cake. That way I would never have to agonize over kicking out an awful boarder out versus having the income. And I can afford to absorb a boarder moving 3 horses out all at once.

                                    I'm sure there are much more complicated, complete ways to do this. But this is my simple heuristic at this moment in time

                                    Comment


                                    • #19
                                      Jaideux, what you suggest isn't really a workable business plan. I do think that a fair board rate should include a fair per-month, per-horse share of the cost of the property, cost of improvements on the property, cost of equipment necessary to maintain that property (tractors, arena groomers, manure spreaders, etc.), property insurance, property repairs, labor to maintain and manage the property (not just labor to care for the horses), accounting costs, etc.

                                      While how you would run your hypothetical future boarding operation is up to you, I think it is completely unreasonable to suggest that someone trying to run a business should provide access to a major asset like a fully equipped and insured farm/barn/arena for free. That would be a charitable endeavor, not a business.

                                      Comment


                                      • #20
                                        Well, that's just it... it wouldn't be a business. It would be my backyard. Hopefully a very nice back yard. But a backyard nonetheless. And I don't think I suggested doing it for free. I said, at minimum, charge the difference. That way you ensure you at least break with if the stall stayed empty. The cost of hay, grain, bedding, and your time alone will easily bump it over the "empty stall cost of existing" up another couple hundred I should think (at least the way it is for my horses it would... TB pigs, both of them). And if the difference is $200 and charging $200 will attract the "wrong kind" of clients, then make it $300. Or $400. But at least it's a place from which to start to help safeguard against financial ruin if boarders don't come... or don't stay... or don't pay.

                                        IMHHO (In my humble, hypothetical opinion)

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