Sales commissions are a notoriously sticky wicket in the horse business. Charging a client for your expertise and time to help buy or sell a horse is an accepted industry practice. Yet many stable owners are uncomfortable implementing a commission rate, and some avoid the issue entirely by never establishing one.
Clients respect your professional opinion and value your expertise to help them buy a suitable horse. “Helping a client buy or sell a horse is like bringing a trusted mechanic along to a car dealership when buying a car,” says George Peters, owner of Win$um Ranch in Schuylerville, N.Y. “The mechanic would see all the dimples or pimples you might miss, and you would take his advice into consideration when making the decision to buy. It’s the same with horses.”
When To Charge a Commission
Commission rates are usually charged when you are instrumental in the sale of a horse. “If you have a horse on training board, or an owner who is on ordinary board but is taking lessons, and you facilitate the sale of that horse [meaning you work, present, ride or otherwise engage significantly], the seller should pay you a commission,” says Raymond Whelihan, professor of equine studies in the agricultural business/animal science department at the State University of New York at Cobleskill. “You get paid nothing for nothing. If a horse simply just sells out of your barn without significant involvement from yourself, then you are owed no commission,” he adds.
In some instances, charging a finder’s fee may be more appropriate than a commission rate. “I have received a finder’s fee in some cases,” Peters says. “I call a fellow I know in Texas who has a lot of good horses. I’ll explain what type of horse the customer is looking for, and will arrange for them to fly to Texas and try the horse.” The client pays Peters a finder’s fee to compensate for his time and professional connections.
Whelihan recommends establishing a flat fee for service rather than taking a percentage of the sale price, as the latter encourages higher sales costs. “Some barns are high-pressure sales barns and it’s all about the turnover,” Peters notes. “Let the horse sell itself. It won’t, and shouldn’t, sell if it’s a poor fit for the rider.”
In other businesses, commission rates are based on many factors, such as the business’ overhead costs and the sales team’s travel expenses. In the horse industry, standard commission rates—10 percent for performance horses and five percent for Thoroughbred racehorses—are more the norm, subject to some variation.
“Many times, the market influences the commission rate,” says Chris Pine, a business consultant in Pocasset, Mass. Talking with other stable owners in the area will give you a sense of the going rate. Joanna Himes, owner of JH Performance Horses in Albany, Ga., agrees. “We researched other trainers who had similar credentials and facilities to ours and tried to stay in the same range or slightly below,” she recalls.
Setting a sales commission rate involves more than recouping the time and travel spent looking to buy or sell a horse. For one thing, the purchase can serve as the foundation for a future training, boarding, or lesson relationship. “If the person is going to be a training client who will be spending money with us every month, or if they have a horse that will improve our image, we will take that into consideration when determining our commission structure,” Himes says.