The Going Rate

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If boarding is part of your business, setting the right rate is critical. Charge too much, and you’re looking at empty stalls. Charge too little, and stalls fill—but you lose money. How do you find the right balance? Here, an equine business consultant and owners of established and start-up stables share experiences and advice.

There is no universal formula for figuring out what to charge, says Lisa Derby Oden of Blue Ribbon Consulting in New Ipswich, N.H. Oden, who provides business development and marketing advice to people in the horse industry, tells her clients to begin by looking at their business overhead. Those who don’t do this, she says, “invariably undercharge.”

KNOW YOUR COSTS

Make sure your rate reflects your true expense, Oden says. That is, don’t just add up what you pay for the hay, grain, shavings and other items boarded horses use. Calculate all the fixed and variable costs of your business, from mortgage (or rent) payments to the electric bill. “Include your labor,” she adds. “If you have a small operation, just five to eight horses, you may be doing all the work yourself. You have to recover your time—and the cost of your health insurance. If you were sick or injured, you’d have to hire someone.”

The only way to get a handle on costs is to track them closely, says barn owner and hunter-jumper trainer Sandi Teachman Carlton of Battle Creek, Mich. Carlton, who has been running her Windsong Stable hunter-jumper barn for 23 years, uses a computer program to log expenses in a dozen categories:

• property and payroll taxes

• salaries, including her own

• service (hourly help)

• repairs—everything from fixing fences to clearing away fallen trees, along with eventualities like painting the barn and repairing the roof. “Repairs go up each year as our facility gets older,” Carlton notes.

• insurance—farm, liability, and worker’s compensation

• utilities

• feed, hay and bedding

• supplies—all the miscellaneous items used around the barn, from light bulbs and toilet paper to feed tubs

• Internet and office supplies

• depreciation—on buildings, fences, tractors, and the like that will eventually have to be replaced. Carlton spreads the cost out by depreciating them over three to 20 years, depending on the item and the IRS.

“At the end of the year we calculate the total and make adjustments in the board rate as necessary,” Carlton says. Boarders cover their portion of the costs; lesson horses cover theirs through lesson income. Other expenses, such as the costs of staging shows, are figured against the income from those activities.

The boarders’ share is broken down into a cost per horse. Carlton explains, “That cost is based on the number of horses actually in the barn, not the number of stalls we have. There are 19 stalls in the boarding barn, but only 16 boarders, so costs are divided among the 16, not 19.

It’s smart to do the numbers based on a few empty stalls, says Oden. “There is always turnover, and you can expect to have some empties at any point during the year.” Turnover tends to be higher in new barns than in established barns with strong connections in the industry, she notes.

If your business is new, you have less to go on in calculating your costs. But this is still the place to start. Monica Hardin started Clermont Saddle Club, a small boarding and lesson barn in Clermont, Fla., about two years ago. She had more than a dozen years in the business, but this was the first stable she’d run as owner. She calculated her board rates initially by estimating what she would need to cover direct expenses and labor costs and to contribute to funds for repairs and farm overhead. “Then I looked at surrounding barns, to be sure I wasn’t higher,” she says. Her rates—$500 a month in the main barn, with 12-by-12 rubber-matted stalls, and $350 in the “paddock barn,” with 10-by-10 stalls and dirt flooring—are average to low for her area, she says.

KNOW YOUR MARKET

Study your market closely to know how much you can charge relative to other barns in your area, Oden says. There may be aspects to your business that will allow you to charge higher board than surrounding barns, as long as the market is there. To bring in top rates, a show barn needs a big draw—a big-name trainer who will attract clients. Access to good trails is a plus for stables with a recreational focus.

“Do a competitive analysis, and see what you can offer that other barns don’t,” Oden says. “Think of what your customers need and want, and what’s missing from your market. In urban areas, clients may include a lot of working adult amateurs who like a clubhouse atmosphere. They may be willing to pay more for a comfortable viewing lounge, shower facilities, or workout space for pre-ride warm-ups. Some barns offer child care and even dog care for their clients.”

Location is increasingly important, Hardin notes. As development takes up more open land, there are fewer stables. In her area, people are willing to pay a little more to be at a barn that’s conveniently located, so they have a shorter drive. Other draws are grass—“it’s a luxury here,” she says—and a covered arena for shelter from the sun’s heat in summer.

The rates charged by comparable barns will limit what you can charge for board—and your profit from it. “I know what I have to make, and I try to add a little profit,” says Carlton. “But we are limited by the rates that nearby barns charge—at $545, we’re currently the highest in our area.” Windsong can charge a little more because the farm has lots of good pasture and is well maintained. “We also have an active multi-level show program, traveling to and hosting shows, which is something most of our boarders are looking for,” Carlton says. Shows are the biggest moneymaker for Windsong, she adds.

“There is not a lot of profit from board,” Hardin agrees. “It helps run the farm and make repairs, but most of my profits come from lessons.” She says that her lesson program, with four school horses, brings in far more money than she earns from her current five boarded horses. But her boarders take lessons, bringing added income.

Oden says that it’s common for stable to set attractive rates to draw in boarders, hoping to make money on other services—lessons, training, and so on. Still, she says, “You need to cover your basic overhead with board, because other income streams can vary or dry up.”

FIGURE THE EXTRAS

What board rates include varies widely. Oden says, “At many hunter-jumper barns, people expect to be charged separately for all sorts of little services. Clients at event barns don’t expect any such extras. Upper level dressage barns often charge an inclusive fee that covers training as well as board.” Try to include anything that is essential for the horse’s health, that most of your boarders won’t do on their own, or that you can’t stand to see left undone, she adds. Essentials like deworming can be included in the rate or billed separately. If they’re separate, make sure that boarders know the service isn’t optional and they’ll be charged for it.

Be sure to charge late payment fees, Oden says. You have to buy hay and feed up front, whether board checks come in on time or not. You’ll also need to decide if you’re going to set a cap on feed and bedding amounts and charge more for horses that need more, or just figure an average and let the costs even out.

“At a dressage barn, most of the horses are big warmbloods,” Oden notes. “They all need a lot of feed, and the basic fee generally reflects that. At a western barn or a trail barn where there’s a wider range of horses, amounts vary.” If you decide to set caps, she says, be sure that the basic amount covers most of the horses in your care—and spell it out in the boarding contract.

Windsong’s board includes all daily care and feed, including salt and a fat supplement. Carlton takes care of deworming, but boarders are billed for it. Services like grooming and tacking up are extra.

Clermont’s rates cover hay, feed to four quarts a day, monthly “desanding” with a psyllium supplement (essential to prevent sand colic in Florida, Hardin says), and bimonthly deworming. Boarders pay extra for services that aren’t routine, such as holding a horse for the farrier or vet or giving medical treatments. “We don’t charge for changing blankets or putting on fly masks, as long as the horse isn’t difficult and one person can do it,” Hardin says.

Boarders are also charged directly for damage done by their horses, and Hardin takes a deposit from each boarder so that there will be money at the ready to repair such damage. But she’s quick to point out that it’s still necessary to build repair costs into the basic board rate. “You can’t always know which horse did the damage, so you’ll often end up paying for the repair yourself,” she says.

ADJUSTING THE RATE

With board closely tied to costs, rates must increase as expenses rise. Hardin had to raise her rates last year, when severe drought in the Southeast drove hay prices up by 40 percent. By making cuts elsewhere in her budget, she was able to hold the board increase to 6.5 percent.

Tracking expenses each month helps Carlton know if her farm is staying within budget. When hay costs in Michigan temporarily shot up last year, she added a surcharge to the board. “I didn’t want to build that cost into the rate permanently, figuring that prices would ease. I just calculated the extra amount we had to pay and passed the cost along,” she says. When prices fell, the surcharge came off.

Still, annual board increases are typical for Windsong boarders. “I’ve found that it’s better to raise the board a small amount each year, $10 or $20 to cover increased costs, than to wait a few years and then bump the rate $50,” Carlton says. “There are definitely fewer grumbles that way.”