Have you held your boarding rates or training rates steady over the past few years? Are you now in a position where you need to raise rates in order to meet the increasing costs of running a boarding stable? In this article Julie I. Fershtman, J.D., offers you some advice on how to raise your rates legally, and using good business practices.
Can You Legally Raise Rates?
As an equine professional considering a rate increase, the immediate question is whether you can legally do so. Evaluate your contract carefully to determine whether it prevents you from imposing a rate increase. It’s possible that a rate increase would violate your written contract, especially if the contract locks in rates for a set duration. This was the case with one boarding stable’s contract that had a year-to-year term; while the stable saw benefit in committing its boarders to the facility for a year, the stable took a financial risk by locking in its fees for such a long duration. Contracts of that type likely prevent stables from raising their rates mid-term.
A more practical question concerns the proper amount of a rate increase. Chances are that no law limits the amount that a boarding stable or horse trainer can request for the future. What matters is what is reasonable.
Purely from a business standpoint, it is wise to seek rates that maintain profitability. In doing so, determine the break-even point—the amount of income needed to meet the business’s typical overhead expenses and compensation requirements. But good business practices also dictate keeping rates reasonable, based on prevailing market standards and other factors. By doing your homework and knowing your numbers, you can usually set a reasonable rate that doesn’t price you out of the market and also allows you to be profitable.
Reserving the Right to Raise Rates
Ours can be an industry with fluctuating expenses—such as constantly changing prices for gasoline and energy, and escalating feed and labor expenses. Some of these price increases can come without warning, such as a regional drought that can affect the cost and availability of hay. Because of this reality, give yourself the flexibility to raise rates. With this in mind, service contracts might include the following elements:
- Reserve the right to increase rates. For example, the contract can specify that the stable is permitted to raise its rates by giving the horse owner at least 30 days’ advance notice in writing of the increase.
- Post pricing policies and rules. If you post policies or rules, reaffirm that the business reserves the right to increase its rates with advance notice, as set forth in the contract.
- Give customers the option to leave. While the contract can give you discretion to raise rates with advance notice, it should also give customers the right to terminate within a similar time frame. That is, if the boarding stable or trainer gives 45 days’ advance written notice of an upcoming rate increase, the contract can allow the client to give the stable 30 days’ advance written notice that he or she is leaving and that the contract is terminated.
Imposing New Side Charges
If you are unwilling or unable to raise your regular monthly rates, consider imposing new side charges, unless prohibited by contract. Here are examples of services for which many facilities assess extra fees:
- holding the horse for the veterinarian or farrier at the stable
- blanketing and unblanketing (using the client’s blankets)
- putting on and taking off splint or bell boots
- turning out the horse in an individual paddock rather than a group pasture
- extra stall bedding
- emergency hauls of the horse to a local veterinary facility or equine hospital
- providing extra feed and hay to “hard keeper” horses
- administration of daily supplements (provided by the owner)
- hauling the client’s horse to a show
- renting the trainer’s equipment at the show
- per class fees when the trainer exhibits the client’s horse at a show
As you provide these services—and keep careful record of them—you can submit monthly invoices to clients itemizing the services along with the dates they were provided.
In fairness to the clients, and to eliminate misunderstanding, attach to every contract the latest and most complete list of side charges, and reserve the right within the contract to amend the list with at least 30 days’ advance notice.
To protect your business, the right to impose side charges should be recognized in the main service contract. The contract can cite the attached list, state when the customer will be invoiced for fees and when payment is due, and acknowledge that the customer has received the list.
Late Payment Fees
To encourage timely payment, some boarding and training contracts impose late payment fees, where allowed by law. Contracts with such provisions might require boarders to pay the stable an extra $15 for every week in which board has not been paid, or a daily percentage. Check the rules governing late fees in your state, as they can differ.
Maintaining profitability is harder than ever. Protect yourself from rising costs by using well-worded contracts that allow you to adjust rates and that specify extra fees and charges.
This article does not constitute legal advice. When questions arise based on specific situations, direct them to a knowledgeable attorney. Attorney Julie I. Fershtman has 23 years experience in the horse industry and has authored two books on equine law. For more information, visit www.equinelaw.net.
Good Business Practices for Collecting Fees
For customers who find themselves unable to pay their fees on time and seek special payment arrangements, consider the following guidelines.
- Maintain the integrity of the service contract. If, for example, the boarding or training contract does not allow for alternative payment arrangements, such as different payment deadlines, waiver of late payment fees, or waiver of interest, the parties can agree in writing to modify the contract to allow for these changes, with the signatures of all parties.
- Don’t be afraid to enforce the contract. If the contract gives you rights, you have every incentive to enforce the contract. This means, for example, that if the contract permits recovery of interest on unpaid balances and/or late payment fees, be ready to demand them.
- Stop the bleeding. If you simply cannot afford slow-paying customers, consider whether to terminate the contracts for these customers quickly—before the debt accumulates and becomes even more difficult to collect.
- Know your rights. When payment problems arise, you may have rights under the applicable state law, such as the right under an agister’s lien statute (also known as stablemen’s lien statute) to sell a boarded horse when fees are not paid. Make sure to follow these laws to the letter, and seek the advice of a knowledgeable lawyer when appropriate.