Don't forget fuel, wear and tear,and equipment costs... and you should be making money! If you're too high you wouldn't be moving product. Martin

 

If you are able to get your product sold, then your price is not too high. I don't deal in small squares but I suspect the complaints about high priced bales have more to do with higher prices in general than anything else. People complain about high gas prices too, right? Supply and demand at work.

 

There is no such thing as making too much money! A product is worth what people are willing to pay. simple as that!

 

I never figured in my hay elevator wear. Im still moving a lot of hay so that helps. I'm am curious, does anyone have big squares our round bales left? I can't seem to find any.

 

The other problem is that people go on to new york craigslist and see 3_4dollar hay that is garbage and expect those prices.. They don't even think about the 700 mile trip. The funny part is is that I erl explain all the costs and then they ask the same questions like I confused them.

 

I'm wondering from an ethics standpoint if I'm overcharging. After all labor cost are pulled, I make .75 to a dollar a bale. I average 700 bales a load. I am not pulling any storage costs or my time. My question is an ethics one. Am I making to much money?

There are no ethics in economic discussions. Morality is personal and it's what YOU are comfortable with. Let the market dynamics decide the price. If you are too high, you won't sell much and invite competition. If you are too low, you'll go out of business. In most commodity businesses, there are people who sell below the market to sell higher volumes and those who demand a high price and accept higher profits on a lower volume.....Neither strategy is right or wrong, but the guy that gets it right will stay in business for the long term. It's the customers who will decide.

I've got hay sellers all around me, but two are good examples. One has a lot of acres in hay, produces a good product in a high volume, and has a very good customer base. During our last drought he brought in a lot of hay and was even re-baling rounds into small squares to keep his customers supplied and kept his prices about mid-range. The other is a feed store who grows his own on about 300 acres and brings in hay from the west coast and alfalfa from NM. He also has a good customer base. When hay got tight, he limited sales to 10 bales at a time and would run out from time to time. He also sold hay at a much higher price. He makes much of his profit on feed and other stuff and really only handles hay for the convenience of his customers and as an outlet for his own production.

No doubt both guys lost customers during that time because some people couldn't afford to keep their animals. To those people, both of them were making outrageous profits and were immoral. Their other customers were happy to get hay and thought they were great. Both knew their good customers and responded to fill their needs, both are still in business, and I'm sure both sleep just fine at night.

With your small margins, I hope you are selling one hell of a lot of hay.

 

When dealing with the public keep it simple. As a society the attention span has decreased. I would tell them I can't go lower but if you want I will keep a eye out for some cheap hay if that's what you want to feed. Martin

 

I don't think you should feel badly or have to apologize to customers for what you charge. It is up to you how to structure your business and make a profit. Many people do not understand a successful business model and what it takes to bring feed products to them and their animals. The true test is if you retain those customers long term or not. In our operation we rely on long term loyalty and so i tend to be under the market form time to time when prices get sky high like they are now and we can also be over the market when hay is cheap. My customers have learned that the cheapest hay is not always the best value and they appreciate our quality and service. They make one phone call and we have their product delivered in their yard at their convenience. They understand we have to make a profit to stay in business and be a steady supplier for their needs.They are generally ok with our prices as they are steady throughout the season. I could charge much more for my hay in the winter (If I have it) than I do but I have chosen not to do so and customers are very appreciative in most every case. We appreciate our customers and they appreciate us so it is a very functional relationship for both parties. Over time we have weeded out the tire kickers and price shoppers for the most part and have a very loyal base of quality customers. Some larger and some very small. But they are all important to us. At Christmas time we send them all a card with a thank you note and a short update on our end as to how things are going for us. We also include a $25 gift card to our local farm store , D & B. You would not believe how much money we have "made" by giving these away. It is like anything in life, treat people the way you would want to be treated and 99% of the time you will be successful. As was mentioned, ultimately the Free Market will determine if you are doing the right thing. Good luck and hope next year goes better for you.

 

I don't think you are making enough. There are feed stores around here that will buy $9 a bale hay and then turn around and sell it for $14 a bale and only have to go 50 miles to get it. With relatively no risk at all.

 

Is making a dollar a bale too much money, hmmmm. Lets see, per acre I spend about 185.00, lime, pesticide, herbicide, np&k. Figure in fuel costs, maybe 15-20 per acre. So that's approx. 205 pa input costs per cut acre. At about 2tpa that's approx 70 small squares, a lil division and I come up with about $3 a bale for input and fuel. Now figure in another substantial input like the friggin ground, (renting here is about $50 pa average) that would be an additional 10-15 $ per acre, and the all important equipment (don't even figure that one in the equation) and operators (don't figure that one either as we don't seem to get paid for our "time") So if my math is correct, I have approx $3 per bale in fixed input costs. With a substantial outlay of cash in equipment, labor, insurance, etc. I figure that I have to be at $5 a bale to make that same dollar. Unfortunately I may be wrong and have much more in it than that, depends on the weather man as well. I WISH I could clear a dollar a bale, that would be awesome, but I don't think I do. I'm just glad I don't have to make money with hay, it's a daunting task, if I could make a dollar a bale and just be the middle man, that would be a good gig for me, and I wouldn't expect anyone to do it for less.

 

If your selling it it's not to high. We here in MS can't hardly give a bale away now. I wish we had put up a lot more small square bales this year. Have only moved 3 truck loads of rounds and that was this month. A buck a bale is not enough but better than nothing.

 

If the price was really too high, they wouldn't buy it. Supply and demand is the fundamental principle of our economy. In 2009, Ford was offering a $10,000 discount on their trucks. I still wouldn't buy one then.

You need to put pencil to paper and first make sure that you're 1) meeting expenses and 2) making it worth your time and effort. I use a number that my time is worth at least $100/hour, $150/hour if I don't like the job or the person.

My observation is that many people will complain about the price, even if you're giving it away. ("What do you mean I have to come and pick it up! Won't you deliver it!") It's all human nature.

Ralph

 

Thanks for all the replies, the other thing i kinda of do when i arrange loads to hay customers is that I take value of how they talk to me and are they respectful and courteous. That really shapes a price for themselves. I dont need to sell hay, so if they are jerks and are complaining about every mishapen bale, i tell them frankly not too call me again for hay. Nobody wants a picky customer, expecially one that there is never a perfect bale. Frankly it is worth the effort at a dollar a bale, but if it gets any damn colder up here im going up a quarter or fifty cents.

 

...Respectful and Courteous...

Two lost words for a lot of people anymore. Know exactly how you feel and what it gets the customer. Also has gotten me better customer service at some local businesses. You reap what you sow.

 

I always use sir and mam, works for me because I'm younger I think. Pays off in spades

 

As has already been stated, if you are selling it, then the price is fine. I would add to this though... if you are selling it and nobody is complaining, then the price is too low!

 

If it was free some still would complain.

I've weeded out those type of customers.Life is to short to deal with those types.

 

thats funny. I tell them same.
Example, "oh, u want me to knock off 5 bucks a roll?" "Ok I tell u what, head right over to that lil gas station and grab an eighteen pack and u got yourself a deal, oh and a bag of ice."

In reference, to the thread, what I feel I've learned about buying and reselling hay is that it sucks. I have always felt the need to try and help out people when we are in a shortage situation and make a lil money doing it. Although I have had good experiences buying hay and do have some grateful customers. It seems that most people think your gouging, which gives u a bad rep, plus it quite a few hay sellers aren't quite as ethical as one would think so u end up with lets say 4 rolls out of 38 that are crap and u hope to break even on. And lets not forget the hot check writers!! Hay shortages always bring them out! Not enough margins in it for me. The issue a lot of times is good hay producers get good money for it where its located, add freight and handling. Its not worth the complaints, bad rep, and hot checks to deal with. I actually had mentioned to my dad today, that I would get off payroll and find something else to do before I do that again. Lol.

 

Sorry to hear your reselling and rebaling experience during the last drought was that bad. You saved a lot of folk's animals. I have to admit though, when I heard you were doing it, I wasn't sure if you had embraced masochism or were trying to get nominated for sainthood.

 

During the 09 drought it was great. Had a great supplier that was honest with good hay and had a perfect logistics setup because it was during Arkansas gas well boom. Hay was 30 miles from there drop off and I was roughly 30 miles from where they were picking up drilling pipe.
2011 it was bad logistical and for hay quality. Every crook and crony came out the woods because they could see an easy buck. Don't mis understand me, I did get some good hay and i did deal with some good folks. But you had people on supply end ripping folks off and on our end everyone that had a small tractor that could fit an big rig figured they were a hay broker or mover. Most were people looking for quick cash. And maybe did them well. For me, I feel it degraded our reputation a bit because of price and quality. Some people really don't have a clue, they thought that was our hay in the worst drought in our small recorded history. People show up in 2012 saying, the last hay we got here wasn't good, well, when did u get it? Last year. Well duh, I told u it wasn't my hay. Its amazing even though I told it wasn't my hay, they still think I baled it.
At the end of day I just take it as a life lesson, learn from it, grow from it and move on. Maybe someone will learn a little from my experience. I know i did.

 

I believe this is the right location for this thread. This year as you know was awful for most midwest farmers. My second and 3rd cuttings were nonexistent and forget about fourth. Basically we lost our ass. So since the end of growing season I have been buying semis of hay from out east.. All small squares. My profit margin is very slim. But due to the many complaints I get about prices, I'm wondering from an ethics standpoint if I'm overcharging. After all labor cost are pulled, I make .75 to a dollar a bale. I average 700 bales a load. I am not pulling any storage costs or my time. My question is an ethics one. Am I making to much money?

What kind of hay you looking for? i have big rounds 5x6 of orchard 1st cut , dry stored in barn

 

I agree with sellers who don't waste their time or hay with people who whine about the price when you are a high quality supplier whose prices are in the middle of the pack. I can usually tell from a lot about the customer from the first phone call or pickup. Ninety nine percent of my customers are horsey people who run the spectrum from professional rodeo and futurity horses to plugs and adoption horses. My fields are within viewing distance from my barns so I can easily describe and demonstrate the amount of resources that go into my product. Additionally, I have my hay tested by top horse laps and I share the results with the customers. Most of them have no idea what all the data displayed means except for maybe protein but I try to educate them and give them handouts that explains what each data point means. People with bad attitudes and who won't call ahead to schedule pickup are give little reason to come back. You can spend 95% of your time trying to coddle 5% of your customers...don't waste your time as it don't make economic or business sense. I try to treat all my customers with professional decorum but my hay stands on its own merit. I know how my hay is grown and processed and my customers confirm my quality with their feedback. Had a new customer today who had been buying from a feed store. He was paying $4 per small square morel than what I was charging for a higher quality product. Selling hay is no different than other retail. Sell a high quality product at a fair price with benchmark customer service program. If you aren't making a profit then you need to review your expenses, especially your operational inputs. Simple things like soil testing, proper fertilizer analysis, herbicide and insecticide programs all cost money but they are the keys to raising a quality product and result in enhanced yields. Sometimes you have to spend money to make money...failure to spray, lime, fertilize etc lowers cost but reduces the quality and quantity of hay produced which affects your customer base. Mostly it is common sense without compromise. JMHO