The LiveryList Blog – Are You Charging Enough?

Posted on 4th May 2018

Many yard owners are equestrian enthusiasts or hobbyists who eventually open their own yard. Some because it’s a long-planned career move, others as they have spare stables at home or a rental yard or some to generate a bit of extra income. Competition is fierce for affordable livery and it’s easy to provide competitive livery rates without considering your own finances or outgoings to run the business- it may be that it actually costs you to run your yard! Below we give some useful advice as to how to calculate what your clients should be paying and what you should be considering when calculating these costs.

You basically need to include every cost you incur through your business for each livery package, plus a contingency amount to cover price increases or unforeseen costs. You can use the preceding year’s invoices and costs as a guide. Most importantly do not forget to put a value on your own time! Divide the total you reach by the number of spaces you offer, and then add an extra percentage on top of this amount for profit. To make it easy, we have broken down into a few sections below outlining the basic costs for livery packages that may be offered, each one should also include the preceding items. There is also an example calculation at the bottom to demonstrate the working out and a useful download working out sheet for your own calculations!

Unfortunately, you may be surprised by the outcome and find that in fact, it is costing you to run your yard. In which case you will need to raise your charges in line with the costs you have calculated. There is no point ignoring it or making excuses so as not to raise charges because it will make you ‘expensive’ compared to other yards- each yard is its own and each yard offers different facilities and levels of services regardless if they offer the same packages! It is also a good opportunity for you to see your outgoings and think of potential ways to bring them down for future years- from changing suppliers to introducing new yard rules or procedures. To work out your outgoings is a good point to review your business as a whole and see ways you can make it work better for you.

All Livery Packages should cover and include the following as applicable to your own regime:

Business Costs

Yard Rent/ Mortgage
Business Rates
Business Taxes
Premises and Business Insurance
VAT
Accounting/ Book Keeping Fees
Professional Memberships and Training
PR and Marketing (websites, leaflets, brochures, printing costs, artwork costs etc)
Office Equipment (Computers, Programmes, Office Furniture, stationary etc)
Bank Charges
Loan Repayments
Legal or Consultancy Fees

Staffing Costs

Wages
Casual Labour (freelance grooms etc)
PAYE/ Accounting Costs
Employers NI and Pensions
Professional Memberships (ie BGA, BHS)
Training (ie equine first aid, H&S etc)
Employers Insurance
Holiday or Sickness Pay
Clothing (branded uniforms, specific ‘workwear’ or worn equipment)

Utilities

Electricity (lights, kettles, steamers, etc)
Water (hoses, water buckets, bathing, stable cleaning etc)
Phone Bill (if you have a specific yard phone or provide to staff)
Gas, Oil (or any other costs of heating)

General Maintenance Costs

Fuel, Wear and maintenance on any machinery (tractors, quads etc)
Muck Heap and Waste Removal
General Maintenance (ditch clearing, hedge cutting, mowing of lawned areas, weedkilling)
Delivery Costs or Fuel for collection (of feed, bedding, hay etc)
Sub-Contractors (third party services used)

Paddock Maintenance

Land Maintenance (third-party services, rolling, harrowing, equipment, fuel etc)
Grass Maintenance (third-party services, fertiliser, grass seed etc)
Fencing Repairs/ Renewals
Electric Fencing Replacement (fencing, batteries, posts and attachments)

Yard Maintenance Costs

Stable Maintenance/ Repairs (re-painting, creosoting, re-hanging doors and equipment used)
Yard Equipment Repair and Replacement (wheelbarrows, mucking out tools, punctures, hoses etc)

Facility Maintenance Costs

Facility Maintenance/ Repairs/ Renewals (arena surfaces, fencing etc)
Electricity (arena lights, floodlights)
Damage, Wear or Replacement of Equipment (Jump Poles, Cups, markers etc)

Direct Costs for Assisted Services

Ad-Lib Hay/ Haylage – calculate the allowance or average amount used per horse per day (if only fed in winter then divide the weekly amount by half for an average over the year)
Bedding – calculate the allowance or average amount used per horse per day (if only fed in winter then divide the weekly amount by half for an average over the year)
Feed and Supplements- calculate the allowance or average amount used per horse per day (if only fed in winter then divide the weekly amount by half for an average over the year)
Wormer or Worm Counts – if included
Shoeing/ Trimming Costs – if included
Clipping/ Grooming – if included (electricity, blades, maintenance)
Equipment Replacement/ Repair (feed bowls, waterers, etc as provided in your package)

Health and Safety Costs

Fire Extinguishers and Alarms (replacement, maintenance etc)
Maintenance of Parking Areas, Access Road (filling potholes, weedkilling etc)
Cleaning Materials (toilet cleaner, toilet roll, kitchen roll etc)
Tea Room Supplies (tea, coffee, milk, tea towels, washing up liquid etc)
First Aid Kit re-stocking (Human and Horse)
PAT Testing of Equipment
Signage
Vermin Control
Bio-Hazard Costs (disinfectant, signage, testing, etc)
Security Services & Equipment
Salting/ Gritting Stocks

Your Own Costs!!

Number of hours worked on the yard per week by your preferred rate of wage (suggested circa £10 an hour)
Fuel (personal driving to and from the yard daily, twice daily etc)

Basically, any cost you incur in the course of business, however insignificant or small they can all add up. This list is not exhaustive. We would recommend you take a walk around the yard and your facilities to remind yourself of costs you incur on a regular or ongoing basis. You can also check previous invoices and bills from suppliers and other costs to see what else should be included.

Deductions

Ensure that in your calculation, you include any deductions from your running costs- basically any fixed annual income such as business grants, subsidies, support from third parties, rate relief etc. Do NOT include anything that has to be paid back (such as business loans, finance etc).

Once you have all the figures to hand, you are in a position to work out what your charges should be…

Example 

The following is a very basic example.

Yard X has 10 liveries- all on a DIY basis (stable and grazing rent only).

The following are the annual yards costs (based on their 2017 costs)

Yard Rent- £7200
Yard Insurance- £850
Website – £130
Accountancy Fees – £300
Muck Heap Removal – £450
Electricity – £310
Water – £280
Paddock Maintenance (harrowing, rolling both done by local farmer) – £350
Quad Insurance and maintenance (used for poo-picking & school harrowing) – £380
Quad Fuel (only used on yard) – £160
Fencing Repairs/ Maintenance – £540
Yard equipment Repair/ Renewal – £190
Stable Maintenance – £160
4 Replacement Jump Poles and 2 Sets of Wings – £170
Gravel for Car Park Pot Holes – £40
The YO also works on average 8 hours per week on the yard maintaining/ managing facilities (based at £10 per hour) – £4160

Now the important bit….!

Add all these figures (making sure they are annual figures) to get a Total Outgoings for the yard – £15,670
Then add an extra 10% contingency (in this case it would be £1567) to cover any price or quantity increases or unforeseen costs – £17,237
Then divide by the number of spaces (in this example 10) – £1723.70
Then divide by 12 to get a ‘per calendar month’ amount per stable – £143.64 (equates to £33.14 per week)

So Yard X needs to be charging a minimum of £143.64 (say round up to £145 per month on a DIY basis) just to cover their costs each month.

Remember the amount shown above is the amount you need to cover your costs- assuming all costs are in line with previous years- not make a profit. The only direct ‘profit’ in the above calculations is the 8 hours a week pay allocated to the yard owner. If you wish to make a profit from your business, you will need to increase the above figure by a suitable amount. i.e if you wish to make 30% profit you need to calculate the above figure x 1.30 to come up with a final figure for clients (i.e this would calculate to a round figure of £190 per calendar month / £43.50 per week and an approximate profit per year of just over £5100).

If you would like to use a template calculation sheet- there is one here – LL EG – TEMPLATE SHEET Calculating Livery Charges along with some further information.

If you work this out and decide you are not charging enough you may wish to increase your rates, we have a TEMPLATE- Price Increase Letter which is also free to download and use. If you’ve not got contracts with your liveries, it would be the perfect time to introduce them and get both your finances and yard procedures and paperwork in order. We also have a handy TEMPLATE- Contract Introduction Letter, and a LL EG – Template Livery Agreement free for you to download, edit and distribute to your clients.

LiveryList Equine Guides page offer many helpful leaflets in managing your yard in all sorts of ways produced both by LiveryList and other UK equestrian resources (BHS, ABRS, DEFRA etc). These are all free to download to help Yard Owners manage their business. We also have a very popular Facebook group- Livery Yard Owners UK – Discussions and Advice– which yard owners are encouraged to join to discuss and assist each other in all yard-based things!  

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