I run a small boarding/ lesson barn in Central Minnesota. Currently we charge $300/ month for pasture board. Amenities include horses on 1 mile pasture track system heated tack room, outdoor 80x160 arena, 60ft round pen, obstacle course, 55 acres of mowed trails, owner on site.
I’m looking to put up a 60x120 indoor arena in the spring.
I would like to increase the price of board to cover some of the cost. How do I approach that with boarders and what is a fair rate increase?
Pick a month when you want to implement the increase, best 2 months out, or three, then send out letters and emails to your clients, put up notices in the tack room, etc.
While 50 bucks won’t come close to covering cost, to me it seems like a decent number for the first increase.
I have no clue though what comparable barns in your area charge.
Exactly this. You need to know what the going rate is.
Do you provide hay/grain or is that provided by the boarder? If you do, $300 seems very low.
$25 would just Offset the loss of value due to inflation in 2021 of the $300 board while not providing any money to cover costs of building an enclosed arena
An indoor arena will cost & 50,000 to $100,000 depending on drainage and construction. You will never make that sunk cost back from board or even when you sell the farm.
You really need to do your research locally to see what the local market is. Then you need to crunch the numbers and make a proper business plan and see what your actual costs are. Those include feed, labor, improvements, utilities, and a proportion of your land cost or mortgage. You may not even be breaking even on $300 a month board.
Where I live, granted its more expensive, but it’s going to cost close to $200 per month to feed an easy keeper.
So crunch your numbers first and see what you need to charge to actually break even. Then look at the average price in your area for your amenities. Then think about what your boarders need and value. If say half of them are retired horses or weekend trail riders they may be after basic care done dirt cheap. How many people will pull wet horses off a field to ride indoor in winter?
If you decide to raise prices you have to consider how much at once is fair. You could do it over a year or two, say $50 every six months to end up at whatever sum you need to break even and turn a small profit.
An extra $100 per horse, say 20 horses. That’s $2000 a month, $24,000 a year. That could be a help towards a new indoor. But my guess is you are currently operating at a loss if you haven’t got a really tight budget and business plan.
You might want to consider having a rate for new boarders, and a graduated increase for existing boarders. Your current boarders might not see the benefit of an indoor in the summer (depending on your area), and you might want to give them time to see the benefit before hitting them with the full increase.
As for your new rate, you need to do some maths: what rate covers your operating costs (utilities, feed, staff), and a fair portion of fixed costs (cost of building, property taxes) plus what profit you expect. then compare that number with what is the going rate for a similar set up. If the later is considerably smaller than the former, you may want to rethink building the indoor, OR accept that your boarders are more subsidizing your own property rather than being a business, and just charge based on what your market will bear.
So hard as a barn owner/ manager to think about this stuff. You’ve gotten some great advice about researching facts that’ll help you understand what your actual expenses are and what the market rate is in your neck of the woods.
I know come January I’m going to have to recalculate rents on our 5 apartments and the boarding operation. The main components of our base expenses are property taxes, insurance (especially excess liability), and I’m worried about what hay and water prices will be next year. Town is talking about a 40% increase in the latter and just about everyone’s hay production was wiped out by rain this past season so I don’t know how prices will be adjusted going forward. But I’ve given everyone a heads up that it might happen and they understand why. Doesn’t hurt that our prices are way below market and they know it!
I don’t really think you can raise the rate to fund the indoor before the indoor is actually available to boarders. Do a small increase now to cover increased costs, then a large increase once the indoor is completed.
I do provide hay and grain. I would say $300 for pasture board in my area is pretty common. I haven’t checked in a few years if people have raised prices.
Welcome!!
You’ve gotten great info from other barn owners. I’m a boarder, so this is my limited perspective.
I don’t want you to lose money taking care of my horse. It’s not fair for you to subsidize my hobby. I expect the place to be kept in good repair, and adequate supplies of hay and grain. Or at least, confidence that deliveries will be made (and paid for) when needed.
But like Mango20 said, I don’t think you can raise the rate before the indoor is built, or at least well under construction. All of us have read complaints from boarders being charged for improvements that never come. My horse is currently boarded at a place that’s putting in an indoor, and the BO has let me know rates will increase in January.
It would help me to have some notice so I can plan. And really, a more modest increase every year is SO much better than a big make-up increase because rates haven’t been increased for a while.
I am in your general area, my stable is in the Twin Cities exurbs. I’ve been boarding for 30+ years here. It would be undesirable to raise board at this time of year here. In my experience, folks only mov
e horses here at this time for one of the three D’s: death, divorce or disaster (like when the barn burned down). You don’t want to price boarders out when they are reluctant to move. Better to ask for a rate increase in Spring or Fall. If your board contract has a time notice for leaving, I would announce the increase to take effect at least 1-2 months before the beginning of that period to allow them orderly departure if they must find cheaper arrangements.
I would suggest you consider a wider indoor arena, even if it has to be shorter in length than you would like. You can always build it with an expansion truss on one end for future length addition but you cannot build it wider later easily. Ours is 60x120 and I found it very challenging to give group lessons with that width building. Knowing what I do now, I would have gone with 70 or 75 and less length. Also, in our climate once you have an indoor riding area your boarders are going to be around more in winter and may want a lounge of some sort. They will also be looking for ways to tack up indoors. You don’t mention if you have those already. If not, the indoor is going to become in part a hangout area and a tack up space at least in winter.
Your barn sounds like it has alot to offer, but anything close to your current board rate would take years to make a dent in the cost of an indoor.
Another vote for you doing a comprehensive business plan and only then consider building the indoor and only then adjusting your rates to acknowledge the indoor. I am grateful for the care and amenities that my barn provides and I understand that sometimes the board rate has to go up. But, I want the BO/BM to have done a business plan so that they are not raising the board again every few months, and I want them to charge enough to be able to provide the care that they say they will provide.
Also another vote for making your indoor bigger. Sixty by 120 feels like a glorified round pen after a few weeks. If you’re going to go through all the work and expense of building an indoor, I would consider something significantly wider and longer.
Good luck!
Another vote for a small increase now, then a larger one once the indoor arena is completed and available for use.
I’m curious how many horses you pasture board? A one-mile track system doesn’t seem like it could support very many horses. Do you only do pasture boarding on the track system? No stall boarding, no actual pasture turnout? It might make more sense, financially, to fence in a lot of that 55-acres of mowed trails to use as actual pasture for boarding, and get yourself more boarders.
60’x120’ indoor is a pretty standard size in the midwest. But it wouldn’t hurt to get cost comparisons on larger sizes and see if it makes sense to go bigger.
Closer to $300-$500k now…$100k gets you footing and thats it.
That’s a good point, and a good reason not to raise board until after the indoor is already built and you can attract new boarders to replace the ones who might leave once board is raised.
one has to expect an increase in operating costs though over the next year (and the overall rate of inflation. So a small increase periodically is warranted, if not necessary.
Yes, one might expect small increases periodically, but boarders aren’t going to be expecting a rate hike high enough to fund an indoor unless OP has made mention of this plan before. Where I’m from a facility with even a tiny indoor charges hundreds more per month than a place without.
agreed. Even if the facilities are in place you need to adjust in increments.
Can I get the name of your builder? I’ve seen quotes come in at 200-300k and that is just for the structure and excavation.
Haha. I’m clearly behind the times. I stand corrected!!
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