Understanding the Total Cost of doing any type of business has become very popular
during the last 5 to 10 years as companies have had to rethink how they do work in
this competitive world. Many departments had moved to personal computers thinking
it was much cheaper than using the larger computers only to find the hardware and
software costs were only ¼ to 1/5 of the total cost. This article will discuss how
you can evaluate the total cost of raising goats. This can be done to see what your
real profit is and how you may increase your profits. It can also show you how to
understand how much real money you are losing and how to minimize the amount or move
into a profitable business.
This is a methodology not facts about the average costs of raising goats. What this
article will not show:
How much it generally costs to raise goats
Identify if it is more profitable to raise goats vs. cattle or some other animal
The methodology for identifying the total cost of doing any business is the same.
The major steps are:
Identify the major categories of costs incurred in the business
Identify the cost types within each category
Collect or estimate the costs for each cost type within each category
Develop a statistical graph of the total costs for identifying the larger cost areas
Define which cost areas you have a better opportunity for reduction
Develop an action plan to reduce those costs
Revisit your total cost case at a later time to evaluate changes and progress
Identify Major Costs Categories
The major cost categories for raising goats are:
Costs of animals
Costs for feed supplements
Costs for land and shelter
Costs for maintaining health
Cost for labor
Costs for transportation
Costs for administration
Costs for selling
Costs for misc.
Identify the Cost Types within Category
Costs of Animals
Cost of Does. The overall cost of the does you purchase should be identified. Lets
take an example of your planning to buy a doe for $1000, expect to keep her five
years and then estimate you can sell her for $400 at the end of five years. You would
subtract the $400 from the $1000 leaving $600. This divided over five years would
be a cost of $120 for this year. If you believed you could buy her for $1000 and
sell her next year at the same price after having kidded, you would have no cost
associated with the year.
Cost of Bucks. This is the same as for does with one exception. If you plan to offer
stud services, this should be calculated into the cost of the buck, thus reducing
the overall cost.
Cost of breeding fees. If you take your doe to have it bred with an outside buck,
you must identify this cost.
Costs of Feeding ( for year)
Cost for Land, shelters and protection
This assumes land already owned would have the same value later and will not be added
Yearly taxes on land used by goats. This is a real cost
Shelter costs. This cost should be evaluated similar to the animals. Look at the
cost of adding shelter and estimate the value it will have later. Spread the cost
over whatever period is appropriate
Cost of fertilizing and any treatments done to pasture for goats
Fencing cost. Similar to shelter. Evaluate value added to land and subtract for actual
cost, then spread over appropriate period.
Cost of Guard animals. This is the cost of animal spread of appropriate years plus
yearly cost for maintaining animal such as dog food, medical, etc.
Costs associated with health
Cost for vaccines
Cost for medicine such as worming, antibiotics, iodine, etc
Cost for vet
Costs for health certificates
Cost for medical supplies. This should include hoof trimers, needles, etc.
Cost for Labor
You probably do not want to calculate the cost of your time, but you may consider
looking at it an consider if you could do the work more efficiently.
Cost of hired labor
Cost of Transportation
Include motels and meals where costs are associated with travel related to goat business.
Use a cost per mile for estimates. (e.g. .27 per mile without trailer, .50 per mile
Travel to sales
Travel to shows
Travel to feed stores
Travel to other farms
Travel to symposiums
Trailers and goat haulers. This should be spread over appropriate years.
Cost for Administration
Subscriptions to magazines and newspapers
Software for goat business. Spread this out over an appropriate period
Stamps and envelops
Costs for Selling
Cost for Misc.
Feed buckets. Spread cost
Hay racks. Spread cost
Tattoo equipment. Spread cost
Collect or Estimate Costs per Category
You could set up to collect this information over a year period but estimating for
the first year is a better way to start. Estimate first and then collect to validate
the accuracy of it. Put the estimates into a spreadsheet and create subtotals for
Develop Statistical Graphics
Take the spreadsheet and create a pie chart to show how the different category costs
Define Which Categories are Better for Cost Reduction
Look at the largest cost categories and consider how much control you have over it.
For example, you have very little control over land taxes. However, cost of feeding
may be something to consider alternatives.
Develop Action Plan
Develop a plan for reducing costs of the identified category areas. Make sure you
have set a goal for the reduction. If you do not have a goal to shoot for, you will
have difficulty in seeing if you are progressing or not.
Revisit Total Cost Case
Next year at the same time revisit your cost estimates and the actual costs collected.
This starts the process all over again to determine if there are areas for reducing
The exercise of identifying the Total Cost of Raising Goats can be very eye-opening.
It draws your attention to the big picture of raising goats. If you are a hobbyist,
it may have no value to you, but if you are looking for a profit, it can't hurt.
I hope this has been beneficial information for you. Please Email us with your questions
or comments. As always, thanks for visiting our web site.