Simple Math

[MurraysMutts]

Ok.
Say I gave $1800 for one pair.
Gave $1450 for another.
And gave $875 for a 3rd pair.

All young cows. Not that it matters!!
2 heifers and 1 bull calf. Black.

So I've got $1375 AVERAGE in those 3 pairs. Easy peasy right???


Why can some folks not get that thru their thick hard heads!?!?
No. No!
You've got 1800, 1450 and 875.

Well. It doesn't matter! I've got $1375 on average in them. So when I sell, be it just the calves, or calves and then re-sell the cows as bred if I've run em with a bull......
As long as those calves bring $1375 each, I've basically got the cows for free! With the exception of feed, hay, grass, meds, transportation etc. And that ALL ADDS UP. Don't forget commission either!!

If a guy buys 20 cows (or 20 of anything really!) He's gonna have a hard time making money if he expects to turn a profit on EACH AND EVERY ONE as purchased. I may not make money on the $1800 cow/pair (whatever item) but as an AVERAGE I WILL turn a profit!

Why. Why! WHY!! can some people not understand that???

 

[gcreekrch]

Ok.
Say I gave $1800 for one pair.
Gave $1450 for another.
And gave $975 for a 3rd pair.

All young cows. Not that it matters!!
2 heifers and 1 bull calf. Black.

So I've got $1375 AVERAGE in those 3 pairs. Easy peasy right???


Why can some folks not get that thru their thick hard heads!?!?
No. No!
You've got 1800, 1450 and 875.

Well. It doesn't matter! I've got $1375 on average in them. So when I sell, be it just the calves, or calves and then re-sell the cows as bred if I've run em with a bull......
As long as those calves bring $1375 each, I've basically got the cows for free! With the exception of feed, hay, grass, meds, transportation etc. And that ALL ADDS UP. Don't forget commission either!!

If a guy buys 20 cows (or 20 of anything really!) He's gonna have a hard time making money if he expects to turn a profit on EACH AND EVERY ONE as purchased. I may not make money on the $1800 cow/pair (whatever item) but as an AVERAGE I WILL turn a profit!

Why. Why! WHY!! can some people not understand that???

Buyers do it all the time. Life is full of averages.

 

[Brute 23]

I understand it but it does drive my ocd crazy. I like itemized spreadsheets. It would probably have a summary at the bottom with some thing like you are saying.

It's kind of semantics but there are things I would not say from talking numbers with people. Like saying "the cows were free"... I'd say... "the calf revenue covered the original cost of the cow purchase". Numbers people can't compute "free".

Lucky for you... your cows and your money so you can say what ever you want.

 

[gcreekrch]

Murray, hopefully you have enough left for next week’s bargains.

 

[MurraysMutts]

Just examples guys n gals. Numbers ain't real. Just a made up example.

Say a guy is putting together a group of like kind short bred cows to hold a few months and sell as heavy breds as a big group.
Your gonna have all kinds of different numbers invested. Say for instance, 1000 to 1950 bucks. And any number in between. Some could have even been bought by the lb.
Take those numbers. Add em up and divide by number of head.
That's your number per head AVERAGE.

Now.
When u go to sell, and you had better be at the sale, you have a minimum target number. You'll have to not forget to add in fuel, mileage, feedstuffs, vax etc.

Gives u a SIMPLE target of Say 1650 per head.
Some will make u lots of dollars.
Some will actually lose a few dollars.
If they bid up over 1650 per head (they usually sell by the head at that kind of sale) you've made money as a group. Now, granted you sure wouldn't want em to sell at your target number, but if you didn't have THAT NUMBER, your just hoping you made money and cussing after the dust settles.

If they make a 100 to 300 or more per head then u can know immediately where your at on the financial side.

My buddy just don't get that.
And....
I tried explaining that to a CPA today and totally lost them!!

I just don't understand how a person, no matter what item they are selling, can NOT KNOW what they have invested. Especially when sold at an auction in this particular circumstance.


Like the guy buying watermelons in Arkansas and hauling em to Texas to re-sell. He buys em for a dollar. Sells em for a dollar and can't figure out how he's not making money. The solution would be to buy a bigger truck to haul more watermelons right???

 

[Allenw]

Your correct but which animal made the most and which lost money? Details are what's important.

 

[Hpacres440p]

Economics of volume- a small producer has fewer opportunities to compensate for the high price outliers. Larger volumes to sell also command “group” rather than “individual sale prices. Probably works somewhat in watermelon too. But always need to account for feed,fuel costs in addition to the animal itself.

 

[Hpacres440p]

Economics of volume- a small producer has fewer opportunities to compensate for the high price outliers. Larger volumes to sell also command “group” rather than “individual sale prices. Probably works somewhat in watermelon too. But always need to account for feed,fuel costs in addition to the animal itself.

 

[MurraysMutts]

Your correct but which animal made the most and which lost money? Details are what's important.

That's pretty easy to figure AFTER everything is said and done.
Trying to do all that in the short 30 or 40 seconds the animals are in the ring is right near impossible.

The better animals of the group, when put together as singles, usually ADD to the value of the lesser animals. When sold as a group or two groups, at least you'll know where your at.

 

[bird dog]

The better animals of the group, when put together as singles, usually ADD to the value of the lesser animals.

One of the big questions I have when I sell a group at the OKC stockyards is whether one lesser animal will go through unnoticed or will the one bring down the value of the whole group. There is never a good answer and you really never know anyway. Its usually not worth the risk to me so the lesser animal sells locally at a discount.
On the other hand, a whole group of lesser animals sells much better at OKC in a group than locally selling as singles.

I have seen groups of junky 700 lb horned steers sell at OKC for $1.50 lb when they would be hard pressed to get above a dollar locally.

 

[farmerjan]

I get both the thoughts. I like to see where the overall average gives me a return, and it is nice to see where an animal that is BOUGHT RIGHT will make a real good profit...
A good buyer will see the lesser animal in a group in the 20 seconds they are in the ring... all according to what they have for clients, they can take and split off that lesser animal, and group it with others to make a group that they can market.... we do that somewhat with buying small time... buy a few that are not "top notch"... put together a group of "okay" animals... and benefit from the "group" pricing.. sometimes have to hold some for awhile... and with us often buying singles and two's of bull calves and working them, we can put together some groups. Right now with the prices the way they are, it is a tough situation.. and the smaller guys in this area are just not able to buy the bigger groups because it is just too much money to put out and gamble on so smaller groups of 3-10 are doing good.

 

[Silver]

When you buy shares in a corporation over time you figure your average share cost on your total amount of shares. When you sell them you figure your profit / loss based on sale price less the purchase price of the combined shares. One wouldn’t try to analyze which particular share was more profitable than the other. Why would a group of cows bought be any different?

 

[MurraysMutts]

@farmerjan
That initial outlay of cash is definitely making it difficult right now. I wanted to buy a few unweaned calves to work and wean with a couple I have at home. Instead of selling just a couple, I could sell a nice lil group of like kind. Baldies are hard to find at a good bargain right now.
I've found lots of black calves.

My favorite small sale is coming this weekend. Good buys to be had. Fingers crossed!

 

[farmerjan]

@Silver ; I have purposely bought shares when things have dropped to get my cost per share down... and then yep, did exactly what you said and when I sold it was so that I was selling for more than the average cost was... since I am very small time stock buyer it really helps to watch how you can really lower the cost average when you buy some for $12 and then they drop off to $7 or something like that. You can actually get to where the stocks you kept actually cost next to nothing if you managed to buy some and then sell some at the right times.... I can only afford to play with "penny type" stocks.. but I also like to buy stocks that pay a dividend... Thanks to @Caustic Burno when I first got on here, he made some suggestions on things like that, to get me headed in the right direction... and I don't get alot since I buy in very small numbers... but I have gotten to where I really like a couple and have made some investments when the price of the stock dropped but they are very steady and consistent with paying their dividend...
Cost averaging.... it works... and you can always figure on certain animals what they actually made you... or what you lost... but the thing is to make money on the overall average...

 

[Lucky]

I go by the averages. Nit picking every animal to death and getting caught up in exact amounts is a waste of my time. I break things down into categories steers, heifers, feed, fuel, meds,etc. From there I look at how I can crunch to get the most out of each.

 

[Brute 23]

That's pretty easy to figure AFTER everything is said and done.
Trying to do all that in the short 30 or 40 seconds the animals are in the ring is right near impossible.

The better animals of the group, when put together as singles, usually ADD to the value of the lesser animals. When sold as a group or two groups, at least you'll know where your at.

I didn't realize you were talking math in your head on the fly. It makes alot more sense now.

 

[Warren Allison]

One of the big questions I have when I sell a group at the OKC stockyards is whether one lesser animal will go through unnoticed or will the one bring down the value of the whole group. There is never a good answer and you really never know anyway. Its usually not worth the risk to me so the lesser animal sells locally at a discount.
On the other hand, a whole group of lesser animals sells much better at OKC in a group than locally selling as singles.

I have seen groups of junky 700 lb horned steers sell at OKC for $1.50 lb when they would be hard pressed to get above a dollar locally.

Yep. When ever I bid on a group, I always bid on the one that would bring the least if they sold one at a time.

 

[Lucky]

Yep. When ever I bid on a group, I always bid on the one that would bring the least if they sold one at a time.

Do you think it's better for the seller to sell in singles or groups? How about the buyer? I'm talking about Order Buyers doing the buying on both sides, not the avg rancher there to buy 5-10 head but a person buying truck loads of X.

 

[BC]

Do you think it's better for the seller to sell in singles or groups? How about the buyer? I'm talking about Order Buyers doing the buying on both sides, not the avg rancher there to buy 5-10 head but a person buying truck loads of X.

Groups of 8 or more will bring more than singles. Order buyers get paid on commission (usually so much per cwt.) . The more lbs that fir the order, the more they make. Lucky, look at the NETBIO sale in Sulphur Springs. Those cattle consistently bring more.than singles. Part is that they are weaned, bulls castrated but part is they are sold in big groups, sometimes a truckload of sames sex, weight,and quality.

 

[Lucky]

Groups of 8 or more will bring more than singles. Order buyers get paid on commission (usually so much per cwt.) . The more lbs that fir the order, the more they make. Lucky, look at the NETBIO sale in Sulphur Springs. Those cattle consistently bring more.than singles. Part is that they are weaned, bulls castrated but part is they are sold in big groups, sometimes a truckload of sames sex, weight,and quality.

I've sold at the Netbio sale several times and felt like the yearlings did rearly well there. Been shipping to OKC for the last 6-7 though. I just feel like at OKC they are going to bring top dollar. Shipping is around $800 a load but the commission seems to be a little cheaper there. Also I don’t have to make several 60 mile trips to SS so it all evens out. You are correct though NETBIO is the best local sale around.