[AlpacaTalk] Marketing 101
So after writing an off-list reply to someone regarding the stinky pile
I stepped in recently, I finally figured out what my problem was. It'll
take awhile to flesh it all out for everyone, so bear with me.
So, say down on their luck Alpaca Breeder A has some alpacas to sell.
Entrepreneur/
to help out Breeder A. Broker will take Breeder A's alpaca/s on
consignment. He will market them, keep them bred, feed and perform all
necessary care for them on his farm. What is Breeder A's bottom dollar
for alpaca X? Ok, we've decided that. So these alpacas actually have a
greater market value, probably. The example put to me was 50%, or more,
difference in those figures. So Broker works and works, breeds the open
dam to his sire... includes another free breed after delivery of the
cria.
Finally a buyer comes along. Let's say he/she buys Alpaca X. Broker has
invested so much time and effort, and services of his sire/s, that his
final profit is next to nothing. But actually, he has seen 1/3 of the
sales price of these animals go into his own pocket. Let's use easy
round numbers, that were offered as an example. Breeder A wants no less
than $10k for Alpaca X. Market value may be easily $15k. Broker markets
Alpaca X for $15k. Makes sure she's bred (to his sire). He controls
care and feeding, vet care, etc. Say we finally get a buyer, who can't
afford more than $13.5k. I'm not sure how the contract reads between
Breeder and Broker, but say Breeder actually receives the $10k they
required. Broker then receives $3.5k for his efforts. Well that looks
like a 35% commission to me. If he'd gotten he full $15k price, that
would have been a realization of a 50% commission.
Oh, he's given free breedings to his personally owned sire! Which he
claims are worth $2k each! So now he's actually lost money because he
gave away for free those two breedings to his sire. Not to mention all
the time and effort of marketing this female alpaca. But he did get a
check for $3500, no? I can claim that breedings to my own multi-blue
ribbon winning son of a famous rose grey sire are worth a bajillion
dollars, but until I get that for one breeding, it's not necessarily
true. In fact, I'll happily take $500 per breed for each of my boys
right now. Seriously.
Gentle readers, marketing is part of the business. Farm visits and
mentoring are part of the business. Free breedings are part of the
business. Helping site barns and fencelines are part of the business.
You don't lose profit my providing those services, you hopefully gain
clients and partnerships. Hand-holding and answering frantic calls are
part of the business. You never lose on good service.
Some years ago, I sold a dam for a certain price. I included a son of
hers (18ยต at 2 years and incredibly silky fiber) for free as a deal
sweetener. We also included a free breedback for the dam. Did I lose
money? Maybe, actually. :) But I have a client who still calls and
recommends us to other breeders, everyone she knows. And how much work
would that boy have gotten on my farm? Not much. Plus I would have had
to feed him and scoop his poop for all these years. Did that free
breedback cost us anything? Not really. So we've saved money actually,
and lots of poop scooping. :) Plus I did reserve breedings to the boy.
So everyone's happy.
So that's my take on this issue. I don't want to upset anyone, but the
math as explained to me by Broker Guy just didn't make sense. So I did
the math and figures don't lie. How can a buyer pay $13.5 for an
animal, seller gets $10k... broker gets $3.5k yet claims he makes
nothing? Well I'll take that kind of nothing every day, thanks! Send
'em all my way!
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posted by Chaddo at 11:18 PM
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