for those that consign to sales

[firesweepranch]

For those of you that consign your cattle to sales, what is they typical commission that is charged? What do you get for that commission? I am just trying to get a feel for what is normal out there, and how different sales work for the consignors.
Thanks!

 

[Doc]

I've seen everything from 15 to 25%. Our state sale runs on the avg 8 to 12 %. But we manage it ourselves.
As far as what you get :
1) Catalog.(which from doing it for our state sale the past 5 years it's a lot of work involved)
2) Advertising
3) Marketing opportunity.  Maybe somebody coming to look at someone else's animal , but gets there and likes yours better.
4) Billing. Although sometimes I think this where some don't try to help collect bills as much as they should.
5) Exposure to maybe a different group than what would come to your place. 

 

[firesweepranch]

Thanks for that Doc. That is the kind of information I am looking for. So it seems pretty similar across breeds? If you have someone manage the sale, what should you expect from that person? Should that person be in charge of collecting all the expenses (billing, basically)? Or do they just set up the catalog and advertising?
Just trying to get a feel for what others are doing. And how much they expect to pay for that service.

 

[AdrienneHilbrands]

Doc pretty much covered everything in his post... but overall it really just depends on the person/firm you chose to manage the sale. Most of the time the manager takes care of all billing and collections, advertising (but doesn't hurt to do some of this on your own as well), catalog layout and printing, hiring of auctioneer and ring-men, possibly arranging sales facility rental and/or equipment if need be, sometimes registration transfers and some even do/help with picturing. Overall, it really just depends on who the manager is, so the most important thing is to make sure you've discussed all of these items before you sign/verify the agreement.  That way everyone knows who's in charge of what.  Your commission is going to vary greatly and all depends on the total gross dollars made in the sale and your total expenses.  A higher grossing sale results in a lower commission (expenses are a smaller proportion of your total sales) or if you keep expenses low you'll also keep the commission lower (again expenses make up a lower proportion of the total sales).  But FYI - advertising is not the place to skimp along with a lot of your other expenses so usually it's a matter of trying to put together enough head to make the sale gross more.  In the case of a lot of your bigger sales like Denver/Louisville/etc. you can usually get by with lower #'s and still have a lower commission on the sale due to the higher averages these sales normally command.

 

[iowabeef]

Make sure you have whatever agreement you decide upon in writing. Even with friends and people you know and trust....it makes everyone's life much easier.

 

[Gargan]

Make sure you have whatever agreement you decide upon in writing. Even with friends and people you know and trust....it makes everyone's life much easier.

<rock>

 

[Red Cow Relocators]

Our standard management fee is 4 % - for this we provide the following services. Catalog and advertising design and typesetting, catalog dispersment, placement of advertising, block commentary, sale order, clerking of the sale, cashiering the sale, billing/collection of unpaid lots, transfer of registration papers, dispersment of funds to consignors, contracting sale staff (auctioneer, ring men, internet broadcast), contracting of sale facility, handle absentee bids, list the sale and catalog on our website and occasionally some photo work.
Advertising costs can be a tight line to walk and knowing when enough is enough or too much can be challenging. Personally I prefer to spend most of our advertising dollars in well known/read publications that may also provide ring service in an advertising package and stay away from doing a lot of "local" advertising.
Printing the "right" amount of catalogs can also be a point of interest. Our "Hot list" for our mailing list is approximately 2500 active buyers. We will sort this list according to geographical locations and direct mail catalogs to those individuals as well as to buyers that we know are actively pursuing more genetics for their program. I personally hate black and white catalogs, nothing says we cut corners more than a cheap looking catalog with black and white photos. A quality 4 color catalog will grab the attention of prospective buyers faster than anything else. Plant the seed that you are selling quality genetics when they first lay eyes on the catalog. 
Every management company has their own list of duties and they can vary wildly from company to company. Cost of facility rent can also sway the sale expenses quite a bit.
We typically aim for a 15 % commission rate on our sales. Some get a little higher and a few will come in just a little below that. As stated above the commission rate is directly related to the gross of the sale. RCR

 

[leanbeef]

That's a great synopsis and how it should sound coming from a good management firm. We manage our fall production sale ourselves and usually get by at 10-12% and that's based on selling only around 40 lots. 15% is completely reasonable if you have a sale manager...I would never hire somebody who thought 25% was acceptable! Not to say that never happens, but unless that manager gets a LOT more than you can get anywhere else, it's costing you money to sell there.

I completely agree regarding color catalogs! The difference in cost nowadays is not that much...spend the extra money. If you need to cut costs, look for another place to skimp.

A good sale manager can do a lot to help small programs market good cattle. I'm not in favor of the management teams who promote a few top animals that bring a lot of money & make their sale average look good when 75% of the cattle struggle on sale day because they use everybody else as filler to make up a sale.

 

[BTDT]

Are you hosting a sale? 

I have been to many sales. A good manager will make you money. A bad one will cost you lots of money.  If you manage your own sale, you can purchase a mailing list pretty cheap. Then you actually get to talk to potential buyers. Plus, who knows your cattle better than you??

Also, read the fine print and make sure you understand it. Some will charge 3% PLUS 15% commission PLUS facilities PLUS advertising. Some will say a flat fee of 8%.  All of a sudden that 3% ballons to 18% plus other expenses.

The best way to find a manager if you decide not to do the work yourself is to deal with them via another sale. I have tried dealing with certain ones only to find they didn't represent the cattle well, manage my bid correctly, or returned calls.
I have also seen sale managers or sale representitives make the sale "personal" by not representing certain farms and by steering people away from cattle only to sale them some of their friend's cattle.  I think personalities should be left out of sale management and sale representation. That is very unprofessional.

If I recall most state sales run about a flat 12-18% depending on year.