A rate list from three years ago and a lot of exceptions
There is a rate list. It was updated a few years ago, maybe with a percentage added since. It lists operations and prices per acre, per hectare, per hour, per bale or per load. Then there are the exceptions. The big arable farm gets a discount because they give you all their drilling. The old customer pays last year's rate on hedging because you agreed it over a cup of tea. A new customer was quoted a special price for the first season. Road time is charged to some and not others.
Only you know all of this, and you do not always remember it when writing an invoice at ten at night. The office, if it is not you, has to ask, or guess.
Why rates get tangled
Rates are set in conversations, and conversations are not recorded.
| Kind of price | Where it usually lives |
|---|---|
| Standard rate per operation | A printed list or spreadsheet |
| Customer discount | Your memory, sometimes an email |
| First season price for a new customer | The quote, if written |
| Rates held for old customers | Your memory |
| Extras and surcharges | Rules of thumb applied inconsistently |
On top of that, units vary. Some customers think in acres and some in hectares. Some jobs are priced per hour and some per acre depending on the customer's preference. Fuel surcharges come and go. The published list may be available through a regional association guide, which you use as a reference, but your real prices are your own.
What tangled rates cost
Inconsistent prices lose money quietly. A discount given once becomes permanent because nobody remembers why it was given. A rate held for an old customer falls further behind your costs each year. Extras such as road time or materials are charged to some and forgotten for others.
They also cause awkward moments. Customers talk to each other, and a farmer who finds out his neighbour pays less for the same work will ask why. If you cannot say, the conversation goes badly. And every invoice that needs the boss to check the price is an invoice that waits.
One rate card, used everywhere
What we build is a single rate card that every quote, job and invoice draws from.
- Standard rates by operation, each with its unit (acre, hectare, hour, bale, load, metre) and conversions where a customer prefers a different unit.
- Customer terms: any rate or discount that differs from standard, with the date it was agreed, the reason, and a review date if you want one.
- Extras as rules: road time over a distance you set, materials at cost plus a margin you choose, surcharges with start and end dates.
- Price changes at the start of a season are made once, with a date, so jobs before that date use old rates and jobs after use new ones.
- Jobs are priced from the card automatically. When you override a price on a job, you give a reason, and it is recorded.
- A report shows each customer's terms, how far their rates are from standard, and which terms are due for review.
Your quotes, from the same card, show the customer exactly which rates apply, and the invoice matches the quote.
Units are handled once rather than on every invoice. A customer who thinks in acres sees acres, one who thinks in hectares sees hectares, and the conversion is done by the card rather than by whoever is typing. Hourly work that some customers prefer to pay per acre, or the reverse, is set as a customer term, so the office never has to remember who likes what.
Setting next season's prices
Before the autumn work starts, you open the rate card. You add a percentage to most operations and adjust a few by hand. The report shows five customers still on older terms; you decide to keep two and bring three in line, and note the reason. The new rates apply from a date you choose.
In October the office invoices a drilling job for the big arable farm. The discount is applied automatically, with the note from when it was agreed. Nobody has to ask.
Do your rates live in your head?
- Customer discounts and special rates are not written down.
- The office has to ask you for prices when invoicing.
- Extras such as road time are charged inconsistently.
- Rates for some customers have not been reviewed for years.
- A customer has asked why a neighbour pays a different price.