Business Math

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Business Math for Breeders

The hobbyist will balk, laugh, sneer, and scream that the prices are "way to high." My response is that most hobbyists don't really care about making money, they're in it for the enjoyment... and the old adage "You get what you pay for!" (See the pricing differences listed at the bottom of this page).

Some established breeders, that are just trying to make a few bucks here and there may not like the prices... but should easily be able to understand the formula for valuing the worth of breeders, especially a very proven pair of breeders. Many other breeders, in the business for an income and the financial reasons, I've met agree whole-heartedly with the formula below, and use it (or something similar) in pricing their best income producing breeding stock. Many other breeders, in the business for an income and the financial reasons, I've met agree whole-heartedly with the formula below, and use it (or something similar) in pricing their best income producing breeding stock.

Obviously, "Proven - egg laying", Bonded, and simply "Paired" hold a directly corresponding much LOWER value (in the above order). A young single or unruly pet is worth ever less (generally about 50% of what a "great pet" would be worth). Birds, unlike virtually any other animal, can be a good investment financially... simply because of their life expectancy. The larger birds can live to be 50 - 80 - even 100 years old, if they are happy and well cared for. The same is true with breeding stock, a happy, healthy, well cared for pair can breed for 20 to 50 years - producing income and enjoyment, through their babies especially, for many years to come.

About four years ago an article was written in Bird Talk magazine (that has long since disappeared) that was written by an accountant that happened to breed Congo African Grey's. It was a very interesting and supported by both sound business logic, investment logic, as well as a few IRS rulings. The article, which I will try to get the issue # to reference, dealt with valuing breeding pairs of birds from a financial business point. I don't honestly know if I can do the author justice - and may not get things 100% correct, but I believe that I understood enough to give you a reasonable idea of how it works. And an example and justification of how I try to employ the formula.

Example
(the numbers are also only for example)

To keep it simple, I have a very proven pair of Extra Large Blue & Golds (often referred to as "Bolivians" - unclear if that is correct or not - but they are nearly twice the size of "normal" B&G's).

Every baby these birds have had were sold by the time they were weaned for $1,000 average. Over the last five years, these birds have averaged a minimum of 3 babies per year (or minimum of $3,000 gross income per year) or a minimum of $15,000 for the five years. Obviously, you have to be reasonably good at marketing and selling the babies... luckily we haven't had any major difficulties in that area (not yet having a fully weaned bird we didn't WANT to keep).

Now, this pair of birds costs, on average, $40 per month (about $500 per year) to feed and care for really well. It is closer to $30 per month during the off-season, and $45 during breeding season and with eggs and babies. Add an additional $100 per year to feed out the babies for resale... bringing the total average expense of $600 per year... or an average of $2,400 net income per year, $4,800 for two years, and a comfortable $12,000 over five years. Just for the one set of birds.

What does this mean to their value? That means that this one pair of birds is worth some where between $2,400 to $6,000 minimum. Why the variance? Well:

bulletare you making any guarantees?
bulletWhat type of help in getting these birds setup are you offering the new buyer?
bulletWill their cage(s) and nest box be going with them (which they are used to and less likely to miss a breeding season, and are usually an added cost)?
bulletWill instructions on how to deal with these individual birds - what they like, don't like, what works - doesn't work, what's been done, tried, etc. be going with the birds?

All of this information and assistance is valuable. Your time teaching (or even writing down) the new owner how deal with and get the most out of the birds is valuable. It will not only help the birds adjust better, but it will help the new owner have a better chance to get their investment back sooner. Can a person reasonably guarantee that a particular pair of birds will produce? I think it depends on the buyer - will they listen, can they keep a similar feeding & care schedule?? Will the birds be indoors or out doors - is the climate (temperature & humidity) about the same as where they came from and used to??  Will they be left alone - or amused (depending on the individual bird) in a similar fashion as they are now? What other birds will be around them? Can they see or hear the other birds (thus being challenged, distracted, or involved in a territory dispute)????

In our limited experience, we have found that truly baby producing pairs will NOT miss the next breeding season if they can be taken care of in the same style (or better), within a similar environment, as well as they are used to. Obviously, the persons experience and ability to learn, listen, and follow the instructions really help. So, yes, I do think some reasonable guarantees can be made.

We have had babies out of a newly paired set of birds within a month from putting them together. Others have done nothing after a couple years. We have brought in "baby proven" pairs, that have gone to nest within a month or two... others that never did anything for us. We are very lucky in that all of the birds we have purchased, traded for, or been given over the last few years were, for the most part, accepted with FULL DISCLOSURE that was 100% true and accurate. Only once has there been a problem regarding a sellers failure to disclose all known problems, sex, and quality to us. That was dealt with quickly, and although very stressful during the working out stages... the end result was fair, reasonable, and the best for all (including the birds).

Now, let's look at some definitions. Understanding what how we define the words and the immense almost "legalistic" stance we take on mis-representations from these definitions, will help you (the prospective buyer) understand our guarantee and our business ethics:

Proven (had babies) - also referred to as "Baby Proven." Has had babies that the current owner has physically seen with their own eyes. I will absolutely guarantee the sex of this type of birds, and expect the same type of guarantee in return. Obviously, if there are actual babies, the birds MUST be male & female - if they aren't, it's fraud - a crime, and I would absolutely push it to the fullest extent of the law (criminally & civilly). If the birds were valuable, or supposedly high producers, I would also seek damages for the reasonably anticipated lost profits. All we ask is that people are honest with us - as we are honest with the people we sell to, and will readily make a full disclosure and written guarantee about the state of the bird(s).

Regardless of the birds name, our guarantee specifically deals with these type of issues - and we do NOT represent any bird as a given sex, unless they are:

bulletin a baby producing pair (then, we usually only guarantee one is a male and the other a female, that have had babies and/or fertile eggs - with breeding records to backup our guarantee);
bulletsexually dimorphic (visually different - such as the Eclectus);
bulletor sexed by a professional (preferably more than once, by different professionals).

Proven (laid eggs) - Has laid eggs that the current owner has physically seen with their own eyes, or as reported from an extremely reliable source. Now, this means the birds are either a male & female or two females (which is generally worth a lot more than an unproven pair or even a bonded pair). If someone represents that they are selling this type of pair and the birds turn out to be two males - the seller should be responsible to repay the buyer the full purchase price AND all expenses (including the DNA tests & vet bill) and the buyer KEEPS the birds... or TWICE the purchase price! It's not a crime to not know the sex of the birds, and it's not a crime to say you don't know something - or that you were told "ABC" but suspect "XYZ." It is a crime to say that you have SEEN eggs from a given pair of birds that turn out to both be males! We would NEVER do that, and would likely sue anyone doing it to us for the fraud and misrepresentation.

Bonded - Is together, getting along really well, sits beside each other, preens each other, eat at the same time, protect may or may not be feeding each other (which should be disclosed to the prospective buyer).

Paired - The birds are together and seem to get along. They might preen each other and occasionally sit side by side. They don't yet eat together (at the same time) and don't feed each other yet. The amount of time they have been together should be disclosed to the prospective buyer.

In conclusion, using the above example birds (the Bolivian Blue & Gold's) I will set values I would sell them for at the various types of pairings.

bullet$4,500 - Proven - (had babies - a number of years, for more than two owners) I wouldn't even consider anything less than $3,500 cash for the birds in this class. Even if they aren't in perfect feather - have a crooked beak, missing toes, or other minor problems... as long as they have some breeding records, or other proof of babies on a regular basis, they must be healthy. The birds in this class have already proven that they will produce for multiple owners in different locations. These are my favorite type of breeders to buy - and am willing to pay a higher price for this class of birds with some reasonable written guarantees.
bullet$3,000 - Proven - (had babies - only one or two years) - break even is one year of babies. I wouldn't sell them for less than $2,400 cash, as I would likely have more babies next year.
bullet$2,200 - Proven (laid eggs) - I wouldn't drop the price below $1,800 - as I either have a probable- soon to be- proven pair or two females, either of which is worth more money.
bullet$1,800 - Bonded -(depends on the shape of the birds) - If they feed each other, I wouldn't take less than $1,500 in all likelihood.
bullet$1,200 - Paired - (current web average for this type of bird pair) - If they didn't even eat together and stayed at opposite ends of the cage, and only seemed to tolerate each other... I don't think I could sell them for more than about $900 - and would likely separate them, or try to repair them with other mates. Of course, this would be disclosed.

To give you an idea of how I would value single birds (same type as above) I've put together the following chart. You must first understand that I don't want, and would put down any breeder that killed it's mate. That is bad and can be very costly. So, it is assumed that the singles below have never killed another bird - especially a mate.

bullet$1,000 - Single - baby producing female, didn't kill mate, feeds out her babies
bullet$   800 - Single - same as above, but does NOT feed out her babies
bullet$   750 - Single - baby producing male

bullet$   800 - Single - egg laying female
bullet$   700 - Single - readily mates, definitely male, and ready to find a female

bullet$   700 - Single - imported OR parent raised female (of breeding age, not too old)
bullet$   600 - Single - imported OR parent raised male (of breeding age, not too old)

bullet$   500 - Single - mature bird of breeding age - never paired, maybe ex-pet, either sex.
bullet$   300 - Single - ex-pet for more than 5 years that has turned violent & unruly

bullet$        0 - for any bird that killed it's mate

There are always going to be people "dumping birds" - babies out of the nest, at 4 or 6 weeks old, singles, or breeders for a wide variety of prices. Some far below the normal standard - some higher than normal. Region also controls the price and value - especially of babies & pets. It is all based on Supply & Demand. No matter what price a person has established, if no one is willing to pay it - either it is too high, or there isn't enough service, supplies, or value being seen by the prospective buyer.

A bird that goes straight from the breeder, who has spent time taming, handling, teaching, and caring for the bird is worth more than the bird that has been sitting in a cage for 6 months without being handled and having people poke at it through the cage. A handfed baby that is going into a family is worth more, when the person hand feeding has kids that the bird can grow up around - the extra noise & handling. Same is true with an animals - a bird being raised around other animals (dogs & cats) - going into a home with dogs & cats - is worth more than a bird that has never been around animals.

Good Luck

We hope you really enjoy your birds
whether they are pets or breeders.

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Last modified: January 03, 2005