Beef Hanging Weight Prices: Ensure Healthy Farm Margins
Hanging Weight
Hanging weight is the weight of a cow after slaughter and processing, with its organs, head and skin removed. Bones and water weight are still included in the final hanging weight. Once a carcass is aged and cut, water weight and bones are not included in the final weight.
Many Farmers choose to charge for quarter, half and whole beef based on hanging weight because it is more accurate when determining their underlying cost-basis. However, the concept of hanging weight is not understood by Buyers and introduces uncertainty (reducing conversion) . Understanding hanging weight prices are critical for your Farm to cover butchering costs, then price your products for Buyers based to preserve a healthy profit margin. Learn more about hanging weight:
When selling beef direct-to-market, your Farm or Ranching business must pay careful attention to the variables that may affect the underlying processing costs for your beef. Many processors charge fees per animal that may be based on Live Weight or Hanging Weight. And, while it is important to understand the nuances as a Producer, your Buyers are looking for an easy ordering experience and do not need to be confused by any terms which are irrelevant to their purchase. Buyers are only concerned with the final price for the product.
Hanging Weight Beef Prices (Breakdown)
When buying beef, Buyers are typically charged by the pound of meat. Hanging weight can be anywhere from 50-60% of the live weight, and the final weight (packaged cuts) can be between 50-60% of the hanging weight, on average.
Once the butcher determines the hanging weight, they will then charge a a fee per pound for the cost of processing and slaughtering. Costs can vary widely from one processor to another based on the Hanging Weight of the animal, the relationship with your butcher, market demand and the volume of your business (e.g. 1 v. 10 v. 25 v. 100 animals per month). Depending on those factors, your processing costs could range from $0.20 to $1.00 or more per pound. Those costs should be factored into your price charged to Buyers to ensure a healthy margin.
Kill Fees & Other Costs
In addition to the underlying Processing Costs (based on Hanging Weight), most butchers will also charge a Kill Fee per animal that is euthanized. Kill Fees can vary widely based on a number of factors from $25 to $100 per head of cattle. Additionally, most Butchers will charge supplemental fees for wrapping, special packaging, and/or freezer hold times (if you’re unable to pick up your final products in a timely manner).
Factors that Impact the Costs to Butcher a Cow
If you’re just getting started selling beef direct-to-market, talk to local Farms and Ranches with experience in your local community. Additionally, talk to several Butchers to better understand the competitive landscape when it comes to processing your animals, initially (one-time), versus on an ongoing basis (e.g. 5 , 10 or 25 animals per month). Your costs will come down as you scale your operation with a consistent base of Buyers (who want to access your products regularly). Standardize your cut sheet to reduce variables and streamline efforts for the processor - any additional, custom variables will only increase your costs.
How Much Does it Cost to Butcher a Cow?
To determine the cost of butchering a Whole Cow, you have to break down the components. See below using rough estimates (given every animal varies).
Live Weight of Animal: 1,000 pounds
Hanging Weight of Animal: 600 pounds (on the hook)
Processing Fee per pound based on Hanging Weight: $0.75 per pound
Processing Fee for 600 pounds: $450
Kill Fee per Animal euthanized: $75
Total Processing Costs: $525
Final Weight of Product: 450 pounds
Cost-basis for Processing: $1.17 per pound (based on Final Weight)
All of these factors (above) can vary significantly depending on the size and scale of your operations.
Selling Quarter, Half, and Whole Beef
Selling Quarter, Half and Whole beef is an easy entry point for Farms and Ranches who are initially building a direct-to-market business. Most Farmers will take an upfront deposit for shares of beef to ensure Buyers cover their underlying costs prior to butchering, and are locked in to make a final purchase. This allows you to line up your processing dates with the butcher, and organize your fulfillment schedules to follow.
Sellers then charge the Buyer a price per pound based on the Final Weight of the products (e.g. $6 - $8 per pound) for a bulk purchase of Quarter, Half or Whole. With Barn2Door, your Farm can simply enter in either the Final Weight or Price per Pound, and the Buyers will be automatically charged (or invoice) less their upfront Deposit. This model of direct sales provides a healthy profit margin for your Farm business, while ensuring all your costs are covered.
Pricing and Packaging your Products
Given less than 3% of Americans have a chest freezer to accommodate a Quarter, Half or Whole beef, the most Successful Farms and Ranches offer Subscriptions (or Herdshares) to sell their products in a small format (e.g 10, 20 and 40 pound boxes). This greatly expands your available pool of Buyers (to everyone with a regular refrigerator & freezer), and provides an avenue to build recurring income. Sellers typically charge a higher price per pound based on the Final Weight of the products (e.g. $10 - $15 per pound), which provides the highest margin for your Farm business, while covering all your costs.
Stay Out of the Freezer Business
Sellers often entice Buyers to purchase larger Subscriptions with better primal cuts in the bigger boxes. Subscriptions (or Herdshares) enable you to streamline your processing and fulfillment dates, and build a regular cadence for your Farm business. Top-performing operations will secure 20-25 Subscriptions to move a Whole Animal every month at a premium pricepoint. Farmers schedule their pick-up from the Processor and fulfillment to Buyers (Pick-up or Delivery) on the same day to avoid storing and/or building costly freezers. This will focus your efforts to a single day per month, and greatly reduce your labor and overhead costs (thereby increasing your margins).
Read: How Farms Avoid the Freezer Business & Drive Upfront Demand
Conclusion
As an Independent Farmer or Rancher, you are in control of setting your own prices when selling direct to your community. Understanding the breakdown of hanging weight prices and the associated processing costs will enable you to better price your products to ensure healthy margins for your beef.
When Buyers sign up for a Subscription (or Herdshare), they are committing to paying a monthly fee to receive your products on an ongoing basis. To command a premium price (and the best margins), you must be explain the value of your Farm practices, your family business, good stewardship and the nutritional benefits of local Farm-fresh beef. Be sure you are paid a good price for your products and your efforts to build a thriving Farm business.
Barn2Door offers software for Independent Farmers to create and promote their brand, sell online and in-person, and save time managing their business. If you’re curious to learn more, watch this 5-minute video.