You Can’t Deposit Revenue
First, Happy Father’s Day to all the dads out there working the farm, chasing kids around, and probably doing both at the same time today. Hope you get a few quiet minutes somewhere in there.
Now, onto something most farmers never actually look at.
Margin.
But before I get into that, let’s make sure we’re on the same page with two words that get mixed up a lot: revenue and margin.
Revenue is just all the money that comes in. If you sold $10,000 worth of beef this month, your revenue is $10,000. That’s it. It doesn’t account for anything you spent to make that happen.
Margin is what’s actually left over after you subtract everything it cost you to make that sale. Feed, processing, gas, packaging, your own time. If that $10,000 in beef sales cost you $9,000 to raise, process, and deliver, your margin is $1,000.
Same sale. Two very different numbers.
Here’s the part that trips people up: you can’t deposit revenue into a bank account. You can only deposit the margin. The $10,000 never really existed for you. The $1,000 is the real money.
Let’s make it even simpler. Say you sell a dozen eggs for $6. That’s your revenue on that carton of eggs. Now think about what actually went into it: feed for the hens, time spent collecting and washing and packing them, the carton itself, gas if you delivered it. Say all that comes out to $4. Your margin on that dozen is $2.
That $2 is the only part of that $6 that’s actually yours to keep. The rest already belongs to your feed store, your gas tank, and your time.
Now here’s where it gets interesting. Let’s say you start selling more eggs, enough that you can buy your cartons by the pallet instead of one pack at a time, and your cost per carton drops by 50%. If cartons used to cost you $0.50 and now they cost $0.25, that’s $0.25 straight back into your margin on every single dozen you sell.
You didn’t raise your price. You didn’t work any harder per carton. You just got smarter about how you buy, and your margin grew because of it (which means you make more money).
That’s the whole game. Margin doesn’t only grow by charging more. It grows by knowing your real costs well enough to find places like that, where a small change adds up fast across everything you sell.
A lot of farmers feel like they’re growing because the revenue number keeps climbing. More cartons sold, more orders, busier weekends.
But if your margin per carton isn’t growing too, you’re not actually getting ahead. You’re just doing more work for the same money, or sometimes less.
So here’s something simple to try.
Pick one product, eggs, beef, whatever you sell most. Add up everything it really costs you to get that product into a customer’s hands. Then subtract that from what you sold it for. That number left over is your margin. That’s the real number.
Then look for one spot, like buying in bulk, where you could shrink that cost without changing a thing your customer sees.
Once you know your margin, you can make better decisions.
Maybe a product you thought was a winner is barely breaking even. Maybe something you’ve been underpricing is actually your best seller and you never noticed because the total dollars looked small.
Revenue tells you a story. Margin tells you the truth.
If you’re already selling and tired of managing orders manually or paying platform fees you didn’t expect, just hit reply and tell me a little about your farm. I’m rebuilding the website right now (exciting stuff coming), but I’ll personally follow up with you.
with my appreciation,
Jason
Aka: The Part-Time Farmer
Your Farm Website Shouldn’t Feel Like a Second Job
I build it. I write your copy. I enter your products.
You send photos and details. I do the rest.
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