A service- or barn-call fee is added to a customer’s bill to cover regular vehicle expenses (fuel, maintenance, fluids), vehicle operating expenses (registration, insurances), travel-time and the cost of a replacement vehicle. This fee may be a flat fee or a variable fee (typically per-mile).

Why Charge A Call Fee?

Tracking vehicle expenses allows you to more accurately separate these expenses from other shoeing expenses. It makes it easier to determine if you need to increase your service fee when costs begin to rise. By charging a call fee, you do not have to consolidate clients to specific areas on certain days.

Another reason to charge a service-call fee is as part of a contingency plan for a new vehicle. Too often, when a farrier’s vehicle dies, there is no cash on hand to purchase a new or used vehicle and it’s necessary to seek a loan. Charging a service-call fee will help you set money aside for this situation.

What’s In A Name?

Don’t call your fee a fuel fee, mileage charge or anything else that ties it to a particular expense. Terms like these can lead to unnecessary arguments and assumptions that the fee is based on the cost of fuel alone. I suggest calling it a trip charge, travel charge, service charge, service-call fee, barn-call fee, ranch-call fee or perhaps a dispatch fee if you are in a multi-farrier practice.

What to Charge?

To determine what to charge, consider the cost of your vehicle, how often you replace vehicles, the cost of yearly maintenance, insurance and registration.

It does not matter how you charge the fee, as long as it covers all of your vehicle expenses. You may decide to charge from the last client stop, from your home, by regions or a simple flat fee. Determine what works best for you.

Esco Buff

I started out with a flat fee but decided it wasn’t fair to clients who lived close to me and was a bargain for those who lived farther away. I switched to charging by regions and found it worked very well. But now, because I can more accurately track my expenses, I prefer to charge a per-mile fee from my home.

So let’s determine what to charge based on two types of common choices. This process will give you a method to determine what to charge. You simply have to put in your own figures.

1. Do you want to drive a new or used vehicle? A new vehicle may cost around $40,000 and a used vehicle may cost you around $10,000. Actual prices may vary depending on type of vehicle purchased and accessories.

2. Decide how long this vehicle will last. Depending on your actual yearly mileage, a new vehicle may need to be replaced every 8 to 10 years and a used vehicle every 4 to 8 years. For this example, let’s use 8 years for a new vehicle and 4 years for a used vehicle. This means a new vehicle may cost us about $5,000 per year ($40,000 divided by 8 years) and a used vehicle about $2,500 per year ($10,000 divided by 4 years).

3. Determine the cost of other expenses. These figures will vary depending on your state and personal expenses. Adding up annual vehicle registration ($40), annual yearly inspection ($25) and annual insurance cost, ($600), we have about $665. Now figure how much you THINK you’ll spend on vehicle maintenance in a year.

A new vehicle initially requires less maintenance than a used one. Right now, I’m spending about $700 a year on maintenance and tires. By purchasing new vehicles, I do not pay out much for maintenance in the beginning. However, toward the end of a vehicle’s life, these expenses rise.

I figure on an average of $835 per year in total repairs during the lifetime of a vehicle. Add that to the $665 in other expenses we calculated earlier, and we have a total of $1,500 a year.

4. Estimate how far you travel in a year. If you’re just starting out, I suggest you use a standard 15,000 miles per year. Most farriers I know travel between 20,000 and 30,000 miles per year. For this example we’ll split the difference and use 20,000 miles a year.

5. What kind of miles per gallon does your vehicle get? This will vary widely, depending on what you drive and what you may tow. For this example, we’ll use 15 mpg. Now figure out what is or will be the yearly average cost of gasoline per gallon for the year. This figure can be obtained on line at www.eia.doe.gov. I will use $2.25 per gallon for this example. This works out to a yearly expense of $2,999 (20,000 miles a year divided by 15 miles per gallon equals 1,333 gallons of gas times $2.25 per gallon).

6. Add up all these figures and our total comes to $9,499 for a new vehicle and $6,999 for a used one. This breaks down to about $183 a week for a new vehicle and $135 for a used vehicle. You need to be sure you are collecting that amount from your clients in a week.

If you decide on a flat fee, you will need to determine the number of clients you see in a week and charge accordingly. Visiting 25 barns a week, you would only need to charge about $7 per stop for a new vehicle ($183 divided by 25) or $5 per stop for a used vehicle ($135 divided by 25).

If you choose a variable fee (per-mile), then you will need to determine this fee based on average yearly miles figured weekly. Traveling 416 miles a week, you would need to charge 44 cents per round-trip mile from home for a new vehicle ($183 a week divided by 416 mile a week traveled) and 32 cents per round-trip mile from home for a used vehicle ($135 per week divided by 416 miles a week traveled).

What To Do With The Money

This is perhaps the most important part. You will need to set aside a few minutes each week to determine this.

Add up what you actually spent for gasoline, maintenance, etc., for the week. Let’s say you spent $60 in gas and had no maintenance. Then add up what you actually collected from service call fees — say $183. This means this week you had a remainder of $123 ($183 collected minus $60 in expenses). Immediately place this amount of money into a high interest savings account or CD.

Why? If you did your math correctly, at the end of 8 years, you’ll have the cash you need to purchase a new vehicle, cash-on-the-barrel-head.

Remember, your service-call fee includes the cost of a new vehicle in the figuring. No more worries about what to do when your vehicle breaks down.