“My purpose is to challenge the way you think. If I don’t challenge you a little bit … I walk away from this feeling like I have not done my job.”

That’s how Aaron Berger, extension educator at the University of Nebraska–Lincoln (UNL) started the 2025 webinar series he hosted, where he talked about the one thing that’s king in every business: money. 

Berger said for producers to make solid management decisions that improve profitability in a cow-calf enterprise, they first need a foundation in understanding and calculating all costs involved.

Equipped with a thick black marker and a blank easel pad, Berger broke costs into categories and showed where changes might be made. 

During six weekly hour-long sessions, 30 attendees learned how to identify major cost drivers, compare feed options, evaluate overhead expenses and use benchmark data to guide decision-making.

The series empowered ranchers to make data-driven decisions, optimize inputs and improve overall profitability through practical tools.

Earning their keep

Berger started off the first session by explaining there’s more than one way to approach ranching, but each operation’s approach should consider all potential methods of profit. He used land value as an example to explain.

“Just because I own land doesn’t mean I need to own cattle; and if I own cattle, I don’t need to own land,” he said. 

Ranches who own land have two choices: run their own cows on the pasture, or lease the land out. Because of this, Berger said any cows on the land have to be able to “pay,” or return, the value of the grass.

He said, “If the cows cannot pay fair market value for the grass and add value to that, then you need to ask the question: should I own cows?” 

From there, Berger laid out the basic framework the rest of the webinars rest on: no free land, no free labor, no free money. It seems like a simple concept, but Berger explained how easy it is to overlook costs or undervalue resources.

Berger reminded producers that even their own labor, which may feel like a given, should be included as a cost. It’s like the old saying, “time is money.” 

“You should at least economically value your labor at what it would cost to hire someone to do it,” Berger said.

Throughout the series, he didn’t just tell attendees what to consider. He equipped them with the tools to think critically about their finances and make decisions to help their ranches survive to the next generation. 

In one session, the main topic was the value of grass. 

“In Nebraska, feed typically accounts for 40–70% of annual cow costs,” Berger explained. 

Using the Feed Cost Cow-Q-Lator, a spreadsheet tool developed by UNL to help livestock producers, Berger demonstrated how to estimate true feed costs — not the just the cost to purchase feedstuff, but the total cost — taking into account factors like transportation, storage, labor and waste.

Looking at the big picture of feeding costs, the calculator allows producers to compare different rations and determine which is best suited for their operation. By entering current rations or testing new ones, Berger showed how the Cow-Q-Lator can break down the costs of feeding specific feed elements like crude protein, energy and dry matter. 

Feed is an important, but generally accounted for, cost. In later sessions, Berger turned his focus to costs that are often overlooked because they don’t show up in the mailbox, like cow depreciation.

“You don’t get a bill in the mail that says you had $50,000 this year in cow depreciation or replacement expense,” he says. “But from an economics standpoint, this is a real cost.”

Berger walked through a live example using Nebraska market values. He charted the value of a cow from weaning through her productive years, showing how she appreciates in value early on, and then begins to decline. 

A weaned heifer calf might be worth $1,800; a bred 2-year-old $3,000; and a 3-year-old $3,400. But by age 6 or 7, prices begin to fall; and by age 9 or 10, cows often sell for $1,600 to $2,000.

Using a simple formula — (purchase price – sales price) ÷ productive years — Berger calculated a $3,000 bred heifer sold for $1,500 after five calves would cost $300 per year in depreciation. Factoring in a 2% annual death loss brought the total to $344 per cow per year. When adjusted for an 88% calf crop and 550-pound (lb.) weaning weights, depreciation translated to 71 cents per lb. of calf produced. 

“That means for every pound of calf you sell, 71 cents went to just cover cow depreciation and replacement costs,” Berger explains.

He challenged producers to truly consider whether their cows were worth their current market value. 

“If you are choosing not to sell a cow today, you in fact bought her,” he says. “You chose not to turn her into cash. You chose to keep her at that price.”

Trimming the excess

Berger next turned his attention to overhead costs — specifically labor and equipment. 

“Labor and equipment are what I would categorize as overhead costs,” he said. “They don’t change much with the number of cows you run, but they can be changed.”

To help producers estimate true equipment costs, Berger introduced the “DIRTI Five,” an acronym model breaking costs into the categories of depreciation, interest, repairs, taxes and insurance. He advised assuming 20-25% of a machine’s market value would be spent annually. 

“If I gave you that money annually, could you cover repairs, insurance, interest and set aside money to replace that equipment?” he asks.

Session attendees brainstormed creative ways to cut costs: leasing instead of buying, trading pickups before warranties expire or switching calving seasons to reduce equipment needs. Berger then broke down labor costs. Starting with a $30,000 base salary for a hired hand, he added housing,utilities, bonuses and taxes, which brought the total well above the original salary.

“Take their cash wages and double it,” he said. “That’s about what they cost.”

Technology does offer solutions to cut down on some labor needs. Berger encouraged producers to explore options like remote water sensing, game cameras and virtual fencing. 

New technology can be a big investment of time and trust, but Berger said it’s simple from an economic standpoint: if it reduces the number of trips needed to check on cows, that’s more money going back into a rancher’s pocket. 

The next piece of the budget Berger brought up was the other half of the genetic equation — bulls. 

“It’s not as big as feed or cow depreciation or labor and equipment,” he said. “But it’s still a significant expense, and sometimes more than we realize.”

Using a $10,000 bull with a $2,500 salvage value and five productive years, he calculated $2,520 in annual cost. Spread across 25 cows, that’s $116 per calf produced.

Berger also cautioned against chasing high expected progeny differences (EPDs) without considering long-term effects. 

“The bull you buy this spring won’t have mature daughters until 2030,” he said. “If you want to make change, you may need to take significant action.”

To wrap up the webinar, Berger shared some benchmark data from Kansas and Colorado to back up his points. The results showed the most profitable herds weren’t necessarily more productive, but they were more efficient. 

“They fed less harvested feed,” he explained. “They figured out a way to reduce their equipment depreciation and labor costs.”

In Colorado, the most profitable ranches had total cow costs around $800, while the highest-cost herds exceeded $1,300. 

“That’s a $500 spread,” Berger said. “It’s the difference between making money in a tough year or not.”

Through these six nights, Berger left attendees with a new way of thinking about the way they run their operation. If you ask him, that was the goal.

“The guys I work with who have been successful in this business and have made money, most of them have business degrees or they understand business,” he said. “They are businessmen first and cowmen second.” 

Editor’s note: Jenna Whitaker is a freelance writer from Moscow, Idaho.