Jamie Brand, business development manager for AgriVision Equipment, says a key part of the ROI calculations the dealership provides to customers is taking into account the cost of ownership. One example, was comparing the value of a standard ExactEmerge planter vs. one with the newest technology, along with seeding costs and yield increases.
“When we start looking at these planters going from 5-7 to 8-9 mph, and what customers can get done in a day, it’s staggering. So, investing in an optimization package to maximize that performance is a small investment.”
Brand says another key part of the ROI calculations the dealership does with equipment is considering the true cost of ownership, for example, comparing the value of a JD Max Emerge 5e vs. JD ExactEmerge, along with potential reduced inputs and yield increases during the time of ownership.
“We start looking at more acres per day because on average ExactEmerge planters in our area are running 7-7.6 mph, vs. 5-5.2 mph on planters that don’t have brush belt and IRHD technology,” he explains. “So, we’re gaining speed, and if it costs $150 an hour for the tractor to run, and we’re getting 50-53 acres done vs. 42, we’re putting less hours on the tractor.”
Brand helped develop a planter specific ROI calculator that allows for real numbers to be used when talking through technology purchases with customers. One of the assumptions made when working farmers through the ROI model is that equipment is fully optimized.
“We must help grower optimize their equipment and technology to reach maximum impact from the investment,” Brand says.
The AgriVision Equipment team typically has a series of 8 questions they will plug into the calculator and walk customers through with the goal of helping growers evaluate the impact of how a new technology investment can have on their operation.
For planters, the first two questions are how many acres of corn and soybeans does the customer grow. Then they will ask how often the customer trades planters followed by what yield increase the customer expects to achieve with the technology for both corn and soybeans.
They then ask if the customer expects to be able to reduce soybean seeding rates, with better downforce, better seed-to-soil contact and better singulation.
“This typically leads to a conversation about what population should we be planting and soybeans,” Brand says. “In most case growers believe they can drop their population by 8-10%, so they want to know what kind of seed savings that pencils out to.”
They then ask how the customer markets their grain and what they believe they can market it for in the coming year.
“We then figure out the investment difference a grower would spend between an ExactEmerge vs. MaxEmerge 5e. We plug that into the spreadsheet,” Brand says. “Then we look at true cost of ownership, based on the field performance we’ve tested with these planters and how many years customers keep them.”
Calculations are made based on the customers responses; an ROI number is determined with a specific dollar amount. While the dollar figure can differ, Brand says on average, customers see 400-600% return on investment with planters during an average of 1-3 years.
“We understand growers don’t want pipe dreams,” he says. “They want true math. When customers come in planning to or wanting to buy a new planter, there can be high emotion involved.
“But once we’ve walked through the numbers, it’s a business decision — whether a farmer makes it or not — we want to put our customers in the best position to make that decision.
Jeremy Ostrander, CEO, adds that the tools the dealership uses also make it easier for th eequipment decision maker in a farming operation to share information and data with other key players, be it their spous, family business partner, banker, accountnt or other advisors.
In order to provide real world, local data to its customers, AgriVision invested in test plots next to the Le Mars, Iowa, store. The test plots have been used for studies ranging from multiple planting dates, planting speed, nitrogen application timing and more. Ostrander says this helps AgriVision offer its customers total agronomic solutions, equipment solutions and business solutions. They’ve found that customers put a higher value on real, local data and the test plots arm the sales team with that data.
Ostrander shares this example. When the transition from auger platforms on combines to flex drapers started to take place the value of auger platforms dropped significantly. “We were coming off $7 corn in that era, and you’d sell a $30,000 platform to a customer and a year and a half later it was worth $12,000. That was a tough conversation to have,” he says.
In response, AgriVision tasked its best people with going out to gather 2-3 years’ worth of data on flex drapers when they were early in their lifecycles. “We had actual data that showed we would pick up 1.5-3.5 bushels, and sometimes as much as 6 or 7 bushel in extreme conditions. We had data across all of our AOR that showed that and showed multiple years. And also using data about timing of harvest and showing that the losses grow as the season goes on and the soybeans get more brittle.
Then when it was time to start selling platforms or flex drapers the next year, the salespeople had the data on hand and were able to show the increased combine cutting speeds, and because the draper feeds more smoothly the customer can run at the same speed but can run a flex draper platform that is 5 feet longer than what they were running before, says Ostrander.
“We had all the math and the customer could put his or her numbers in. At the bottom, it shows they’re going to save $30,000 in one season. And now all of a sudden, the $10,000 we were arguing over whether their platform was worth $12,000 or $22,000, the $10,000 was peanuts compared to what they were going to gain. And it just took all of that adversarial negotiation out of it because we helped the customer feel good about the investment that they were going to make,” he says.