It is unlikely that anyone who ever said moving from free services to fee services would be easy had actually done it. It is equally unlikely that anyone who has done it will say it was easy. However, there are few full-service ag retailers today not feeling the pressure to make the transition.

Commodity fertilizer and crop protection sales offer little margin for retailers to cover the range of services needed in modern intensive agriculture. Dan Frieberg, Premier Crop Systems, West Des Moines, Iowa, works with retailers making the switch and coined the "free to fee" phrase to describe it. He says resistance to and the difficulty of transition is understandable. He suggests it is natural for the extent of transition to vary with each retailer and even within a customer base.

"Most of the people we work with have built value around providing service in support of product sales," explains Frieberg. "For years, people, services and advice were how they differentiated their company from the competition. The key to starting the transition is to find a balance between what remains included with normal product sales and what is moved into the 'for-charge' package."

Finding that balance requires questioning every service, such as field visits to scout for weeds or pests. Each retailer has to sort out the answers based on its current level of services and grower expectations.

Frieberg admits that some dealers may not have to make the transition. "There are dealers who provide a phenomenal amount of support, which has allowed them to be higher priced in the market," he explains. For these dealers, margin is not a concern; their customers understand the added value they are buying with that higher-priced fertilizer and other crop inputs. The key to success with this pricing mechanism is the same in many ways as for those dealers who make the transition. The customer must understand the value of the service, whether it is soil testing, VRT applications, scouting or mapping services. In fact, Frieberg would argue, that job is easier than first thought.

"Growers constantly say they want a lower price, but there is evidence that price is not the most important factor," he says. "What many growers want more than anything is an agronomic advisor who helps make them more money by helping them better manage the agronomic decisions they have to make."

Frieberg adds that if you have decided to make the transition to fee-based services, the key is to transition both the business and the relationship so you remain that trusted advisor. The irony is that it may be easier for the retailer who hasn't previously offered many services. Of course, such a dealer is not likely to start. The answer, he suggests, is for a dealer to find ways to add new value to existing services.

"The big focus of our company is helping growers and their agronomic advisors create value out of their agronomic data," he says. "That includes providing analysis tools for data being collected that compares how hybrids and practices perform on the field level, the grower level and on grower group levels."

Doing so helps his retailer customers launch programs that get them started with fee-based services or move more quickly through the transition if they already have started. To be successful, services being charged for must produce true value, and that means higher yields, he adds. In a high fixed-cost industry like farming, the only way to lower the cost per bushel is to spread those fixed costs over more production from the same acres. Frieberg points to precision services, such as yield mapping or grid soil testing, that are often offered without a clear connection to increased yields. Why should anyone perceive value in such a service, much less pay a fee for it?

"I do meetings with growers all the time who were early adopters of yield mapping, have five years of printed yield maps and have never made a decision based on them," he says. "They have lost interest, but it is easy to show them why and how they will make money using their data with a system like Premier Crops."

The ultimate goal, whether selling Premier Crops' services or moving existing services from the free to fee column, is to prove how decisions being made and advice being given make the grower more money. It is a different way to do business, and he cautions that it requires high level management commitment. He also cautions that it is not for everyone.

"Some companies are content as long as they are getting along and the competition allows them to be successful," he adds. "However, if someone is already eating your lunch, it is usually too late to start."