An appropriate method of feeding cattle is to pay a yardage fee and then pay for feed separately. Yardage fees are more or less a rental rate on facilities and service while cattle are fed. The main methods to charge for this are: 1) flat yardage fee, or 2) feed markup, or 3) a combination of the two. The flat yardage fee is the easiest and most transparent, as well as most straightforward.
Average yardages today range from 0.30 to 0.40 per head per day. This includes facility charge, animal care, feeding, and all services needed (including marketing). With older facilities, yardage may be a bit lower; however, they are not charging for facility-replacement costs in these instances.
Of course, feed amounts and costs need to be tracked very closely, as well as little to no markup on feed cost, except for feed preparation (e.g., grinding and shrink on dry hays). Cost of gains vary tremendously across the industry currently and range from $0.50 to $0.80 per pound gained. This changes readily with feed prices. Recent daily changes in corn prices are a good example.
Your local Cooperative Extension office can help locate information to help you calculate the cost of gain.