Commercial breeding facilities can be large or small. As with other commercial enterprises, the common factor is the desire to make money through the production of a "product."

The product, in breeding and brokering, are the puppies or kittens.

Money is earned through:

• Mass production. The more animals produced, the greater the sales. With some breeding kennels, this means keeping mass quantities of adult dogs or cats in order to produce more puppies and kittens (high volume production).
• Less operating costs. The fewer the expenses, the greater the profit margin. This means spending less money on proper care of animals, such as less staff, unqualified staff, less veterinary care, poorer quality food, inadequate shelter, etc..
• Investment. By contrast, responsible breeders are small and invest in proper animal care to ensure that each animal is physically and psychologically healthy. Responsible breeders have consumers who are well-informed and demand high care. 

A MN breeder; was USDA-licensed for years; licensed revoked in 2015

OVERVIEW:

Source of income

These breeding facilities (defined as substandard, negligent or horrific) view dogs and cats as ‘products’ to be mass produced for profit. Breeding is defined as a business. The more puppies and kittens produced, the greater the sales. Therefore, for these type of facilities, quantity of dogs and cats is the goal.

As this is a primary source of income for these breeding facilities, they and their supporters consider this form of breeding to be “free enterprise” or “making a fair living.” Puppies and kittens are commodities to be sold to pet stores or other companies (via brokers) or directly to consumers from the Internet or through classified ads.

Repeated breeding

To produce as many litters as possible, adult breeding dogs or cats are bred continuously. While responsible breeders will stop breeding their females at a young age, problematic breeders will continue to breed the females at an older age — at 6, 8 or even ten years or more. Some of these animals are in-bred, passing on genetic diseases.

When the breeding dog starts giving birth to dead litters, that is a sign that she is no longer of "production use." The breeding animal (including males) is then killed, sold at auction or retired (e.g., kept within the facility, sold at discounted prices or given to rescue groups).

If the older, breeding dogs/cats are given to rescue groups, these groups assume the cost of care for these elderly animals, many of whom have higher medical expenses.

Corners are cut

To maximize sales and profits, corners are cut in operations, such as providing minimal veterinarian care, poor quality or limited food and water, poor shelters (i.e., no or improper ventilation, lighting, and temperature control from the heat and cold), overcrowding in cages/pens, and no or limited grooming resulting in skin sores, matted hair and other conditions. 

Sanitation is often poor (i.e., excessive feces and urine) with little or no pest and parasite control; this increases the spread of bacteria and disease, resulting in the animals becoming physically sick. (Animals could have infectious or zoonotic diseases which could be passed on to humans and other animals, if the animal is sold.)

Even if sanitation standards are met, high volume breeding facilities ‘save money’ by hiring fewer employees, contributing to behavioral issues because the animals have limited or no positive human contact, exercise, socialization and enrichment for proper mental and emotional development.

Sold to consumers

Consumers are often unaware of these breeding conditions or physical and psychological health issues, and buy based on how “cute” the animal looks.

The unique difference with the dog and cat breeding industry (as compared to other businesses) is the fact that the 'product' is life, not an inanimate object.

Prices

Prices for a puppy, kitten, dog or cat can vary considerably. Price does not necessarily reflect proper care. Commercial breeding facilities that focus on quantity, not quality, may breed the adult animals as often as possible to produce as many litters as possible.

It’s estimated that a single dog could generate $2,000 per year in gross sales for the breeding facility.(Example: 1 female dog x 2 cycles per year x 5 puppies per each litter = 10 puppies yearly. If each puppy was sold for $200, then 10 x 200 = $2,000. If a high-volume kennel had 200 intact females, then 200 x $2,000 = $400,000 per year in gross sales. Number of breeding bitches, male studs and number in litter may vary. Price per puppy sold can vary as well; if price is $450 per puppy, income obviously increases.)

It’s also estimated that it takes six months to recover the cost of one dog (based on substandard breeding practices and conditions) vs. five years for one cow.

Follow the money

To generate high profits, some commercial breeding facilities cut operational costs, such as staffing levels, veterinarian expenses and shelter conditions. As with any product, cutting or eliminating basic operational expenses results in poorer quality — animals who suffer due to substandard conditions or who become sick, physically or psychologically.

This is why, in addition to the moral issue of animal neglect and suffering, consumer fraud and public health are also concerns.

The true cost of care

Animal shelters, rescue groups, and responsible smaller breeders recognize that proper animal care is costly and labor intensive.

Veterinarian care, quality food, waste disposal, pest/parasite control and quality sheltering are expensive. Facilities, too, must be regularly cleaned and the animals must be socialized, exercised, groomed and given affection, requiring labor. This is why hobby breeders choose to breed less (having fewer than four intact females) to give individual attention to each animal. Proper levels of care also result in higher expenses, which is why hobby breeders, by definition, generate less per year in sales. 

Animal shelters and rescue groups rely heavily on donations and volunteers to ensure proper animal care.

Historical data:

In October, 2007, the State of Maine seized about 250 dogs from inhumane conditions at a Buxton puppy mill. The Maine State Veterinarian Christine Fraser was aware of and involved with this case. Cost of care for the rescue was recorded. Said Fraser: “To properly care for about 300 dogs, a kennel would need to employ at least 15 people and spend about $2,500 a day. In the first month of the rescue and recovery operation, about $125,000 had been spent in total to care for the animals. About 80 percent of that amount covered veterinary expenses. The total cost of restoring the animals to good health is likely to increase. [Fraser said it will take the dogs a long time to shake kennel behavior. A few dogs still cowered shyly and backed themselves into corners, a sign that indicates the dogs were not socialized properly.]” The food was donated. (Pepper Bailard, HSUS, Massive Maine Puppy Mill Rescue Exposes Industry Ugliness.)

In Minnesota, a Foley-area breeding facility applied to the Benton County planning commission for a conditional use permit in December 2007. This kennel had been operating for 17 years. At a public hearing, the kennel owner stated she had 175 adult dogs and about 265 puppies a year (72 litters each year with an average of four puppies). The owner also stated that, besides herself, she had one other person working about four hours a day. This is 1.5 people to care for 440 dogs.