Technical Abstract: We modeled two farms that differed in size, grazing management, and feeding strategy. We first modeled the optimal management and performance conditions for each farm with the assumption that forage on pasture was measured accurately and budgeted optimally. We also established an economically optimum balance of pasture utilization and harvest of excess forage. All simulations with pasture measurement errors resulted in lower farm profits (i.e., net returns) compared with a farm managed optimally. Under or over estimating the amount of forage available on pasture by 10% to 20% caused a loss of $6 to $48 per cow per year. Underestimating forage production on pasture resulted in less hay and grass silage being produced, more pasture consumed, and less forage sold, compared with the base farm. In other words, if the amount of forage is underestimated, the paddocks are oversized and there is less grass area available for harvest with more trampled and wasted by animals. On the other hand, feed costs decreased when pasture forage yields were underestimated, but this was entirely offset by the reduced amount of forage sold. When the amount of forage on pasture was overestimated, the paddocks were too small and the animals actually had less pasture forage available than anticipated. This meant that supplemental feed costs increased, although that increase was partly offset by an increase in the amount of forage sold. The information presented in this article shows that it pays a dairy farmer to use an accurate method of estimating forage yield and then also to spend the extra time needed to budget forage on pasture. Regular pasture monitoring can provide other benefits, such as identifying pastures that need improvement.