We have sold beef for the last three years and this year we fared poorly in the finance area. our model has been to buy young calves - 400 to 600 lb - in the spring usually for $1/lb one the hoof. We keep them on pasture until the late fall when they are hauled to the butcher and we sell them for $3/lb hanging weight. When it all works right we have a pretty good profit margin and it would pay the mortgage on the farm land. This year with the increase in cow prices of more than 30% and more expected next year this is not going to work for us. I am looking at a different approach. I see offered for sale the different USDA grade cows - breaker/boner/lean - for way less/lb than the feeders we have been using. The cows are much bigger but the price/lb is about half the feeders. Most of these local USDA grade have been on a pasture and received supplemental feed of some sort - grain, soybean etc. I would have them on just the pasture , grass finished for 3 to 6 months so I think they would have the qualities of a grass fed, grass finished cow. I think this would restore our good profit margin without having to raise our price. As long as they are less than 2-3 years old i think the quality would be good. Any thoughts on this?

The reason these cattle are cheaper is because they are thin and older. Generally they are dairy animals at the end of their usefulness for the dairy farmer. You have no idea what they have been fed, medications they have been given, or how they have been treated.
The best way for you to keep your profit margin is for you to raise your price at the point of sale. If it costs you more to buy calves, then sell them for more.
Cattle prices are .30 to .70 higher than last year already. You have to understand that we have the lowest number of cattle in the US since 1960. Texas and other SW states had droughts and had to sell cattle. They did not sell only feeders but cows. We will have a huge shortage of cattle for the next several years, and our exports are only growing. Look for prices for meat to skyrocket. Feeder steers have sold for 60 to 80 cents for years. Recently they are as high as 1.27. The common purchaser will only soon be able to afford hamburger, so that may be how you need to market your animals. Grind them all to burger and raise your price.

I have the same business model as you and face the same dilemma. Though I am sure that your operation is bigger than mine, and the beef business is a sideline. I ran into the same problem when buying my spring yearlings.
Don't forget that while your costs are going up, so are everyone else's. So if you have to raise your prices you will not be alone. You really have not choice but to raise your prices and make your customers understand the sitiation in the market.
It is unfortunate that although we are buying and selling grass fed beef, we are at the mercy of a market that is somewhat controlled by the price of corn. It doesn't cost any more to feed my cattle this year than it did last year because they are eating grass and hay. But since grass fed is considered premium, the cattle always cost more than conventional, even though it may cost less to raise them.
I was at an auction last week in SW Wisconsin and the grass feed steers were going for as much as $2 per pound.
I think that if the cattle have had a small amount of grain, mixed in with sileage for example, then after about 6 weeks, the affect of the grain has pretty well cleared the system. What is more important is whether they were spread out in a pasture or in a confinement lot.

I sold calves last year at $2.50 a lb standing and scaled in Western, NY

Prices have been on the rise

My dad was a cow jockey - which is what you are planning to do. He died owing money at the age of 53.

Thanks for the encouragement. Our cow operation pays the yearly mortgage.

If you are doing well, why ask for input? Per your original post, you are planning on moving from a business plan that worked well up until last year, into something that has been proven to not work well. Look at the other posts for some experience with this.

You said "what I was planning to do was ...."
I am not planning to do that. I only asked about it and have received the input.