One important dynamics of the game that is either missed or stumbled across is Happiness.  

Happiness increases when you place (and upgrade) decorations (or run the happiness farm machine) and decreases when you add or upgrade houses.

Every process on your farm (planting wheat, starting pigs, etc) has a fixed cost. Happiness affects these costs. It has no impact on the cost of buildings or upgrades.

Happiness is not linear. As you increase your happiness, the amount your production costs decrease slows down. This means that as you increase your happiness, you get to a point where a building put in the place of those decorations will generate more farm income (and materials) than the happiness will save in production costs. Past this point, increasing happiness and not having buildings actually starts to decrease your farm income.

When you run your farm on negative happiness, you increase your production costs. It is a much more drastic increase. -39 happiness will double your production costs. -100 will triple your production costs.

Some people say that the best happiness is 41. The theory is that this is the point where happiness equals cost reduction (the equinox) and after this the decrease in costs slows down. You can ignore that, because the real magic number is where the building replacing the decorations generates the same income as the decorations would save in production costs. This number is completely dependent on your farm and farming habits, the type of decorations you have and the building you are placing. For most farmers, this generally happens between 40 and 100 happiness. If you are placing a stable, the number will be higher. If you are placing an orchard, the number will be lower because orchards generate more income. As your farm grows and you have more buildings, your total production costs go up, also raising that number, but your buildings are better and produce more income. Most farms find that somewhere between 70 and 100 is a good place to be.

That being said, don't be afraid to dip lower to add a building that you need or to generate some extra materials.

The worst place you can run your farm is between 0 and negative 400. Negative 400 makes everything 4.6 times more expensive. 

Just like positive happiness, you get to a point where decreasing you happiness has less and less impact. At negative 2000, everything costs 5.6 times more.  

There are some highly developed (level 150+ with cash investment) farms that can a successful running their farms at negative 2200 happiness, but they are at the point where farm income is no longer important and do it to maximize product for tournaments.

In the next post, we will look at 2 real farms from Facebook and how changing their happiness affected their farms.