Study’s objective was to evaluate the economic impact of nutritional grouping in commercial dairy herds. A dynamic, stochastic Monte Carlo simulation model was developed to represent individual cow DMI, NE_L, and MP requirements and the resulting changes in body energy throughout a year. The amount of energy consumed directly affected the BW and BCS changes in the model. Moreover, to control the range of observed BCS in the model constraints on lower and upper bounds of BCS were set. Cows that would drop to BCS <2.0 were assumed to stay at BCS = 2.0, but at a decreased milk production {New daily milk (kg/d) = daily milk (kg/d) – [deficient NE­_L intake (Mcal/d)/NE_L in milk (Mcal/kg)]}, and cows that would reach BCS >4.5 were assumed to stay at BCS = 4.5, but at decreased DMI {New DMI (kg/d) = DMI (kg/d) – [extra NE_L intake (Mcal/d)/dietary NE_L (Mcal/kg)]}. The model was validated by comparing its projections against actual data regarding involuntary culling, BW, BCS, NE_L and MP concentrations of the offered diet. The model was initialized by separate data sets obtained from 5 dairy herds with different herd size and structure. Status of each cow was updated on a daily basis together with the required diet nutrient concentrations. Each month, lactating cows were regrouped according to the studied grouping strategies and their nutrient concentration requirements. The calculated income over feed costs (IOFC, $/cow per yr) of having more than 1 nutritional group among the herds ranged from $51 to $70, with an average of $58 for 2 groups and $70 for 3 groups, when group was fed at average NE_L and average+1xSD MP concentration. The improved IOFC was explained by increased milk sales and lower feed costs. Higher milk sales were a result of fewer cows having a milk loss associated with low BCS in multi-group scenarios. Lower feed costs in multi-group scenarios were mainly due to less RUP consumption. The percentage of total NE_L consumed captured in milk for greater than 1 nutritional group did not show a consistent increase and the values were rather similar among different group numbers. The percentage of N fed that was captured in milk increased with more than 1 group, and was the most important factor for improved economic efficiency of the grouping strategies.