Pallet cost

[4x4American]

I found a company that is interested in buying hardwood pallets from me.  Today I went and took a look at other pallets they had to see what they like.  In total, one pallet, with sides, is approx. 31bdft of lumber.  I figure that from the time I start cutting the lumber to length, to the time I have a finished pallet, it'll take an hour.  (nailing by hand).  I have access to some flooring grade oak logs right now, that the logger wants 350/mbf for..so figuring that in and then paying myself, I figured $50.  But that sounds really high to me.  Then again, I'm not sure what a hardwood 42x54" pallet with two sides goes for, I could be too cheap, no idea!  He said they use approx 3,000 of them a year, usually buy a truck of 100 at a time, and they are a 10min drive from my sawmill.  What do you think?  Am I too high, too low, just right?

[Bruno of NH]

You don't want to nail them by hand .
Get your self a nail gun if you don't have power at the new mill yard buy a paslode gun .

[dustyhat]

Is this a error, or did you type 50 dollars a pallet?  might be location but guys around here get around 10 dollars.

[4x4American]

No error, that's how I figured it.  These aren't featherweight pallets, they need to be able to hold up to 5,000lbs.  All 5/4 and 4/4 hardwood lumber. 

Bruno, no, I don't want to, but I need to!  Only thing I can think of easier would be to screw them together.  Maybe they'll last longer and be worth the extra pesos.  The scorpian screws at curtis aint too expensive. 

[dustyhat]

Ok, specialty pallets, yes you might be on to something.

[4x4American]

lol that's why I'm here, it sounded high to me, but for specialty pallets, idk if the guy is just gonna hang up the phone, order a truck load, or order 100 tt loads when I get back to him on the price...

[Joe Hillmann]

I have no idea how much they should cost but if you have 31 bdft of lumber plus an hour to assemble them then $50 appears to be low looking at it from your side.

[4x4American]

And I could very well be jipping myself.  Would it be unwise to ask the guy what he pays now?

[4x4American]

I have no idea how fast I can make one but I figure an hour to be safe.  Once I get some jigs made up I'm sure I can go faster.  But also need to figger, that, I don't have a shop set up.  This is all gonna be done outside.  Which means I need to setup and takedown every day.  Which means prolly another hour of time there.

[Joe Hillmann]

Check out this link to uline. http://www.uline.com/BL_718/Block-Pallet

A NEW 5500lb capacity 48x40 pallet for $55.

[Bruno of NH]

4x4 I use screws in the pallets I make . It's a good selling point when making specialty ones .
I started using screws on most things I build 6 or 7 years ago .

[4x4American]

Joe thanks for the link.  That one is more expensive and it doesn't even have the two side racks. 

Bruno, I think that would be my cheapest way out right now is to screw them.  It could be a good selling point, I don't have to buy an air nailer, and I don't cost myself alot of time by nailing them.  And I agree that screwing is more better than nailing.  Especially if something breaks, then you can easily take it down to the piece that broke without breaking any more and fix it.

[Lawg Dawg]

It'd be my luck he's paying $100 each, and I'd price them at $50 and he'd order 10,000

[Joe Hillmann]

I'd like to point out you can buy a knock off framing nailer for $100.  Assuming you already have a compressor that could really speed up the building process.  If you don't have a compressor you can buy a pancake compressor for just about $100

[rjwoelk]

I bought a rechargeable nailer will nail 3.5 inch framing nails. Was good to do all the plywood on a 22x26 ft floor on one battery. . Very happy with it. Couple of batteries to keep you going.
With 2 guys you can do more than twice as much as one guy, which is a lot better that pallet is goi g to be heavy. I would make a couple just to try out first. The jig is a good idea.

[4x4American]

That don't sound bad but will the thing actually work?  I generally don't like cheap tools cause they cost ya more in the long run, like that husky air hammer I bought awhile back, it only lasted for one job!  Complete rip off!  Then ya gotta go buy a better one, which if you just bought it the first time, you'd be ahead what you spent on the first one! 

But things like di-grinders, buy the cheapest one you can get cause they're all built about the same and last about as long as each other.  A guy I know conducted a study on it, thats his conclusion at least lol

[4x4American]

Yes, my plan was to build one and then bring it to the guy and show him why he should buy my high quality product lol

[sealark37]

Air nailing will be cheaper and quicker than screws or hand nailing.  If you get the order, try to work yourself into 100 pallets ahead.  That will give you a cushion against the unseen.  Are you going to build pallets outdoors in the winter?  Good Luck, and Regards, Clark

[4x4American]

Air nailing will be cheaper and quicker than screws or hand nailing.  If you get the order, try to work yourself into 100 pallets ahead.  That will give you a cushion against the unseen.  Are you going to build pallets outdoors in the winter?  Good Luck, and Regards, Clark

If there's work to be done I'll be out there doing it!  Not looking forward to the winter though, I'm in a valley, and there's a 35 mile long lake on the other side of the valley the wind never stops..gonna be brutal, unless I can get some sort of roof with 4 sides put up before then. 

[WV Sawmiller]

4X4,

    I am certain you can pick up the production rate by building the pallets en masse. You can cut your components for a reasonable number (25, 50, 100?) set up a building/assembly table or platform and turn them out pretty quickly once you get a system down pat.

    The bottom line is you need to determine what you can build these pallets for and make an acceptable profit. Once you do that present your offer to the client and see if they accept or come back with a counter offer. You might present your offer as different rates for different quantities as that would allow you to buy or rent better equipment, hire help, sub contract some phases of the work, etc. If you can nail for one price or use screws for another bid accordingly. The client may accept a higher bid if it gives them a better product.

    Warning - be sure your quote meets or exceeds the client's specification or your bid will likely be thrown out. Don't be afraid to bid on the specified pallet and also include additional proposals. Maybe they specify oak - be sure to bid on oak - but if you can provide maple or gum or other woods that may work just as well but be more readily available to you at a better price and the client may just never have thought about them. I often sat on bid review committees or did them myself and if the specified items was not quoted the bid went in the trash out of hand. Alternatives were appreciated and considered but only if accompanied by the specified item quote.

    It doesn't matter what other people can produce them for or if the client has paid higher prices to others. What matters is can you provide a quality product in the time required and make an acceptable profit margin.

   Don't paint yourself into a corner by entering into a contract that will cause you to lose money or be too stressful. Good luck.

[AnthonyW]

I'm just going to put this tid bit of info out there. I just finished building a retaining wall. The blocks came 4000 lbs per pallet. The pallet was completely of hardwood (probably oak) with four spars instead of the traditional three. The return fee per pallet was $30. I am thinking the pallets likely cost less than $30 each if that was all they charged for the return fee.

[killamplanes]

Try to get in with the guy. But around hear 25 would get that pallet by the truckloads. We have a lot of pallet manufacturers that run with a couple percentage profit per day. its dog eat dog around here. And supplying the wood is break-even with just buying the log. very little meat on the bone. But maybe u can sneak in on a niche market. More power to u hope u make millions.   ;D

[killamplanes]

maybe more like 30

[killamplanes]

around here I mean

[4x4American]

Thanks for the good thoughts.  I know nothing about the pallet making industry, all I know is that there ain't much $ in sawing pallet stock.  Other than that, I have no idea how it goes.  The logger is dropping off a few white oak logs tomorrow for me to do a test run of making some pallets and I'm gonna see how it goes and keep track of things.  I posted on here because the way I wanted to check my figgering.  The guy wants pallets, idk why, if he can't get enough, if he doesn't like the quality of the ones he's currently getting, if he just wants a backup, I'm not sure.  I aim to find out.

[paul case]

I do know a little about pallets.

I know that a lot of folks that buy them to ship their products on want to get paid for their product before they pay for the skid it is shipped on. That means payday can be 60 to 120 days out. Make sure you don't get on one of these deals if you can help it. Several guys I know have gotten shafted when a company went out of business. Some had sent in over $40,000 worth of pallets they never got paid for.

PC

[4x4American]

Yes good point, I had thought of that I was gonna ask for COD or net 15.  If they're selling to builders, builders take forever to pay.

[Ron Wenrich]

Just curious if they need to be heat treated.  If the pallet goes to export, I believe it does. 

[Brad_bb]

Another issue is, are you building the pallets with green lumber?  Or do they need to be dry and heat treated?  Also, a $30 deposit return doesn't mean the pallet only originally cost $30.  It's worth a bit less used as some may have damage etc.  So that is the value second use.  You probably cannot resell that pallet for new price.  Grayed pallets also will not sell for new price.  I think this really comes down to an exercise of figuring out all of your costs and adding the margins you need.  You can always come down in price when you get more efficient.  It's harder to go up especially if there's competition.  If you get the job at a good rate you also need to consider whether you should stay on the mill as you're worth more there than assembling pallets.  You may want to hire help and set them up (with processes and fixtures) to do the assembly.

[starmac]

I am sure no expert and don't have a clue what pallets are bringing, but would bet a dollar to a busted doughnut hole you can build a table and jig that would speed up the actual building considerably. I doubt pallet manufacturers spend over 10 minutes for the assembly time per pallet, maybe even less.

[Joe Hillmann]

That don't sound bad but will the thing actually work?  I generally don't like cheap tools cause they cost ya more in the long run, like that husky air hammer I bought awhile back, it only lasted for one job!  Complete rip off!  Then ya gotta go buy a better one, which if you just bought it the first time, you'd be ahead what you spent on the first one! 

But things like di-grinders, buy the cheapest one you can get cause they're all built about the same and last about as long as each other.  A guy I know conducted a study on it, thats his conclusion at least lol

I bought a cheap knock off air stapler for 1 in staples for $17 brand new for a new product I was making.  I figured it would work long enough to get a few samples made and see if they sell before I invest any real money into it.  That was three years and at least 70,000 staples ago.  In the last few months it has started to jam every so often because of wear so I will probably have to replace it this year.  I don't know if a name brand $80 one would have lasted any longer.

[Dave Shepard]

Watch YouTube videos of pallet production to get an idea of how long it takes your competition. Some have five or six air nailers on an arm and the pallets go through on an assembly line.

Personally, I'm a cash and carry business. I'm not going to front anyone anything. If they can't pay their bill, let them get a line of credit at the bank. Nothing leaves my yard without payment, and down payment on large orders. I have a couple of people that I work with regularly that I would wait a little for a check. This is not a situation where I would give any slack.

[paul case]

Nothing leaves my yard without payment, and down payment on large orders.

me too.
PC

[4x4American]

Wow lots of good info, thanks everyone. 

[ladylake]

Thanks for the good thoughts.  I know nothing about the pallet making industry, all I know is that there ain't much $ in sawing pallet stock.  Other than that, I have no idea how it goes.  The logger is dropping off a few white oak logs tomorrow for me to do a test run of making some pallets and I'm gonna see how it goes and keep track of things.  I posted on here because the way I wanted to check my figgering.  The guy wants pallets, idk why, if he can't get enough, if he doesn't like the quality of the ones he's currently getting, if he just wants a backup, I'm not sure.  I aim to find out.

  I'd be selling white oak for around $1.25 a bf for trailer decking or fencing rather than giving it away for pallet lumber.  Steve

[Dave Shepard]

I get a lot of interest in trailer decks and truck side boards. I just don't have a reliable source for white oak. Both of those markets can be served without a change in your equipment, and have a much higher return than pallets.

[derhntr]

If U line is selling them for $55 they are paying less than $30 from their supplier.

[4x4American]

I have a couple good sources of chestnut white oak, I would love to be sawing and selling for trailer decking/side boards but I haven't had any interest in it.  I'm just trying to find something that is steady work to pay the bills and then when I get these random pine orders they are the icing on the cake...right now some weeks are busy and others are slow.  Like this week I didn't get any orders and last week I got 4..I have two woodworkers coming out next week to look at some hard maple at least..HMR is saying that pretty much the marketplace is flooded with lumber and buyers are having a hard time absorbing and processing it all.  I have been aggressively advertising this week on facebook, craigslist, going to places and pinning up flyers and handing out pricelists and making cold sales calls.  I definitely planted some seeds as they say

[Peter Drouin]

Can you get 16' hardwood?

[scleigh]

4x4, from what I've seen, the pallet industry operates on small margins. There are many pallet companies around me and they don't pay much per b.f. in any species. There's also a decent sized circular mill close by that saws only for the pallet companies and they stay behind, but they operate on small margins sawing only pine and poplar pallet stock.
Seems to me that a one man operation is better suited selling specialty woods like maple, walnut, cedar etc.

[Quebecnewf]

I built and sold some (200 or more) a few years back to the local seafood coop. They were used to ship frozen crab on. Not a heavy load pallet like your talking about but still about the same to build.

Mine were only green softwood.
They were a one way pallet. Considered as part of the packaging cost for the pallet of crab.
I used just scrap lumber from my sawing . Mostly boards with wane that I did not want to edge
I made a simple nailing jig and built with a air nailer. With all you material cut to length no trouble to shoot one together in five minutes.
I got 25.00 a pallet at that time.
They stopped buying because they now must use hardwood no choice and it has to be heat treated. These pallets are shipped to the US and overseas .

Wish I had an order now because my edging pile of lumber is getting large.

Quebecnewf .

[4x4American]

Can you get 16' hardwood?

I'm sure I could but idk about how straight they'll be.  Where I'm getting the chestnut oak from right now is on steep ground and they are sweepy and stressful. 


I took this picture back Apr. 30th from where the hill where they're growing:





There are 2 concentration yards close by and a truckload of other loggers I'm sure I can get some 16' hardwood.  You wanna buy some lumbah?

[Peter Drouin]

I was thinking you can cut crane mats and use the side lumber for your pallets, slabs for fire wood. That way you can sell all the parts of the logs.

[4x4American]

That's a good idea.  I would like to find an outlet for crane mats.  There is a guy down the road from me who uses a woodmizer to build crane mats.  I've talked with him before about selling to him, but he didn't seem interested.  Called him last week also and left a message with secretary and haven't heard back.

[Peter Drouin]

I get calls all the time to cut them. But, I don't have a market for the side lumber.
If you can find someone that puts them together, I bet you can sell all you can cut. The market for them now is hot.

[AnthonyW]

I built and sold some (200 or more) a few years back to the local seafood coop. They were used to ship frozen crab on. Not a heavy load pallet like your talking about but still about the same to build.

Mine were only green softwood.
They were a one way pallet. Considered as part of the packaging cost for the pallet of crab.
I used just scrap lumber from my sawing . Mostly boards with wane that I did not want to edge
I made a simple nailing jig and built with a air nailer. With all you material cut to length no trouble to shoot one together in five minutes.
I got 25.00 a pallet at that time.
They stopped buying because they now must use hardwood no choice and it has to be heat treated. These pallets are shipped to the US and overseas .

Wish I had an order now because my edging pile of lumber is getting large.

Quebecnewf .

For the OP, make sure you check on the heat-treat requirement. This is becoming a popular requirement.

[sandsawmill14]

i am pretty sure we were paying 10 bucks a pallet just to get them heat treated and only pallets the are going to be exported have to be heat treated but the company your building for can require anything they want to 

[4x4American]

I hope they don't require anything more than waving my magic wand over them

[Bruno of NH]

4x4 how did this work out for you ?

[4x4American]

Not good..they currently give $18-19 per pallet  :D   I meant to report back but musta slipped my mind.  He looked at my pallet and said boy that's a nice pallet, too nice.  But I got an order for 20' long hardwood side boards for his triaxle dump truck.  Got back late last night with my sawmill in tow.  Back to work!

[WV Sawmiller]

4X4,

   Thanks for the update. I thought the price/cost sounded a little high based on what I have seen and heard that others sold them for. Seems to me pallet stock is usually a salvage operation for low grade lumber that can't be used or sold for other projects. Nothing wrong with that just a fact of life. Sort of like making tomato stakes. Pretty labor intensive, a definite need and market but not generally a high profit margin.

   You might make and save a few for sale when you have excess stock and time if you have the space and tell the guy you have a few for $__ if he ever needs them.

[Magicman]

Most of the pallet operations here use "imported" low cost labor which allows them to sell pallets at a low cost and also virtually eliminates competition.

[WV Sawmiller]

MM,

   I like the "imported" terminology. Gets an A+ for political correctness.

   When I was a kid building pallets was a local job for teenagers after school. I had friends who tried it. I think the guy provided all the lumber, gave them a heavy ball peen hammer, plenty of nails and showed them how to assemble them and paid $1 per finished pallet. I doubt they pay much more now if not less especially with the availability of electric and air nail guns.

   We had a family business selling and installing monuments and chain link fences and Dad figured we were worth more than we could make building pallets (not that I ever remember getting paid - I told him the only reason I left home was because he would not buy an automatic cement mixer. He said he didn't need one with 3 sons there.)

[4x4American]

Yeap...the mater stakes weren't bad.  Got $1.50 each plus delivery charge for them.   ;D

[double cut1]

i build 35 pallets an hour 2 person nail guns are provided by the nail supplier. a gma 48*40 4 way pallet in ga is 8.25 to 12$ 15 feet of lumber about 5 $ profit each
 

[reswire]

I know a guy in Southern Maryland that builds engine pallets for local salvage yards and dealers.   He builds them to handle engines of all sizes, and usually has to "build to fit".  He buys oak boards from an amish sawyer, and sells pallets/crates for $250 to $350 each.  Sounded like a good deal to me, but I wouldn't have a clue of how your local markets are.  You could check with auto dealers, engine dealers, maybe some scrap yards that are shipping engines via freight.  Just a thought.

[Bradm]

i build 35 pallets an hour 2 person nail guns are provided by the nail supplier. a gma 48*40 4 way pallet in ga is 8.25 to 12$ 15 feet of lumber about 5 $ profit each

$8.25-12 per is quite a large range (almost 50%).  If hardwood pallet stock runs at $0.50/bft (random number as I don't know what it actually should be) green you're left with $0.75-$5.00 gross profit before labor and other costs.  I don't know very many companies that can operate very long at the low end of the scale especially if the customer takes longer than prepay to pay.

[curved-wood]

I did supply the wood for a crate for transporting a big electric motor for a paper mill. The crate was a an engineer design so nobody could say a word. The order was 8 pieces of  8''x8'' by 8 foot  red oak and had to be clear!!! I think somebody was planning to use the crate when it return back to the mill. No complain on my side $$.  May there is a niche market in crate for large electric motor...never know

[reswire]

In the early days, Ford motor company required all their parts suppliers to deliver parts in pre designed crates.  The crates were later turned into seats, stripped and repurposed as wheel spokes etc..  If it worked to build Ford Motor company,,, ??????

[hedgerow]

I have taken several shipping crates that big pieces of factory equipment was shipped in from work that was going to be sent to the land fill and made every thing for inside firewood racks to work benches to storage cabinets. These were well built and expensive shipping crates. 

[killamplanes]

I'll pipe in on this one. I build specialty 40x40 skids "no bottom boards"  2.5in ends. Anyway same deal 2yrs ago company approached me to build. I shot very fair price for both parties. Currently produce semi load "550" a week. My mill sits now and I manage employee and another mill makes the lumber. I did do my own cutstock for awhile and may do it again. Been great to me. Ie get air nailer 300 bucks. I got 3 spares and one last upwards of 6 months. I have a pallet jig, forklift, semi for transportation and heated and airconditioned building for it all. It didn't happen over night but with hard work and good decisions it's possible.  On your wood cost I think you will find it to be cheaper than your estimates. And with an air nailer and 1k pallet jig I can produce 25 an hour "not all day" and my 72yrs old employee 100 an 8 hour day.

[edwin dirnbeck]

If you are a young man and nail pallets together by hand,plan on being on ss disability at age 45. I see it all the time,young indetructable guys ,bent over and ruined at 45. If you are making $500 worth of pallets a day ,you surely should be able to afford a good nail gun.You are competing with guys using nail guns.Yes ,I can understand ,not having money and nailing the first few pallets by hand,but please get a nail gun. Good luck

[hedgerow]

I'll pipe in on this one. I build specialty 40x40 skids "no bottom boards"  2.5in ends. Anyway same deal 2yrs ago company approached me to build. I shot very fair price for both parties. Currently produce semi load "550" a week. My mill sits now and I manage employee and another mill makes the lumber. I did do my own cutstock for awhile and may do it again. Been great to me. Ie get air nailer 300 bucks. I got 3 spares and one last upwards of 6 months. I have a pallet jig, forklift, semi for transportation and heated and airconditioned building for it all. It didn't happen over night but with hard work and good decisions it's possible.  On your wood cost I think you will find it to be cheaper than your estimates. And with an air nailer and 1k pallet jig I can produce 25 an hour "not all day" and my 72yrs old employee 100 an 8 hour day.

A guy I used to hay with years ago his son and him used to run a saw mill and farm and then a factory needed special pallets made for shipping they started doing them stopped farming and saw milling and 40 years later the dad is dead and the son and his son are still building pallets for the same factory  and have since sold the saw mill and the farm. Some times a better deal finds you and you go with it. 

[double cut1]

i build 35 pallets an hour 2 person nail guns are provided by the nail supplier. a gma 48*40 4 way pallet in ga is 8.25 to 12$ 15 feet of lumber about 5 $ profit each

$8.25-12 per is quite a large range (almost 50%).  If hardwood pallet stock runs at $0.50/bft (random number as I don't know what it actually should be) green you're left with $0.75-$5.00 gross profit before labor and other costs.  I don't know very many companies that can operate very long at the low end of the scale especially if the customer takes longer than prepay to pay.

8.25 each is wholesale to another pallet company average gma in ga is 9.75$ small quantity 12$ I get lumber from a mate company at 18 cent a bft I get logs at 40 tone  I have 2.5$ in nails and lumber 5$ is before part time labor and gas blades ???   I bought a lt 35 to feed my woodmizer resaw I can make pallet parts and make more money about 60$an hour 2 person. not getting wealthy but this pays the bills . looking for a better product have not found one.

[moodnacreek]

4X4, My guess is you would be lucky to get  $1.00 bd. ft. all built. Absolutely need an air nailler preferably air powered.

[nativewolf]

I had chimed in but not read the whole thread.  So I deleted my comments, they are not helpful.  Interesting case.

[4x4American]

Lol this is a real old thread, I've since learned alot and went a different route.  

[taylorsmissbeehaven]

Hey 4x4 I would love to hear what you have learned and what direction has worked/not worked for you. As I lean harder and harder on the mill I am very interested in weeding out the losses and chasing the winners!! Care to share? Brian

[4x4American]

Hey 4x4 I would love to hear what you have learned and what direction has worked/not worked for you. As I lean harder and harder on the mill I am very interested in weeding out the losses and chasing the winners!! Care to share? Brian

Buy low sell high!! lol
I just never got into making the pallets.  Seemed like too much time to go from log to $.  You can make decent money selling cutstock, especially nowadays.  Scale the kerf into the boards when you resaw cants.  Look for specialty items to sell.  Like rn I'm cutting some specialty stuff for the pulp mill to ship their paper rolls with.  On the 12" stuff it equates to $2.40/bf and the 39" ones is like $5.20/bf.  It takes time and you have to have the right equipment to do it.  I'm cutting as much of that stuff as I can right now.  And it can be any kinda wood, hard or soft.  If I wanted to I could use walnut and be profitable lol

[Peter Drouin]

That sounds good. $5.20 a bf for green dead stacked wood. How can you go wrong?

[taylorsmissbeehaven]

Thanks for the reply. That does sound good. I try to always have my eyes open for opportunities. Brian 

[sealark37]

To cap off this thread.  The pallet business is a low margin, labor intensive operation.  No matter how good your quality, no matter how low your price, no matter how quick your responsiveness, the buyer is under pressure to lower the unit cost of the pallets he buys.  All you can expect is to be under-cut in the near future.  Unless, of course, the buyer is your BIL.     Regards, Clark