Another "what to charge" post, I've searched, really.

[chelle]

Well the snow is melting fast and the jobs are piling up but now I seem to have to get my s*** together.

I've got a local widowed farmer letting me harvest trees from her land for cheap. I've got a good sized order for beams, siding and dim lumber. I've been searching the forum for tips on pricing but I can't seem to find info on what I'm dealing with here.

I'm falling and hauling Douglas Fir logs.
I'm milling to fill an order.
I'm planing all of the boards and beams. Possibly making T&G decking too.
I'm loading with my equipment.

So my question to all you experienced millers out there.

What do I charge if I'm suppling the logs?

What do I charge for planing or shaping?

I can figure out what to charge per bd ft for milling based on what I've read on here but all recomendations are welcome.

My planer is sure to get a workout on this job so I'll prolly have to figure on a resharpen and the customer has suggested that I puchase a shaper to make T&G as he's got requests for lots of that lumber also. I've got plans to build a kiln soon too.

Thanks in advance.

Cheers

Michelle

[northwoods1]

Well, there are several ways you could approach this question.

One way is to just separate the different processes beginning with supplying the logs.

Every process you add to that is a value added procedure. Meaning you don't simply charge what each individual process would be charged for, but it amounts to more than that. You would add a profit margin to each individual process.

Sawing, 2 sided planing, 4 sided planing, loading, those are all things you can expect to get an additional amount of $$ for.

AND the profit margin that goes along with each process as if you were performing each operation on its own. This is called value added when you begin to combine procedures.

For example, if I sell logs delivered for say $300 per thousand bf, and I charge $250 per thousand to saw on my bandmill, I would not be charging $550 for rough sawn lumber it would be more than that. If I charge $200 a thousand to plane it 2 sided I do not simply add that cost but a slight profit margin also. If I take that lumber and build something out of it I do not just figure my time for building but I add a profit margin on to that also. This is just the way it would work if every procedure was being done by a separate entity like is most commonly done. The fact that you do all it yourself is to your benefit.

All these prices for your local area can be determined by checking around as if your were in the market to buy what you are selling.

Glad to see you back on the board

I have always thought that some day I would like to "get my s*** together" , when you figure out how it is done could you please let me know the way to go about that :D

[Magicman]

chelle, Welcome back.     Really anytime I sell something, I try to buy it first.  That will give you a feel for the market.  All of your different operations have to be tallied up.  This would include your time and expenses plus the log/tree cost.  Buying equipment only to supply one customer's needs is risky at best.  If he fails you are stuck.

I'm quite sure that others that are more into supplying finished products will chime in.  

[chelle]

Thanks for the comments NW and MM. I have been hesitant to contact other millers as I'm trying to stay under the radar until I'm ready to turn this into an actual business. I've got a couple home builders and a deck builder that I'm suppling but I'm just not quite ready to go full boar yet. I've always liked the idea of value added products so if I can stay within my parameters meaning milling, planing, drying and shaping then that just means I can charge for these services.

[Bandmill Bandit]

One other point you need to consider is product availability.

If you are cutting a product that is unavailable to your client unless you cut it for him you need to add a profit margin based on that factor as well.  Don't under charge for product that you are custom cutting but make sure your price is fair to both you and the client.
I do know a lumber man in Enderby that would be able to Give you some guide lines in pricing. He has been in the lumber business all his life.     

[laffs]

you could check prices at the box stores see if you could somewhat compete. beams are gonna be a premium the box stores dont carry  beams. the t&G will be a drag if you dont have a moulder, its a lot of handleing. you should charge what a big mill pays for the logs. then the sawing should be around what the other mills get, because those cheap logs arent going to be around forever. generaly people get as much for planing as for sawing and about half for drying.
at least thats how it is in my area.

Brent

[red oaks lumber]

the biggest thing about pricing is how much wood can you saw,plane dry or whatever per day.the small hobbie type equipment you can't run enough wood thru them in a day to even pay the light bill.
every month you have fixed costs insuranse, loan payments,wages those type of things.charging by the b.f. volume per month will be huge if your equipment is big enough to handle it.
we charge  .25b.f s4s or t&g  doesn't seem like much but, we can run from 5000 b.f -15000b.f per day depending on what we run.

[northwoods1]

the small hobbie type equipment you can't run enough wood thru them in a day to even pay the light bill.

I guess that it would matter how much your light bill was :D

And the amount of your loan payments.....

Having a larger higher producing operation that does on thing like sawing  and planing is not necessarily better.

Being a smaller producer and taking advantage of the "value added" factor is definitely an advantage in todays economy.

Cut the trees, saw them, turn them into a stairway and railing like you have shown in you last post Michelle, I think you are totally on the right track...

[BandsawWarrior]

I'm about 2 hours away from you so our prices should be fairly similar.  I've been selling all kinds of wood products for awhile now so I could help you out on pricing.  There's two markets out there....products that the big boys produce (which you want to stay away from because they'll sell for less than your log costs) and then the specialty market which is where you want to be. 

Send me an email on what you're curious about or give me a shout I'll gladly go over some pricing with you.

Tyler

[customsawyer]

I would be nervous if the customer is wanting you to buy a planner as I would think if he had that much work for it he could buy it his self and save heaps of money. I am not saying to not do it as you know your situation better than I but it raises a flag when the people we sell to start saying what we need to buy next.

[chelle]

Well I've already got a medium duty planer, 6 x 20 3hp, it's the Shaper/Moulder that he suggested I add to my equipment. I've been working with this guy for a year now (he's a timberframe builder) and he would like to give me a good sized order for T&G decking.

He just ordered 3000bf of 2 x 10. I told him that I'm not interested in cutting this as Depot sells it cheap enough. His customer wants finished 2" x 10" dim as the joists are exposed and if that's what he wants, he'll get.

As some of you know I'm cutting on a manual mill for now, yes there is a hyd mill in my future. As for overhead, it's pretty low. I'm milling on my own property and my equipment is paid for. The last thing I want to do is rush into a full time business of wood processing. If there's anything that I've learned from all of you it's that things take time if they are done right. I've only had my mill for a year. I'm getting it but there's still lots to learn. The biggest thing this winter was developing a wood flow pattern (thanks Brucer) because what I was doing last summer/fall just didn't work on a comercial level. I'll be moving the mill once the snow is gone to a new spot with much better access and room to move.

Thanks you everyone for all your tips.

[Meadows Miller]

Gday

Michelle what to charge is like how longs a piece of string each market and area has a Price that the market will bare and what customers are willing to pay and varies widly from country to country take Russia for example the retail market price for graded construction timber nuts out to about $0.38 cents a bft where as the same sort of graded 4x1/2 framing goes for here $1.40 a bft  ;)

Ill add Australia has the Highest retail timber prices in the world anywhere upto and over in some cases $7 a bft for High grade construction timber I can sell rough sawn graded Douglas fir here for $3 a bft any day of the week get into custom or dried and dressed stuff for fitouts or flooring you will hit the $4 to$5.50 a bft mark 

Everyone has given good advice already  ;) Like Northwoods with breaking down everything into a an idividual area with its own costing structure and Rate and Id take Tyler up on his offer as he wold have a pretty good pulse on what the market is doing in your area  ;)

Good luck and keep us posted  ;)


Regards Chris