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Author Topic: added price when milling from your own logs?  (Read 1552 times)

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Offline forrestM

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added price when milling from your own logs?
« on: April 14, 2019, 07:09:20 PM »
Hello,

When you mill and sell your own logs, do you bill for your cutting time (hours or BF) and also add a charge for the material? As an example -- Say you spend 4 hours cutting 15 - 10'x2"x10" boards from your own poplar logs -- about 250 board feet. 

if the price for poplar logs is  $500/1000bf then 250bf would be worth $125 

and say you were cutting by the hour at $40/hr --  $160 

would you charge both amounts? $285

I just made up a number for the price of poplar logs - not sure what it is off the top of my head. Also - if my math is incorrect, don't hesitate to let me know!  

do you use the same price for lumber as you would for the price of logs? or is there a different price you apply to sawn lumber?

Thank You,
Forrest




Offline WV Sawmiller

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Re: added price when milling from your own logs?
« Reply #1 on: April 14, 2019, 07:34:37 PM »
  I don't make it that complicated. I just figure what my sawing rate is and the value of the lumber I have to have from my own logs on top of that. When the customer buys the lumber he is paying for my sawing, price of the log, cost to cut and drag the logs to the mill, etc.

   BTW - I don't sell my logs and almost never buy one.
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Offline Ron Wenrich

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Re: added price when milling from your own logs?
« Reply #2 on: April 14, 2019, 07:45:08 PM »
Depends what the mill down the road is charging for those 2x10s.  You have to figure out what the market value is in your area.  If you're the only mill around, you might have a bit of leeway.  But, you're in competition with the local mills and the local box store.  
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Offline Tom the Sawyer

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Re: added price when milling from your own logs?
« Reply #3 on: April 14, 2019, 07:46:44 PM »
I primarily custom mill other peoples' logs, both on mobile appointments and here at my home.  Some of my clients have projects in mind but don't have a suitable log, or have found out that it is much easier to purchase a log from me, rather than fell, buck, load, and haul their own log.

I purchase logs from sources like tree services, property owners, land clearing companies, and try to keep a varied supply on hand.  I sell the logs with milling, at so much a board foot for the log, plus milling fees, plus tax - they take the whole log.  Earlier this week a frequent client, who is a furniture builder, came out seeking a large white oak mantle and picked out a burr oak log. He got 2 - 5/4x12"x8.5' LE, 3 - 5/4x14"x8.5' LE, 2 - 8/4x16"x8.5' LE, 1 - 24/4x17"x8.5' LE; 176.02 board feet for $240.23. (Average 1.36 p/bf).  I have a client scheduled for tomorrow who is looking for a small white oak and a white ash for a steam bending project.

Those prices are based on taking the whole log.  If they only want a couple of boards, prices are significantly higher.  I sometimes have lumber for sale, prices go up the longer I have it, because it is drier.  For example, a pair of bookmatched, 8/4 live-edge, walnut planks would start at $6 p/bf green, $7 under FSP (30%), $8 air-dry (12%), $10 KD/HT.  The best ones go early.   I don't sell commodity lumber, the only softwoods I mill are ERC and cypress.
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Offline YellowHammer

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Re: added price when milling from your own logs?
« Reply #4 on: April 14, 2019, 08:57:45 PM »
It depends what you are selling and what the market will take.  Certainly I would never sell lumber for less than it takes to produce and acquire.  
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Offline WV Sawmiller

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Re: added price when milling from your own logs?
« Reply #5 on: April 14, 2019, 09:08:04 PM »
Tom,

  I think that is a novel idea about the customer buying the whole log. Makes sense in case his specific need for a board or mantel or such screws up the value of the rest of the log. What I don't sell I put in stock for the next guy. Of course that may be a long time before that next guy shows up.

  The logs I sell are usually excess trees I have like tulip poplar which I have in abundance, a stand of overaged Norway Spruce from a Christmas tree farm 65-70 years ago and anything that is damaged or uprooted like a big basswood and a couple of maples from last winter and of course the dying/dead ash trees. I may cut and sell a cherry or two but not my oaks or hickories which are more valuable for wildlife trees to me. My lumber I sell is based on my perceived value of it for example: Polar and any pine I might have obtained $.75/bf, spruce/maple/oak (I got some "free" red oak - paid the guy 2-1X8X8 boards plus my transport costs) $1/bf, Basswood $2/bf, Cherry $3/bf, Walnut $5/bf with special prices for big slabs, cookies, lath boards, crotch pieces, mantels, etc.
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Offline barbender

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Re: added price when milling from your own logs?
« Reply #6 on: April 15, 2019, 01:32:37 AM »
I usually just figure the market rate for the logs I have, regardless of what I have into them. So even if I got some pine logs free or real cheap, I figure $100-130 for them, and that's what it will cost me to replace them. Then I add my sawing rate to that figure (my sawing rate is way too cheap, kind of the market up here. So I have to make it up with really cheap wood).
Too many irons in the fire

Offline John Bartley

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Re: added price when milling from your own logs?
« Reply #7 on: April 15, 2019, 12:59:18 PM »
Cost (what I paid) for the logs the customer is buying = $"X"
Labour (time spent sawing) = "Y" hours

Customer price  = ("X" + "markup") + ("Y" x hourly rate) + whatever taxes apply.

That's it.   I don't care what the competition is selling for.  If I am too expensive I don't saw ... I can do something else.  If I am too cheap I go broke .. I know which one I'll choose.

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Offline Woodpecker52

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Re: added price when milling from your own logs?
« Reply #8 on: April 15, 2019, 01:19:29 PM »
I sell for what everyone sells for, market rate and if I want to drop it I do for volume purchases.  I know my labor cost (free) I am retired! and logging cost very little on my land, and sawmill cost minimal.  So It just boils down on what price seems right in the market and what I want to fool with.
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Offline Woodpecker52

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Re: added price when milling from your own logs?
« Reply #9 on: April 15, 2019, 01:22:23 PM »
One more thought I paid for my mill in about 5 months.
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Offline forrestM

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Re: added price when milling from your own logs?
« Reply #10 on: April 17, 2019, 10:52:01 PM »
Thank you! How nice it is to be a part of the forestry forum!

Offline Beavertooth

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Re: added price when milling from your own logs?
« Reply #11 on: April 18, 2019, 12:15:19 PM »
I am with John Bartley on this one. 
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Offline Mountain_d

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Re: added price when milling from your own logs?
« Reply #12 on: April 19, 2019, 08:12:05 AM »
Does anyone use a percentage of what the lumber yards charge? If sawing 2x4 2x6 etc from your own spruce and selling rough, say charge 75% of the lumber yard price? Any thoughts?
Mountain. 
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Offline John Bartley

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Re: added price when milling from your own logs?
« Reply #13 on: April 19, 2019, 08:36:52 AM »
I know my labor cost (free) I am retired! and logging cost very little on my land, and sawmill cost minimal.
I would never dream of telling you how to run your business affairs.  This is a different point of view, just to help others think a bit deeper about the "cost" of things.

Time :  I am also "retired" .... sort of.    I have a non-financial need to work.  Many of you will understand that.   But ... "time" is never free.  There are always other things that we can, or want, or need to do, and time spent working for other people takes away from our enjoyment of "our" time.  That is the true cost. It is hard to put a price on, but I refuse to subsidise other people's life styles at the cost of my own (ever shrinking) time.

Materials : even if you cut them off your own property, they have value.  included in that value is time, fuel, saw chains etc.   Once again .... using your own materials and NOT charging for them is the same as subsidising your customer.

The sawmill : every pass taken on a log on your mill is one less pass available on your mill's lifespan.  Mills are not cheap and if you use it up by giving it away to your customers, you have again given away your resources for free.  If you live long enough, someone will have to pay to replace that worn out mill and I doubt that your previous customers will line up to donate their hard earned money to you ..... no matter how cheaply you gave away your time, materials and mill.

.... just some food for thought ....

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Offline John Bartley

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Re: added price when milling from your own logs?
« Reply #14 on: April 19, 2019, 08:42:18 AM »
Just gonna' add this ... gleaned from a lifetime of working for myself...

You can compete on price, quality, speed, service, attitude, all sorts of things.

When you compete on price, you either give up on the rest or you go broke.  Competing on price is a race to the bottom, or .... as my son says ... "aiming for mediocrity".


The formula : determine, without error or exception, your "true" costs, add enough profit to live a good life, and then add a bit more for the rainy day fund.  Unless that's your selling price (or higher), quit milling and go find a job.

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Offline Banjo picker

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Re: added price when milling from your own logs?
« Reply #15 on: April 19, 2019, 09:28:35 AM »
Does anyone use a percentage of what the lumber yards charge? If sawing 2x4 2x6 etc from your own spruce and selling rough, say charge 75% of the lumber yard price? Any thoughts?
Mountain.



Mountain, as a normal rule for myself, I dont quote 2x4 or even 2x6 s as most of the box stores have too low of a price for those.  Charging 25% less than they charge will likely put you selling your lumber too cheap.  Cut the same logs into nice one inch boards and you can beat their price and still do well.  At least thats the way it is here.  The big mills will be able to cut 2x4 s out of fairly small logs then chip the rest for mulch or at least chips.  A small mill will have to cut those same boards out of much better logs, and then have a bunch os waste to dispose of. Banjo
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Re: added price when milling from your own logs?
« Reply #16 on: April 19, 2019, 09:32:24 AM »
In my area one can not compete with the lumber yard/box store selling framing lumber....not.

Now, probably 90%+ of my sawing is sawing framing lumber.  It is cheaper/easier for a landowner to knock a few trees down and have them sawn into lumber than to buy what they need because there is virtually no market for selling a few trees.  That plus many of the harvested trees are beetle killed and have no market value.  It's a salvage "save what he can" operation.

When I bought my sawmill my intention was to saw and sell, but within the first year my business model changed to the opposite direction.  I am now 0% selling and 100% custom sawing.  Only you can look at your available market and decide which direction or directions to take.  If you sell you might consider adding value such as drying, planing, etc. all of which require more capital expenditures/investments.
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Re: added price when milling from your own logs?
« Reply #17 on: April 19, 2019, 10:25:38 AM »
say charge 75% of the lumber yard price? Any thoughts?


I don't advertise framing lumber but do sell some when folks ask for it.  My price is about 25% OVER what you would pay at a box store and I make no qualms about it.  First I don't try to compete in that market, no intention of doing so, second I am producing a superior product to what you can buy from the box store so I charge accordingly.  Serve a market that exists and is under-served with high quality and value and you can basically name your price.  

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Offline Bandmill Bandit

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Re: added price when milling from your own logs?
« Reply #18 on: April 19, 2019, 11:09:20 AM »
Hard woods I sell at the same or a bit higher as the local specialty lumber outlet. Most of my customers say they cant get the same quality from the store and often pay me a generous tip to boot.

SPF I sell at the same price as the local farm supply UFA store. Every customer says the stuff that I sell them is much better quality the the store. I don't chase the market as I dont need to and I think that actually helps people find you.   
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Offline Mountain_d

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Re: added price when milling from your own logs?
« Reply #19 on: April 19, 2019, 01:15:19 PM »
Southside, I see your point. We do saw better stuff. Straighter than the mass produced and high production dry kiln stuff. Good feedback to give me a reason to ask a bit more.
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Re: added price when milling from your own logs?
« Reply #20 on: April 19, 2019, 02:32:37 PM »
Absolutely Southside.  smiley_thumbsup

My statement above should have read that you can't compete with them on prices, but your product wins out many times over on quality.  If a potential customer is price shopping, he is playing his own game.  Stand your ground but be very sure of your cost/pricing/profit.
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Offline YellowHammer

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Re: added price when milling from your own logs?
« Reply #21 on: April 21, 2019, 07:47:46 AM »
I agree 100% with what you guys are saying, its the core of our business model.  In this day and age, we have all gotten used to paying high prices for mediocrity.  We don't like it, but have no choice.  

So as a business owner, make a conscious decision to provide a better product and service.  A statement I say several times a day to customers is "You can't get this at Lowes."  

A professional chef doesn't compete with McDonalds, and professional machine shop doesn't compete with Harbor Freight.  

I had a great example of this happen last week.  A guy who is a sure nuff bargain buyer called me up and said he needed some walnut.  He asked my price and freaked, said he had just gotten some green at $2 per bdft from another local mill.  I said good, but it isn't my stuff.  So later in the day he drives buy with that same truckload of the ugliest walnut I'd seen in awhile, thick and thins, knots, bends, bark, etc basically unusable even for pallet stock, and starts haggling over my prices, (I don't haggle), and I say surely you aren't  comparing my wood to that garbage?  We went out and looked at it, and after I showed him what was wrong with it, he was actually embarrassed he had bought it.  So he bought some of our walnut complaining about the price.  Then as he was loading it on top of the garbage wood, he got it out into the sunlight and it just shimmered, and he said it was the best he'd EVER seen.  Then the next day, he came back and bought some more, saying he started using mine to finish a project and when he saw the difference between what he had been using and mine, he said he was just going to start the piece over with mine.  Our price? $9 per bdft.  Seems high but we buy veneer grade walnut logs, at twice the price he paid for his garbage wood.  I made sure he knew that, saying "My logs cost twice as much as that junk lumber you bought, and our wood starts with the best and ends better."  Can't make a good steak from ground beef.  

So among other things, my point is, don't skimp on buying low quality logs and expect to make good lumber.  Buy the grade logs that will set you apart and people will notice.  Then hone your skills and dial in your mill to take advantage of the good logs.

My other point is know you market, but get paid for your work.  

  
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Re: added price when milling from your own logs?
« Reply #22 on: April 21, 2019, 05:29:46 PM »
Custom milling is just that ,I have always had a bdft rate according to species and charge accordingly consistent pricing makes for return customers. When sawing other people's logs same thing I charge either hourly or by the bdft been sawing long enough that I never lose money sawing and have  many of the same customers over the yrs . As YH said quality will make customers happy and more likely to return.
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Offline Ron Wenrich

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Re: added price when milling from your own logs?
« Reply #23 on: April 21, 2019, 06:09:28 PM »
It may be true that a professional chef doesn't compete with McDonalds, but, they do compete with the professional chef down the road.  

I sawed in a commercial operation, and I competed with every other mill for the business.  We also competed with other mills to buy logs and stumpage.  We had to pay top dollar for those in order to have enough material for the markets.  I rarely lost a market, unless they went out of business.  We never sawed on speculation.  

We sold to commercial buyers and the occasional broker.  My secret was to give them what they ordered.  4/4 lumber was cut plump and the grade was there.  If they ordered a load of F1F and btr 8/4 red oak, that's what they got.  Very little to no 2 Com mixed in.  Well edged and well trimmed.  I once got a note that came back with the trucker stating it was the nicest load of lumber they ever got.

Same went for the low grade blocking.  They ties were cut plump, as they requested.  Pallet cants were cut plump so they could get an occasional extra board.  

The guy that came in off the street and wanted a special order got what he ordered.  If he wants trailer boards, then they were cut out of the blocking type of logs.  We charged about double the blocking price.  We had some pattern shops that needed specialty lumber.  We cut that when we cut the species they could use.  Charged about double market for the small order.  We had return customers.

We were the professionals down the road, also known as competition. 
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Offline John Bartley

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Re: added price when milling from your own logs?
« Reply #24 on: April 21, 2019, 08:18:25 PM »
So, after all this it seems that old adage is true :

You can have it done fast
You can have it done cheap
You can have it done right

Pick any two.
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Re: added price when milling from your own logs?
« Reply #25 on: April 21, 2019, 10:03:44 PM »
I agree with Ron as that was my experience as well except that I  would take my mill in the bush and cut on site bridges for logging companies I also cut for the two big sawmills in the area and wether it's a farmer building barns or structures , crossing timbers for the railroad , someone building their own home or a contractor building for someone else your logs or their logs treat them fair ,good quality and competitive pricing and you will be successful .
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Offline John Bartley

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Re: added price when milling from your own logs?
« Reply #26 on: April 22, 2019, 10:20:02 AM »
I agree with Ron as that was my experience as well .... snipped ... competitive pricing  ... snipped
Except that Ron didn't compete on price.  His post clearly states that he charged "double the market".  Ron competed on quality of product and quality of service, not on price.
Competing on price, without qualifying "who" you are competing with, simply means that you are racing for the bottom.  Bottom  = broke = poor = crappy lifestyle.  Thank you, no, not for me.
cheers
Kioti DK35HSE w/loader & forks
Champion 25hp band mill, 20' bed
Stihl MS361
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Online hacknchop

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Re: added price when milling from your own logs?
« Reply #27 on: April 22, 2019, 10:55:34 AM »
Sorry I  guess I  didn't  explain I will try and do better the difference is circumstances you can charge as much or as little as you like if you are financially independent but some of us who raised our family travelling with a mill ( I  worked on the road for almost 10 yrs before woodmizer even gained popularity in our area Board Bandit was popular then ) so I  charged 30.00 /hr and then when other mills started charging 35.00/ hr and raised it along with my competition, when I  started selling dimension lumber from my own yard spruce and hemlock cost was 150.00 mbft and the price for sawing at the time was 100.00 mbft  so 250.00 mbft and the price changed accordingly , now considering that the population in my area was about maybe 1000 people in the area you could price yourself out of business one way or the other pretty quick so competitive pricing means just that priced according to market value and when your livelihood depends on doing business with the same people over and over you set a fair price so that they are happy and you are happy . Everybody happy good business, that's why we have " the another happy customer thread " which I enjoy reading.
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Re: added price when milling from your own logs?
« Reply #28 on: April 22, 2019, 11:12:11 AM »
We have structured our business to largely avoid competing with Mega Mills, and actually have a good symbiotic relationship with them as they are good accumulation yards for the best logs and lumber.  We send work to them and they send work to us, and their business isn't ours.  Our business is structured to provide the absolute highest quality lumber available.

Our main product, about 20 different species of kiln dried, S2S and S4S hardwood, is arguably one unofficial grade higher than FAS at a goal of 100% usable wood.  I realize FAS can go to 100%, but since we sell more than we can produce, when we are forced to purchase kiln dried "Top Grade" FAS packs from mega mills and wholesale suppliers such as on the HMR, they will have mixed percentage yield mixed in as per grade, and we have to end up working pretty most every board in the pack to bring it up to our standards, unless we can buy it green and have it sorted directly off the chain.  Some people call it the "Presidential Cut" but around here, even the Mega Mills call it the HHA grade, or as a local pro lumber grader calls it "No stinking knots!" or as in the case of walnut and cherry he call it "No stinking sapwood!" as they hand sort boards to meet our grade requirements.  When the boards come out, they mark each board with an HHA for the sorters to put them in our stack, which is actually how we came up with our company logo, its the shorthand version of using lumber chalk and spray paint to mark our logs and boards from our suppliers.

Ron, from the sound of your operation, we would have worked well together, because I would have been one of the guys calling up asking, and paying, for the best you had.  I remember a few years ago, I badly needed some walnut, I was running out, couldn't get logs, etc, and called a wholesaler who knew of a walnut run being done near Nashville.  So I asked him to get the mill owner to do a hand sort for us, and of a 20,000 bdft run of walnut, they hand sorted the absolute highest grade stuff and ended up with 1,100 bdft for us.  When the wholesaler showed up, we again went through every board and we only selected 800 bdft of that.  So of a 20,000 bdft run, we got the best 800 bdft, which was the top 4%.  We paid him for it, no doubt, but it worked out $$ for both of us.  A had a phone call later from a customer who asked me how good our walnut was and I said its the best from here to Nashville.  He asked how I knew and I told him if there was any better, I would have gotten it, too.  :D :D :D

That's what I like about this Forum, there are top notch folks here who seem to be as crazy as I am. :D :D :D

 



 
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Offline Ron Wenrich

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Re: added price when milling from your own logs?
« Reply #29 on: April 22, 2019, 12:00:40 PM »
Actually, we did compete on pricing with the retail market.  You can't really compete for price in the wholesale markets, as the buyers mainly control the price.  Price comes into play when you hit the specialty markets.

My point is that the guy up the road charging $2/bf for trailer boards could get a comparable piece at our operations for 80/bf.  It may have had more knots, but the utility was still the same.  I've seen a lot of lumber bought by inexperienced buyers who buy grade too high for the job.  You don't need clean white oak for fence boards when a 3 Com is just as good for the job

You're simply replacing quality for price, but not from a manufactured standpoint.  It is a grade standpoint.  There are several ways to look at quality.  Utility should be a factor in pricing the job.

Never under estimate the power of stupid people in large groups.

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Re: added price when milling from your own logs?
« Reply #30 on: April 22, 2019, 01:08:56 PM »
Yes, thats where we dont compete with the bigger mills, dont even try, but work with and even sometimes, for them.  We dont sell trailer decking, barn packages, siding, fencing 2x4s or flooring.  If somebody comes in wanting those, I tell them we dont do that, but Im know a mill up the road who does and hand them their business card.  If they come in wanting to use our furniture cedar for raised garden beds, sure we will sell it to them if they want to pay the price but I tell them they can get a better deal buying low grade from someone else, and I give them a name.  By the same token, when someone comes into their place wanting high grade ready to work furniture wood, or a load of specialty wood kiln dried, in small quantities, they send them our way.  Not only them, but we get referral customers from quite a few retail hardwood outlets and home building shops from as far away as Chatanooga and Nashville, including some of the Big Box Stores.  Anyway, it works for us and our customers, and I even get invited to one of the local mega mills Christmas Dinner.        
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Re: added price when milling from your own logs?
« Reply #31 on: April 22, 2019, 02:44:57 PM »
Sorry I  guess I  didn't  explain I will try and do better the difference is circumstances you can charge as much or as little as you like if you are financially independent but some of us who raised our family travelling with a mill ( I  worked on the road for almost 10 yrs before woodmizer even gained popularity in our area Board Bandit was popular then ) so I  charged 30.00 /hr and then when other mills started charging 35.00/ hr and raised it along with my competition, when I  started selling dimension lumber from my own yard spruce and hemlock cost was 150.00 mbft and the price for sawing at the time was 100.00 mbft  so 250.00 mbft and the price changed accordingly , now considering that the population in my area was about maybe 1000 people in the area you could price yourself out of business one way or the other pretty quick so competitive pricing means just that priced according to market value and when your livelihood depends on doing business with the same people over and over you set a fair price so that they are happy and you are happy . Everybody happy good business, that's why we have " the another happy customer thread " which I enjoy reading.
I understand.   I guess my philosophy is different.  I know why people stay where they are and do their best to make a living, and I can say that living in a town with a declining economy and a population of under 5000 people.  This is my second time here.  I left to make a living because I wanted more and better for my family, and I gotta' say .... it wasn't fun for me to leave, but I did and I'd do it again.  I came back because after having busted my ass for 26 years in the "other" place, I can afford to not work.
It's just personal choices ....
Kioti DK35HSE w/loader & forks
Champion 25hp band mill, 20' bed
Stihl MS361
Stihl 026


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