Hourly Rate

[Bandmill Bandit]

I know that since I have gone to strictly the hourly rate I don't have to worry about how I will pay for my next box of bands and the rest of my operational costs.

Every time I have sawed by the BF I have barely broke even because the guy does not want to pay for the second cut slabs, 1 inch material because he wanted all 2 inch stuff or edging etc etc. If guy wants me to saw by the BF he is almost always a chincy bugger that wants you to pay him to cut his logs. I dont even quote a BF rate and if he want to figure it out on is his own that is his prerogative. He still pays by the hour. NO exceptions any more for any one!     

[OlJarhead]

Thanks MM (and Bandit)....that makes sense to me as I don't just mill.  I load the logs (roll them off the deck to the mill), often off-bear the lumber, clean up during the day, buck off limbs, buck logs shorter, mill 'on demand' (meaning I will let the customer choose if he wants something different on the spot) and just about do whatever I can for the customer.  I see it as a service, I'm there, I have chainsaws, chains, a truck, and a strong body so if they want me to cut a cookie off a big stump I'll do it, if they need me to buck limbs etc I do it...

[Carson-saws]

OlJarhead......I'm thinkin you pretty much nailed it Sir.  Do you charge mileage as well?

[OlJarhead]

OlJarhead......I'm thinkin you pretty much nailed it Sir.  Do you charge mileage as well?

Currently I charge $1/mile over 50 from my location though I think I'll change it to over 30 next year.

[Magicman]

This very vividly illustrates how different our markets are as well as our billing strategy's for meeting those markets. 

To say, "I just bought a sawmill so tell me how to make money" is like buying a ticket to go to the moon.  It does not work that way.  Sawing skills have to be mastered and markets have to be developed.

[OlJarhead]

I should add that what I mean by "what the market will bear" is that you could charge $200/hr if you wanted but there may not be anyone willing to pay that....whereas you could also charge $20/hr and maybe you'd get more business than you could handle.

You may be in an area where there are a dozen mills willing to travel all over the state and as such you have a lot of competition so charging more than everyone else will likely cost you work, unless of course you have a stellar reputation -- even still, if you charge $100/hr and I charge $75/hr I might get more work simply because people want to save money.

On the other hand, if you have two dozen mills in the area you may not get much work for even $75/hr -- the market won't bear it because someone else is going to mill for $45/hr....

VS. you could be where I am and there are almost no mills around willing to drive 100-150 miles one way to your logs...as such you can charge more and possibly not lose any work.

I've had a lot of calls that did not pan out into jobs but I've had a lot of jobs too so it's a balance.

I'll also mention that at least on two jobs I had competition but won out.  On the first the other miller said he'd mill for share (50/50) but never answered calls and said he couldn't mill burned logs...I got the job at $75/hr and milled up 6000bf.  On another there were three of us:  one at $60/hr, one at $105/hr and myself and all with similar mills I'm told.  I got the job at $85/hr (and slept in a tent overnight) and was told that because I was in the middle, very responsive to questions, calls, emails etc and demo'd my mill at a field day it made the customer confident that I'd be the right choice and when I was done I was told I'd be back.

So my point is that the market (customers) really decide what you can charge and actually earn a living etc because either they will pay it or they won't.

[OlJarhead]

This very vividly illustrates how different our markets are as well as our billing strategy's for meeting those markets. 

To say, "I just bought a sawmill so tell me how to make money" is like buying a ticket to go to the moon.  It does not work that way.  Sawing skills have to be mastered and markets have to be developed.

AMEN!

When I started trying to mill for others I was dipping my toe in the market really (thanks to you and others on the forum) and charged less, produced less and ultimately didn't last long because my equipment wasn't up to the task (couldn't produce like I can now) but I learned a lot.

When I restarted the business with the new mill I spent a lot of time familiarizing myself with it and increasing my production rates and every job I went out on I tracked and compared to others to see if i was at least producing at a reasonable rate for what I charged.

I also worked very hard, and always do still, to produce good lumber.  This takes study and time...and to study you need a teacher and that is where FF comes in.

Today, after what? 6 years or so of milling I'm still a novice compared to Peter Droin, MM, Bandit and others here but I do everything I can to learn from them always!  I read a lot more of the forum than I post in (surprise surprise) because if someone posts about locust, birch, tulip whatever I want to know what they did, what trouble they had, how it dried, etc etc etc so that I can provide better service to my customers.

Also, if I have a problem that I was not prepared for (like when I did not have spare B57's) I don't charge the customer mileage or setup to return since it isn't their fault I have to leave.  I also try to always do more on a job.  My motto is "You work hard for your money, so I better work harder to earn it from you!".

[Magicman]

You are "spot on" my friend.   

It has been interesting to watch your sawing operation/business grow from a question to a success.  You have progressed from a CSM, to a manual bandmill, and now finally to your present setup.  Each step has been made with hesitation as well as anticipation and with a good mix of common sense.   :P

You setting and meeting your goals has been rewarding for us all. 

[OlJarhead]

Thanks MM....so much to learn but thanks to you and others I'm getting there.

I will say to anyone wanting to do this it's hard work.  I come in after an 8hr day of milling and an hour or more to the site (and back) beat up and feeling my age!   :D but I enjoy it and love meeting people as well as working hard to accomplish something.  It's rewarding work

In the long run I hope to actually draw a wage from my work (since now I don't because I'm using everything I earn to run the business and pay for equipment etc) but I can see it doing that.  Today the business pays for itself now 100% whereas in the beginning I funded all expenses out of my regular job and that to me is the key.  It takes money and time to get started and in my mind the goal is that it pays a salary and pays for itself to run or it isn't worth it.

[Bandmill Bandit]

The geographical differences on this great continent create very different conditions and types of wood species and different need for said wood. The colder the climate the greater the urgency to get the logs milled in the better weather AND the cold does reduce competition too.

MM is bang on for the reasons he operates as he does in the region he lives and oljar and I are about 7 hours apart and our markets are quite similar to each others BUT he gets better logs than I do as a rule. It takes some experience which all 3 of us and many others on this forum have developed with the help of many of the members here, to know how to meet the needs of the clients we serve and what our service is worth.

The most important thing I have learned is that under priced is a LOT worse to your business than over priced.

If someone doesn't hire me because he thinks I am over priced, My mill dont cost me a cent sitting in the back yard. It paid for it self long ago. IF i am out cutting a job that doent pay me $30 an hour wage AND $60 to $70 an hour for my investment, depreciation, operational cost and expertise, I'd be much better sitting at home reading the forum.

Eric; dont know if you have got one yet but a out feed roll table and board return REALLY reduce the hardest part of the labor and increase production quite a bit too.

In good consistent logs I can keep 2 guys pumpin hard to keep the lumber stacked and another guy to remove trash and keep the roll way loaded. 

[WV Sawmiller]

   My thoughts are on establishing an hourly rate is once you get enough experience sawing to determine what is a pretty fair average bf/hour estimate assuming good conditions and good wood for you and your equipment then convert that to $/hr and use that as an hourly rate.

    When cutting under perfect conditions the customer may save a little money using an hourly rate but under less that perfect conditions the sawyer still makes a decent wage (I.e. What he would have made under decent conditions).

    That is kind of what I thought MM meant earlier in this thread where he indicated something to the effect that should be roughly the same. May not have been his exact intent but was the way I read it.

    I understand the customer often preferring a bf rate, not because he is trying to save money or beat up the sawyer but simply because that is terms he can understand and budget for the work.

[Magicman]

Correct Howard.  If a customer hesitates, (very seldom) I will offer to figure it both ways and give him the lesser of the two.  At the end of the job, they will usually insist that I charge the larger amount or tip me the difference.

Honesty begets honesty.   ;)

[Brian C.]

We charge hourly and have yet to have a complaint. Our mill is manual and with two of us we do a pretty fair job being about the same in cost as bd ft. We also tell them that the more they help the soon we can get done.
A few have just let us go by ourselves, but they usually hang around and help out. Keeps their cost down.

[ncsawyer]

The most important thing I have learned is that under priced is a LOT worse to your business than over priced.

If someone doesn't hire me because he thinks I am over priced, My mill dont cost me a cent sitting in the back yard. It paid for it self long ago. IF i am out cutting a job that doent pay me $30 an hour wage AND $60 to $70 an hour for my investment, depreciation, operational cost and expertise, I'd be much better sitting at home reading the forum.

In one of my business classes in grad school, one of my teachers was a consultant.  He said that the best advice he could give any small business is to raise your price.  His point was that most business under sale themselves and don't charge enough.

I do have some fixed cost associated with by milling operation, so it does cost me a little to let my mill sit (depreciation, insurance, and the like). So I like to keep the mill going as much as possible. But I don't take on every job that comes my way.  If its a job that I am not particularly excited about, (long way from home, low quality and small logs) I will price it high enough to make it worth the headache.  Most of the time I don't get those jobs.  ;D

[Carson-saws]

I don't know how it may change area to area or state to state...but...$100.00 per hour min.2 hours...$1.00 per mile from home base to job site.  Cust buys first blade....will metal detect for $40.00 or not...if not each blade cost the cust should the blade be damaged beyond reasonable cut grade.

Before the job is set up it is explained how the logs should be staged in order to decrease handling time.  If the logs need to be moved within an area the cust. can rent our skidsteer service for mileage to job site and charged either for min. 2 hours or Hobbs time.

[Chop Shop]

In one of my business classes in grad school, one of my teachers was a consultant.  He said that the best advice he could give any small business is to raise your price.  His point was that most business under sale themselves and don't charge enough.

When my father started in bizz in 1962 he was very busy and not making very much money.  He always speaks of an early customer that gave him good advice.  He said my father was too cheap and very good at his trade.  My dad said, "thats why I stay very busy".  The man said, "no thats how you go broke or get burnt out"   He told my dad to double his price.  "You will only have to do half the work for the same pay and the customers willing to pay it will be twice as pleasant to deal with".

My father is 78 and still booked a year in advance and we cant talk him into retiring!