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added price when milling from your own logs?

Started by forrestM, April 14, 2019, 07:09:20 PM

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forrestM

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




WV Sawmiller

  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.
Howard Green
WM LT35HDG25(2015) , 2011 4WD F150 Ford Lariat PU, Kawasaki 650 ATV, Stihl 440 Chainsaw, homemade logging arch (w/custom built rear log dolly), JD 750 w/4' wide Bushhog brand FEL

Dad always said "You can shear a sheep a bunch of times but you can only skin him once

Ron Wenrich

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

Tom the Sawyer

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.
07 TK B-20, Custom log arch, 20' trailer w/log loading arch, F350 flatbed dually dump.  Piggy-back forklift.  LS tractor w/FEL, Bobcat S250 w/grapple, Stihl 025C 16", Husky 372XP 24/30" bars, Grizzly 20" planer, Nyle L200M DH kiln.
If you call and my wife says, "He's sawin logs", I ain't snoring.

YellowHammer

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.  
YellowHammerisms:

Take steps to save steps.

If it won't roll, its not a log; it's still a tree.  Sawmills cut logs, not trees.

Kiln drying wood: When the cookies are burned, they're burned, and you can't fix them.

Sawing is fun for the first couple million boards.

Be smarter than the sawdust

WV Sawmiller

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.
Howard Green
WM LT35HDG25(2015) , 2011 4WD F150 Ford Lariat PU, Kawasaki 650 ATV, Stihl 440 Chainsaw, homemade logging arch (w/custom built rear log dolly), JD 750 w/4' wide Bushhog brand FEL

Dad always said "You can shear a sheep a bunch of times but you can only skin him once

barbender

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

John Bartley

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.

cheers
Kioti DK35HSE w/loader & forks
Champion 25hp band mill, 20' bed
Stihl MS361
Stihl 026

Woodpecker52

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.
Woodmizer LT-15, Ross Pony #1 planner, Ford 2600 tractor, Stihl chainsaws, Kubota rtv900 Kubota L3830F tractor

Woodpecker52

One more thought I paid for my mill in about 5 months.
Woodmizer LT-15, Ross Pony #1 planner, Ford 2600 tractor, Stihl chainsaws, Kubota rtv900 Kubota L3830F tractor

forrestM

Thank you! How nice it is to be a part of the forestry forum!

Beavertooth

2007 LT70 Remote Station 62hp cat.

Mountain_d

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. 
1978 TJ 230E 3.9L Cummins 4B, Husky 372XP, Husky 61, Husky 266XP, JRed 625, Husky 265RX clearing saw,  Woodmizer LT40HD 1995, Kubota 4950DT (53hp 4WD), Wallenstein V90 Skidding Winch, John Deere 610 backhoe, 1995 Volvo White GMC WCA42T SA Dump Truck, 2004 Ford F-250SD 4WD, , Central Boiler OW

John Bartley

Quote from: Woodpecker52 on April 15, 2019, 01:19:29 PM
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 ....

cheers
Kioti DK35HSE w/loader & forks
Champion 25hp band mill, 20' bed
Stihl MS361
Stihl 026

John Bartley

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.

cheers
Kioti DK35HSE w/loader & forks
Champion 25hp band mill, 20' bed
Stihl MS361
Stihl 026

Banjo picker

Quote from: Mountain_d 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.



Mountain, as a normal rule for myself, I don't 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 that's 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
Never explain, your friends don't need it, and your enemies won't believe you any way.

Magicman

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.
Knothole Sawmill, LLC     '98 Wood-Mizer LT40SuperHydraulic   WM Million BF Club Member   WM Pro Sawyer Network

It's Weird being the Same Age as Old People

Never allow your "need" to make money to exceed your "desire" to provide quality service.....The Magicman

Southside

Quote from: Mountain_d on April 19, 2019, 08:12:05 AMsay 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.  

Franklin buncher and skidder
JD Processor
Woodmizer LT Super 70 and LT35 sawmill, KD250 kiln, BMS 250 sharpener and setter
Riehl Edger
Woodmaster 725 and 4000 planner and moulder
Enough cows to ensure there is no spare time.
White Oak Meadows

Bandmill Bandit

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.   
Skilled Master Sawyer. "Skilled labour don't come cheap. Cheap labour dont come skilled!
2018 F150 FX4, Husqvarna 340, 2 Logright 36 inch cant hooks and a bunch of stuff I built myself

Mountain_d

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.
Mountain 
1978 TJ 230E 3.9L Cummins 4B, Husky 372XP, Husky 61, Husky 266XP, JRed 625, Husky 265RX clearing saw,  Woodmizer LT40HD 1995, Kubota 4950DT (53hp 4WD), Wallenstein V90 Skidding Winch, John Deere 610 backhoe, 1995 Volvo White GMC WCA42T SA Dump Truck, 2004 Ford F-250SD 4WD, , Central Boiler OW

Magicman

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.
Knothole Sawmill, LLC     '98 Wood-Mizer LT40SuperHydraulic   WM Million BF Club Member   WM Pro Sawyer Network

It's Weird being the Same Age as Old People

Never allow your "need" to make money to exceed your "desire" to provide quality service.....The Magicman

YellowHammer

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.  

  
YellowHammerisms:

Take steps to save steps.

If it won't roll, its not a log; it's still a tree.  Sawmills cut logs, not trees.

Kiln drying wood: When the cookies are burned, they're burned, and you can't fix them.

Sawing is fun for the first couple million boards.

Be smarter than the sawdust

hacknchop

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.
Often wrong never indoubt

Ron Wenrich

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

John Bartley

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.
Kioti DK35HSE w/loader & forks
Champion 25hp band mill, 20' bed
Stihl MS361
Stihl 026

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