Purchasing logs

[KenMac]

Just  a simple question on pricing boards from purchased logs as opposed to "freebies" obtained locally with no cash outlay. Do you set a profit margin and price accordingly or stick with your normal price regardless of how you got the logs? I hope this makes sense. Thanks for your input.

[Southside]

Don't reduce your price point because the input cost, this time, is lower. Be happy to get a better margin because when your input cost goes up you don't need to raise your sale price. 

[YellowHammer]

I suggest you set your prices so that you can make a reasonable profit in a short term poor log acquisition scenario, not a best case scenario.  

This will alleviate and smooth out issues with log supply and keep you from dithering on not buying necessary logs because they are too expensive to make a profit.  

For example, say you set prices based on low to average log prices.  Then you are running low because your supplier(s) are not selling to you anymore, either on a temporary or permanent basis.  Maybe it's not their fault, maybe its just been raining too much and the log supply is drying up and prices are rising, like now (for me in North Alabama).  So I have choices: run out of logs because I didn't price in the extra margin, or offer to buy the logs at a higher price, and still make a good profit.  Of course I can also temporarily raise prices, but that really does confuse and create issues with retail customers, as no matter how much I lower it later, they will only remember the times you raised it.  Especially. in my case since by the time the logs are turned into kiln dried lumber ready for sale, it may be many months and nobody will remember that it rained during the spring, and "this" batch of lumber came from expensive logs I purchased months ago.

Best thing, set a price, and if you can do better on logs, then good for you.

If long terms markets allow to raise or lower prices, then that is a different situation.  

 

[moodnacreek]

Being on the side of the road sometimes I get some free logs, [this is tricky unless you can handle a wood dump]. I would never lower my high prices. What about the logs I misjudged, the rot, the hidden shake, metal, carpenter ants, red rot, etc. I do as much locust as I can get and 1/3rd is bad inside. Sometimes you have to buy a little bad wood to keep a supplier coming back.  I wonder what Stave buyer thinks of this?

[stavebuyer]

Being on the side of the road sometimes I get some free logs, [this is tricky unless you can handle a wood dump]. I would never lower my high prices. What about the logs I misjudged, the rot, the hidden shake, metal, carpenter ants, red rot, etc. I do as much locust as I can get and 1/3rd is bad inside. Sometimes you have to buy a little bad wood to keep a supplier coming back.  I wonder what Stave buyer thinks of this?

I have seen it work both ways. I have one particular veneer client that demands a true veneer log and won't budge on quality. He doesn't disappear in the summer and pays on the spot. I never try to peddle him junk and I can ship on my tally when needed. That model works for him.
On the yard dealing with saw logs I tend to agree that you have to buy it all to keep them coming. The sad part is that its often the pricing on junk logs that nobody ever wanted that often causes issues. Some guys you can go to great lengths to try and educate and entice to bring what you need and can pay the most for and seems like they go out of the way to do exactly opposite
For a small mill it works well if you can develop good relationship with one or two small loggers who will try to bring what you need. Those guys you have to take care of as much as you can even if what they have today isn't what you were hoping for.

 

[alan gage]

It's not logs but in my real job of auto repair we have a similar situation with parts. I have my regular suppliers I do 95% of my business with. Sometimes I can find the same part for considerably less money elsewhere and I'll go that route. But I don't drop my sale price because:

Getting that cheaper part is a little more hassle.
Sometimes that other option falls through and I have to buy at the regular price last minute.
If the part has to get returned it takes more time/money than just handing it back to our regular supplier.
We might not be able to return it at all if not needed.
If there's a warranty with that part we'll likely have to cover it ourselves.
I don't want to undercut my competition.

If everything works out we make more money and the customer pays the same as he would at any other repair shop in town. If things don't work out (customer doesn't show or part is wrong/not needed) it costs us money. Sometimes we win and sometimes we lose. But you need to be sure the overall wins are bigger than the losses to make it worthwhile even pursuing that option.

In terms of free logs I'd guess that sometimes free logs will be more work than buying logs from someone who delivers them bucked and ready to go at your door. And free logs might be free because they're lesser quality or you have to spend more time sorting through the free junk to get to the free good stuff. All of which costs time that cancels out some or all of the free part. And, like some others said, it's always best to keep prices consistent.

Alan

[KenMac]

I'll go into a little more detail now that I'm on my laptop instead of my phone. I had some very high quality white oak logs (one tree) that only cost me the trouble to haul them 10 miles to my mill. Some others not quite as good in the same scenario, but about 18 miles away. Some others were delivered free. All in all, I had 8 logs of varying length. My Craigslist ad brought a few inquiries and all wanted either 12 or 14 foot lumber. I didn't have nearly enough to meet their needs, but all are still interested in dealing with me. My price is $2.50 bd ft green for heart wood suitable for outdoor use. I have found a source for enough logs to meet my present needs for $1.40 bd ft delivered from Tennessee. That leaves me $1.10 for sawing if price is the same. Is this reasonable or not? I don't have much experience with this stuff, but I'd like to leave the price as is since I would certainly saw someone else's logs for $1.10.

[moodnacreek]

Ken mack, Your $.50 higher than me, good for you, but you are paying a lot for logs and I would saytoo much. But wait, this whole thing is tricky. If 90 per cent of your logs are straight and sound and you just roll em and saw em and sell the boards well I pay .50 bd. ft. for locust and metal detect, do chainsaw work and get a lot of culls, see what I'am saying. I could pay twice as much for straight and sound white oak, if I could get it.

[moodnacreek]

Stave buyer, man you really understand. I never get to talk to some one who has log buying, selling and sawing experience and all the frustrations that come with it.  I have beat my head against the wall for years trying to get guys to see the log in the tree and extract it properly. Wish I could cuss here. It is amazing what men cannot do with a chainsaw. Hope to meet you someday.

[Banjo picker]

Ken, just for giggles call Haskell & Hughes saw mill in Colinwood ten tomorrow and find out what they are paying for delivered white oak.  The reason I say that is because you are a good ways down in Alabama and a good bit of that $1.40 has to be trucking.  Makes me wonder as moodacreek has said in a round about way....what is the quality of those logs.  It will be hard to beat someone making whiskey barrels for prime logs, especially if you are further away.  If you know where the logs are coming from you can do some investigation.  Banjo

[KenMac]

I do not know the man who has these logs, but through texts we discussed both of our situations. He owns a farm with about 50 acres of prime hardwoods. He has been considering buying a band sawmill, but there are many of them in his area and sawn green lumber is hard to sell. So, he thought that a better market might be a situation such as mine, where he can saw the logs and have them hauled to where the market is better. All of this has been discussed through texts, but he seems genuine and sincere. It may be worth my trouble to make a day trip north and meet him in person. Sometimes you can get a feeling about things, and my feeling about this is good. I'd much rather find local logs to inspect before purchasing, but I have not yet done so.

[KenMac]

Ken, just for giggles call Haskell & Hughes saw mill in Colinwood ten tomorrow and find out what they are paying for delivered white oak.  The reason I say that is because you are a good ways down in Alabama and a good bit of that $1.40 has to be trucking.  Makes me wonder as moodacreek has said in a round about way....what is the quality of those logs.  It will be hard to beat someone making whiskey barrels for prime logs, especially if you are further away.  If you know where the logs are coming from you can do some investigation.  Banjo

16 inch prime white oak is $1150 per 1000 bd ft. 15 inch prime is $850. All other varieties of "white oak family" is $750. I may need to look at these trees and go from there. Thank you all for your input. 

[sawman53]

Ken mack, Your $.50 higher than me, good for you, but you are paying a lot for logs and I would saytoo much. But wait, this whole thing is tricky. If 90 per cent of your logs are straight and sound and you just roll em and saw em and sell the boards well I pay .50 bd. ft. for locust and metal detect, do chainsaw work and get a lot of culls, see what I'am saying. I could pay twice as much for straight and sound white oak, if I could get it.

Hello new to forum I also saw a lot of locust I do not live in a great area for logging SE PA but its good to know I am not the only one dealing with Black locust I metal detect also I think in my area locust attracts metal but most of my logs come from tree removal services and not loggers I also have to do a lot of sorting,sawing,and get a lot of firewood logs it seems to be the nature of locust I do get 2.20 a BDFT for sawn lumber mostly goes for decking and flooring White oak is really hard for me to get I have to pay .90 to get and it is not the best 

[OffGrid973]

+1 on the locust comment.  I had 35 fence posts to replace in historical context so they needed to each be turned...you can imagine how many loads that took with 1/3 being bad 1/2 through.  I sometimes give extra when I get a great load and explain it's offset when I am fare for the dud loads that end up as firewood.

Make sure your secondary market for leftovers is strong and the "bad" purchases hurt a lot less.