How much would you pay per MBF?

[Redhorseshoe]

If you were sellinh lumber for $1 per board foot, and able to sell it by the semi load (11,000 board feet at a time) what is the most you would pay, on scale, for those logs?  I know what all my expenses are and what I'd like to make but I'm curious what kind of margins others would still consider profitable.

[SawyerTed]

You didn't specify species of log.  

[Durf700]

if the logs are 40 cents per board foot if I would sell it for a dollar per board ft for me if its soft wood like pine or hemlock.. I don't mill for a living but on the side for fun and some extra cash.  much less than that margin and I don't see keeping up with repairs and maintenance.  thats just my rookie opinion.  I am curious what others need to make per board ft for logs like hemlock and pine.  please give us your ideas.

I try to get it for 25 cents per board ft and sell for 85 cents.. but right now prices are much higher in my area.

[moodnacreek]

The problem is the machinery to saw the logs, in my mind at least. If you have a fast mill and say a vertical edger plus automated board handling equipment you can pay alot more than those without or less than an even faster mill.

[YellowHammer]

The general rule of thumb for a conventional healthy business is that with all the overhead, labor, insurance, expenses, etc, the product should be sold for a minimum of twice the material acquisition cost, as long as labor doesn't over balance the scales.  

It doesn't mean you'll have a 2X net profit, it just means that generally, you will have some positive net profit as opposed to going in the hole.  Personally, it's a good rule and I never dip below 2X when I set my prices. 

Some business, restaurants for example, go into the 10X range for material (food) compared to the selling price on the menu. 

[stavebuyer]

On the Sawmill and Milling board it seems logs should be free and whatever you can get out the lumber is not enough. Jump over to the Logging forum and all sawmills are getting rich off the backs of loggers and landowners even if they are paying more for the logs than they can sell the lumber for.

[Southside]

I would find a different market. 

[Redhorseshoe]

This was a semi theoretical question but to answer it myself, I'm happy paying 350/1000 but won't go over 500/1000 if selling for $1/bf for retail.  Less money per bf but way more volume than I could sell alone.  I haven't done any semi loads yet but I believe they are on the horizon.

[SawyerTed]

Theoretically, then I couldn't pay more for logs than 64 cents a board foot for a theoretical species and make any money selling at $1.00 per board foot.   

[Southside]

It may not look like it up front, but you are loosing money with that example, especially the 500 MBF.  The problem is sort of like physics.  The equation as to how many bullets it takes to stop a charging lion only works in theory, there are too many real world variables that are not being considered.  

If you want to survive on that kind of margin then you need to be a commodity producer, running a fast mill, as in air strain, 7' wheel fast.  Every piece of equipment needs to be running the whole shift, making money the whole time.  Loader, debarker, mill, edger, sorters, etc.  You need to be selling all of the byproduct, and you better have more than one buyer or you are at his mercy.  

To do otherwise is simply to create "profit" out of depreciation of your equipment.  What are you going to do when the woods gets muddy and log prices go up but lumber stays flat?  Off cuts that don't make grade? Logs that have hidden issues in them?  Guys don't show up to work so you can't get a load done before it begins to mold or stain.  Trying to play in that world without the right equipment and capital is a race to the bottom.  I can show you guys who have tried and they made it to the bottom. 

[woodduckhunter]

What size material, specie, green or dry?  Lots of variables

[Redhorseshoe]

Man, tough crowd around here.  I didn't think my particular situation really had much to do with my question here but anyway here it is.  I've made a couple other posts lately about expanding my business and also making one step of a process quicker and more efficient.  There is a theme here!  I cut quite a bit of juniper.  What I sell myself I sell between 1.50 and 3.50/bf.  However, there are two retailers who will buy quite literally all of the 6x6x8 posts I can get them.  Both companies pay $1.00/bf.  On my manual mill it takes about 6 minutes including loading and offloading to cut an average post.  4 cuts and it's done.  It takes about another 6 minutes to square cut the ends (see previous post about efficiency).  I make better money by the hour cutting 1x12's but I can always sell these and in whatever volume I can produce so it is a reliable source of income.  

It's looking like I may be coming into a large continuous supply of logs which are for sale at a really good price, much less than what I posted earlier, but the trucking costs will be substantial.  I was just hoping for some insight into what others consider a decent margin.  Like I already mentioned, $350/1000 has worked so far but depending on freight cost I'm trying to weigh out the margin to quantity ratio.

Lastly, I suppose my thread wasn't entirely theoretical  :

[stavebuyer]

I say square some posts and work on improving efficiency starting with a chop saw if its taking longer to square and cut to length than to saw them. The next issue will be what can you do to make money from the slabs which will soon overwhelm you?

If you had access to nationwide real world numbers I would wager that the majority of logs sawn in the country are sawn at a lower price per board foot than your example. If you can't make money at $.50-$.65 per board foot 4 siding a 6x6x8 from a softwood log than look into a different occupation. I would wear that deal out and quit wasting time reading about why it won't work.

[Ron Wenrich]

Another thing you'll have to consider is how much you'll have to pay to have sufficient supply of logs.  Right now, you apparently can get all you need at $350/Mbf.  What happens if you double your production in the same time frame?   Will you get the same amount and quality at $350 or do you have to raise the price to guarantee a log supply.