Price increase

[PAmizerman]

Has anyone raised there prices due to the pandemic? I'm hearing rumors of local amish mills paying 25% more for a load of logs than my prices are based off of.

I just hate the idea because it seems once a price is raised it never seems to come down. 

Has anyone ever done a temporary price increase? Say 20% in hopes things will settle down? 

[farmfromkansas]

My experience is prices go up, and only go down when business dries up.

[KenMac]

I'm just a very small one man part time operation, but I have not raised prices. About the only thing I can sell is pine dimensional lumber. Nobody wants to pay for hardwoods.
Pine is $0.75 a board foot. Not to sound sour or mislead anyone, I'm happy with the way things are now. I have all the work I want and don't depend on the mill for a living.

[nativewolf]

Has anyone raised there prices due to the pandemic? I'm hearing rumors of local amish mills paying 25% more for a load of logs than my prices are based off of.

I just hate the idea because it seems once a price is raised it never seems to come down.

Has anyone ever done a temporary price increase? Say 20% in hopes things will settle down?

Are you having a tough time getting logs?  I would say yes, prices have gone up.  Amish are paying crazy prices for walnut limbs today.   Rising tide lifts all ships is my feeling, so price rises, if they don't impact buying, can only help.
What's your product mix normally?  Who's the normal buyer?

[WV Sawmiller]

   I have not increased my prices because I my costs have not changed significantly nor have I had a reason to increase my wages/income. That is the only reason I see to raise or lower my costs. 

[miro]

Recent news indicated that framing lumber is getting pricier - now up to $936 per Mbf. Driven by building boom for residential single family houses estimated to be about 1.7 million houses in 2021.
So, 1.7 million plus kitchens, vanities,  - lots of flooring, stairs, etc etc.
The report also cites the lack of skill trades people for sawmills as a major impediment . Source is Croton Financial - David Duncanson analyst

[Southside]

WV, your costs are going up, you just don't realize it. Fuel, bands,belts, saw chain, all increasing in cost.

You can increase now or later, after you have lost money. 

The 1980's called, they want their inflation back. 

[Bruno of NH]

My log prices haven't increased yet.
But I have been told by customers my prices are lower than some.
I'm very busy and don't want to lose business,  so I'm very hesitant to raise them.
I'm might give it a try on the next orders I price out.
I'm getting some logs in now as mud season is fast approaching. 
I am on a state road.

[btulloh]

Recent news indicated that framing lumber is getting pricier - now up to $936 per Mbf. Driven by building boom for residential single family houses estimated to be about 1.7 million houses in 2021.
So, 1.7 million plus kitchens, vanities,  - lots of flooring, stairs, etc etc.
The report also cites the lack of skill trades people for sawmills as a major impediment . Source is Croton Financial - David Duncanson analyst

Good info. Thanks. 

[WV Sawmiller]

   I have not seen, and I am anal about keeping up with every expense, a significant increase in my costs. Some costs went up, others went down. My sales/services went up enough to keep ahead of any cost increases I encountered. The coming year appears to exceed last years volume, if this snow and ice will ever melt. Hopefully it will be enough to keep ahead of costs.

   Time will tell.

   

[moodnacreek]

I'm just a very small one man part time operation, but I have not raised prices. About the only thing I can sell is pine dimensional lumber. Nobody wants to pay for hardwoods.
Pine is $0.75 a board foot. Not to sound sour or mislead anyone, I'm happy with the way things are now. I have all the work I want and don't depend on the mill for a living.

While it is non of my business how you run your show I think you should raise your price, if even just a little, because lumber prices are up. I only say this because in the past I did like you and then operating costs went up and lumber prices stayed low... so I had to raise as I got too far behind and my customers where not happy. At this time they expect to pay more.

[Southside]

My sales/services went up enough to keep ahead of any cost increases I encountered. The coming year appears to exceed last years volume, if this snow and ice will ever melt. Hopefully it will be enough to keep ahead of costs.

WV, respectfully you just said that you are willing to work more, for less money.  If you are doing more work and not generating more income then your "profit" is actually depreciation off of your equipment.  It does not matter if you are a one man show or Georgia Pacific, the rules are the same.  

I get the concept of wanting to be good to ones customers, times are tough, etc., but if you are going to survive in this environment then you need to realize it's just business.  I get reminded of this reality every other Monday when my payroll is calculated and I see how much money is coming out of my account on Tuesday evening.  

[PAmizerman]

I have three months of orders to fill. I saw only hemlock. After posting I talked to my number one logger.
Seems there are a couple guys just taking advantage right now. He told me he will continue to sell to me at the rate I've been paying. 

I've been waiting on logs for a couple weeks now. 

[WV Sawmiller]

SS,

   I follow but remember for me my sawing is more of a cost neutral hobby and I do not depend on it for my livelihood. I do it to keep active and to make new friends and do not see where I am losing ground. I may not be getting ahead as fast as I could but my customers are generally rural small farmers and businessmen and I have made many new friends doing this. I'm already at the upper end of what our market seems to be able to bear. I'll raise my prices when I can see it is no longer profitable or feel my compensation is dropping. I don't try to sell my lumber or services for less than what the big box stores sell theirs nor do I plan on raising my prices just because they do.

[Magicman]

I don't know whether is is necessarily "pandemic cost related" but I have made some changes.  My hourly rate has stayed the same but I raised my sawing rate $25Mbf last year and another $25Mbf this year.  My sawing rate is now exactly double what it was when I started sawing 20 years ago.

[stavebuyer]

Wholesale hardwood lumber has practically doubled in price for many species and grades since about Sept 2020 at which time you could not find a home for some lumber at any price. Lumber is "hot" and so is competition for logs.

You will see some insane speculative/desperate offers for accessible logs going into spring.

Labor rates go one way and that is up. Lumber is boom-bust within the overall inflation based rises. Four dollar walnut could be eight dollars or two dollars six months from now.

Most reputable buyers will move with the market. More and more the trend seems to be seize today, forget yesterday, and don't worry about tomorrow. I did well dancing with the ones that made me; but loyalty on both sides of the equation seems to be in shorter supply each passing year.

The people who buy my logs and lumber are my customers. I never understood the need to treat them as adversaries. Loggers are my suppliers; without logs I have no business. I need loggers to prosper and handle many items at cost or below to help them during tough times. We target production to meet our customers needs and in return we have sales when others don't. No doubt we miss some peaks but we also never see the bottom of the troughs either.

[Cedarman]

I have raised the price I pay for logs 10% and I have raised the price of lumber 10%.  Labor and fuel are going up and will stay up.  I have too many  orders to fill and would rather price some out rather than say no.  Customers are more concerned of when they can get their wood rather than the price of the wood.  Even companies buying truck load are not quibbling much.  The Italians have argued the most so far, but even they agreed to a price increase. I fear the number of people wanting to build raised beds this spring. Have sold over 500 2x8x8 so far this year.
But I will ride this horse until it bucks me off.

[Rhodemont]

My forest plan is calling for a good thinning next fall / winter.  Not sure how much but there will be a lot of nice red and white oak along with some maple and beech.  I hope the demand for logs stays healthy as it is way more than I will be able to mill.

[moodnacreek]

Stave, I have missed the peaks for sure. Been accused of everything. Have the distinction of being the last man standing around here. It's all about relationships especially buying logs. Like your post.

[boonesyard]

There is no question, prices everywhere are on the rise. The supply chain for everything is as far behind as I've ever seen it. I get weekly letters from the largest pipe, steel, cement and equipment suppliers in the country warning us of shortages and price holds as little as 7 days. Makes it extremely difficult to bid public municipal projects that require us to hold our bids for up to 60 days  :. Dimensional lumber prices here are north of 100% higher than at the end of 2019 and hardwood prices are up 50%, treated posts aren't even available. Along with the pricing is availability, most post frame contractors around here won't even give you a rough estimate because they don't know when they can get product. Rafter companies are 4-6 months out  ! 

Try buying a new bandsaw, jointer, table saw, planer, bandsaw mill, blades, sharpener, etc., etc. if you needed it right away, isn't going to happen. We run 8ea 3/4 and 1 ton diesel pickups in the fleet, 4 with 250,000 - 400,000 miles on them. If one laid down right now, we couldn't replace it quickly if we wanted to. Our local dealer has had nothing in inventory for 4 months. The US auto industry is 7.5 million vehicles behind production, wow. 

Sorry for the rant but this supply shortfall, therefore pricing increase, isn't going to improve in the near future. The virus vaccinations are rolling out, but I believe people have gotten REAL used to either not working or working from home. We have, and are, going through a major shift in the way things will look on the other side. As small mill operators, we can weave and bob shifting directions quickly and adapting to the changing times. 

Man, I really like running my sawmill  ;D !    

[mike_belben]

The money supply nearly doubled in 2020 at the printing press. You are getting paid almost half price of 2 year ago.   Goods and services are repricing to reflect this and the first to be aware are the first to reprice.  Housing demand is a scramble lead by those who understand this, to lock in a 30 year rate at the old price and current low rate.   Like purchasing corn or oil futures today knowing next year will be higher.

[alan gage]

On the one hand I can see not wanting to raise prices more than the increase of your input costs (if any).

On the other hand if what you're producing is suddenly worth more money, and everyone else in the industry is selling it for more money, why wouldn't you too?

Let's say someone gave you two free logs and both yielded the same amount of lumber and took the same amount of time to saw. One of those logs was a half rotten pine and the other was a beautiful walnut. Your input costs to produce the lumber for each log are the same but not very many people would sell the final products at the same price.

If you found a quarter on the street you'd probably be happy to sell it to me for 50 cents. But would you sell me a $10 bill you found on the street for 50 cents? Input cost is the same (bending over to pick it up) and in each scenario you have 50 cents more than when you woke up in the morning.

The biggest justification for getting the most money from your product is that someday the worm is going to turn and you're going to have a product that cost you $$$ and now it's only worth $$ and you have to either sell it for a loss or hang on to it in hopes that costs rebound. A customer doesn't care how much it cost you to produce a product, they only know how badly they want it. If the trend is walnut then the price of walnut goes up because people are willing to pay it. When walnut falls out of favor and no one wants it anymore no one is going to care that it cost you $$ to buy the logs and produce the lumber. They only know that they either don't want it at all or they want it cheap.

There are ups and downs in business and you need to make as much as you can in the up swings and lose as little as you can in the downswings and hope that it all averages out ok in the end.

My personal experience is in the auto repair industry and sometimes I'm almost embarrassed by how much we charge for some jobs. But every time I think about knocking some money off an estimate I remember the the job, or the week, or the month when everything went wrong. Some weeks everything goes perfect and you can't help but think if things were always like this you'd be rich. Then the worm turns and someone scratches and dents a customer's fender, parts prices are quoted incorrectly, a job takes 3 times as long as it's supposed to and we don't get paid for it, the phone doesn't ring, or all you do for 2 weeks is oil changes (which are a money loser), or you need a new furnace, or a piece of equipment breaks and that soaring bank account starts to plummet and for three months straight you lose money. And then you realize it was those jobs that seem to pay embarrassingly well that are keeping the business afloat. When things are good you gotta grab all you can to get you through the bad and when things are bad you gotta grab all you can (which isn't much) to keep from drowning.

Grabbing all you can doesn't mean screwing people over. It means getting enough money to see yourself through the lean times so you can still be there to service them in the next 1, 2, 5 or 10 years. From our business three people make a good yearly wage and most years the business bank account grows but some years it shrinks. We've been here for nearly 40 years and have a reputation as being good but expensive. We've seen a lot of shops trying to compete on price come and go, some multiple times. They do fine when things are good but they can't ride out the hard times.

Alan

[mike_belben]

The lumber is worth the same.  Its that the money is suddenly worth less.  

I dont like to belabor the point and abhor currency devaluation as evil but feel obligated to warn my friends that you better raise the price or youre obliging to a forced paycut.  A wave of massive price rises will be occurring for years to come. 

[Cedarman]

Some years ago I had a piece of property for sale.  One fellow asked the price and said he would not pay me that because he knew what I had paid for the ground.  He should have bought it , because I ended up selling a short time later for 50% more.  I had given him good price.  But he begrudged me a profit and ended up losing all around.  He had a backhoe business.  I always seemed to forget he was in business when people asked who they could get to do backhoe work.
What you pay for something has no bearing in what a customer will pay.
Supply and demand do that.

[YellowHammer]

Basic rules of business:
 
1.  Stay in business.
2.  Have more money coming in than going out.

As input costs fluctuate, prices should fluctuate, based on real and intelligent decisions.  Its nothing personal to the customer, it's the way it is.

We look at the prices of all our species of wood regularly, and adjust prices regularly.  Not all species go up, some go down.  Right now, white oak is high, red oak-not so much.  We don't make the prices up, we generate them through analysis.  This way we can look the customer in the eye and say "the price is the price."