Raise prices or add blade fee?

[NewYankeeSawmill]

Most folks expect tradespeople to include the routine consumables in the rate unless specified by law (tire disposal or appliance disposal here).  Whether true or not, the shop fees, consumables fees and other add-on fees tacked on bills seem like money grubbing.
.....
At such a low rate, are you subsidizing the sawmill with other income?  In essence "buying work" by working below costs and at a rate below competitors?  That's not sustainable.

Agreed, I don't like the 'feel' of a blade fee. Many of the customers have both hard and softwoods, so I don't think I want to make 2-rates, although it does give me the effect of placing the costs w/ the logs that incur them, which is what attracted me to the blade fee idea.

Yes, I make most of my income from trading stocks and options, so the sawmill business is only a portion of it. The LLC also allows me to tax advantage my 'toys' (like a bigger tractor, newer truck, etc., etc.) My accountant tells me I can't expense the bass boat.
I'm not losing money, just not netting as much as I would like. After deducting expense from pay, the hourly rate isn't where I want it to be for my time.

Thanks @YellowHammer , you are correct! After a year of doing this, I can see some parts of the business plan that need adjusting. Just trying to figure out the best way to do it, w/o losing any customers or business opportunities.

Funny you mention the discount idea @TreefarmerNN . I give 10% off to military, police, EMS, etc., and have a different rate entirely for "friends and neighbors". If you pay cashish, I was never here....

One of the reasons I've been OK w/ the rate being so low thus far is most customers give me a large tip at the end of the job. Like a hundred dollar bill or 3... it's like the inverse of a discount? That also tells me I do have room to move up my rate, and that customers currently feel they are getting good value for their money at the end of the job. Guarantee @dougtrr2 didn't tip for the crummy BBQ sandwich.

[NewYankeeSawmill]

I'd base my bf rate on sawing normal, decent, well prepared and properly stacked logs so I can come in and set up and saw them quickly and get out.

Ha! Perchance to dream! Yeah, I get the bottom of the barrel customers a lot of other folks pass on or walk away from...  I'm lucky if the logs are all in the same pasture. Another reason BF-rate won't work for my situation. Every job has production delays outside my control. Frankly I don't mind one bit! I designed around the issue w/ the business plan: I'm getting paid while they futz with their helper, tractor, whatever. I'll be over here nibbling on my sandwich, let me know when you're ready!

If close enough and/or possible, I do a meet-n-greet at the logpile, but that's another expense I don't get paid for. Trying to avoid it - send me some pictures and I'll call you to discuss. I can usually get a good feel when initially talking w/ the customer about the job - they either understand the language or ask a lot of questions, which tells me how much hand-holding I need to do. A few of the more recent customers had prior experience w/ a mobile sawmill, and we end up talking about a lot of these very topics!

[NewYankeeSawmill]

My point is you have to keep careful track of every expense and study it, then make good choices going forward. If you don't adjust as you go, you will likely shrivel up. I think you are doing great, you just have to keep working at improving it. By the way, don't get scared off when somebody turns you away because you cost too much. That can be a sign you are on the right track too. You need to cull out those 'tire kickers' right away.

Thanks for all of the advice! I was starting to see signs of this problem earlier in the year, but didn't have that many jobs or different customers to get a consensus. Working 1-2 days a month just isn't a lot of data. I don't want to change anything during the calendar year, but see Jan 1st as my opportunity to make a change.

[Magicman]

I seem to recall you and I have had disagreements about this topic, before? Sounds like you understand why my rate is what it is!
........... Glad you see it now!

I have not changed my stance whatsoever.  I can not and will not ever suggest what your hourly or bf rate should be.  What I have continually said is that your customer has to received value for their $$ or they will take their business elsewhere.  Your profitability is your responsibility, not theirs.

[TroyC]

I'm a hobby sawyer with a manual mill. I really don't think I could run it for 50.00/hour and expect to make a living. A blade an hour (25.00) leaves you 25.00 for everything else. When you figure fuel, maintenance, mill cost, taxes, insurance, etc., 25 an hour won't go far. If you are pushing that blade to save a dime you are sacrificing quality that will come back to haunt you. Blades and sharpening are a cost of doing business and should be included in your service.  I wouldn't want a customer telling me to keep sawing with a dull blade in order for him to save a buck. That buck is gonna come out of my pocket sooner or later on extra wear and tear on the mill.

You could sharpen blades on your down time to save on blades. I can easily do 3 blades an hour on the Woodland Mills sharpener while doing other things at the same time. If you are only netting 25/hr on sawing, that means you can sharpen and save a blade for 8.00.

Once upon a time an old sawyer won the lottery. When asked what he was going to do with his winnings, he replied "Well, guess I can afford to keep sawing for a few more years now."

[GAB]

When I started I was sawing by the BF.  Then one customer/off bearer decided that any boards with any wane he tossed on the side of the slab pile.  I just knew that he was going to reclaim them after the counting was complete and I had left.  That was the day I went to $'s per hour.  Doing that I do not make any math mistakes tallying boardfootage and the final cost is quicker to calculate.
I charge for blades destroyed because of foreign objects in the log(s).
Now blades damaged because I was tired and hit the log stop or other parts of the mill well that is my problem, however the sparks get customer attention.
Suggestion: If you have a battery powered angle grinder put a cut off wheel in it and add it to your tool list for sawing jobs.  When a blade is destroyed especialy if it has two ends make life easier for your self and add more ends as short pieces are easier to handle.
GAB

[GAB]

I see, as do others, a few options. Frist is: Have two different rates, one for hardwoods and an one for softwoods. The difference is easily explainable and any of your clients, no matter how green should grasp it.

OG:
Would you saw tamarack as a hardwood or a softwood?
GAB

[Magicman]

I seem to be reading where readers are subtracting the $25 per blade cost from the $50 hourly rate.  Blade cost is the same as fuel (consumable) and should be deducted from the daily ($400) rate. 

If a blade per hour is being used, something is bad wrong.

Looking at GAB's post above, I decide what is lumber and what are slabs and explain why.  I insist on 3 good corners and at least one half of the board and edge width.  That is easy for anyone to understand.  Maybe that is another reason that I do not use a board dragback/return.  All of the lumber and lumber handling is in front of me.

For the record, I have never had anyone that I felt was trying to "gip" or intentionally "shortchange" me.  I have never had anyone to question an invoice, and I have never failed to be paid for sawing.

[WV Sawmiller]

@GAB .

  I have never had a customer take a board off the stack and put it in/beside the scrap pile to come back later and retrieve to avoid bf charges. I often have them take boards off my loading arms in my "to be edged" stack and go stack them as finished because they are fine for their intended purpose. I always show the customer when there is a little wane and offer to edge if off. Most of the time if they have one clean side they are fine. I am more discerning about cleaning up the wane than they are. I point out they can have an 8' board with 6' of clean wood 8" wide or I can edge it down to a clean 6" board that is 8' long and most prefer the wider board and point out they can always run it through a table saw later if they need the longer, clean edge.

Yankee,

  My situation is different than many others as I often refer to my sawing as a cost neutral hobby. I don't depend on it for a living but I don't expect to pay to saw other people's logs into lumber. I am anal diligent about keeping up with my costs and if I do a site visit I list it on my mileage expenses. If it is 5 mile side trip on a normal shopping trip to town, I record the side trip. Many and maybe most of those site visits do not turn into actual sawing jobs and some are because when I get there I tell the "customer" his logs aren't worth sawing or at least they are logs I do not want to saw so ultimately it still saves me money in the long run.

    I compare my expenses to my income to determine my rates. Obviously I can afford to accept a lower salary for my work than someone depending on it to support a family or send kids to college. If/When the juice ain't worth the squeeze I'll raise my rates or I will quit sawing. Increasingly my sawing is for repeat customers or from referrals they made.

    Also I have a lot more latitude in which jobs I will take. I am concerned about some of your comments about the customers you "have" to take to stay in business and about some of their complaints about costs and such. I have sawed logs that I did not enjoy but only because I liked the customers so well and enjoyed their company and that was the trade off.

   BTW - my pay is cash or check and I don't care which. I've never not been paid or gotten a bad check. I don't do credit cards and I don't give discounts for cash as it all gets reported the same. I sleep easy and never have to worry about an audit should one come my way.

[fluidpowerpro]

Yankee,

  My situation is different than many others as I often refer to my sawing as a cost neutral hobby. I don't depend on it for a living but I don't expect to pay to saw other people's logs into lumber.

Same with me.
I charge $65 per hour.
Thats about the most I can get away with considering the saw I have.
If I wanted to charge more I would need to invest a considerable amount of money in a faster saw and even then there would be no guarantees that I'm profitable.

Unfortunately I think thats what your running into. The market dictates a price point but your equipment wont support it.

Maybe there are guys doing it, but I think it would be pretty hard to make any money using a manual saw.

At $50 an hour your subsidizing your customer.
You definitely need to raise your prices however even after that the best you can probably expect is to cover your costs. 

[SawyerTed]

One of the pressures my business is experiencing is the number of COVID-19 mills that people bought thinking they would cash in on the high lumber prices due to that bubble.  

I'm not being critical but these guys are killing me by selling lumber at low prices that would be a loss for me.  With availability of low cost rough cut lumber, people are saving their own trees and buying the cheap lumber.  Customers aren't hiring portable millers.  

As I mentioned before, some guys are subsidizing their mills from other sources and undercutting the guys trying to run a business.  Essentially, they are "paying" customers to take their lumber.  Or if portable sawing is their thing, they are "buying" the work at bargain prices.

I'm waiting for the luster to wear off or for their small manual mills to begin experiencing some breakdowns. 

My biggest competitor just sold his mill and edger.   He has a tree service business and just couldn't sell his lumber to cover costs.  

[Southside]

Do you have a debarker on your mill? If not I would strongly suggest you put on on if there is any possible way. Your blade life will improve dramatically. 

[Old Greenhorn]

I see, as do others, a few options. Frist is: Have two different rates, one for hardwoods and an one for softwoods. The difference is easily explainable and any of your clients, no matter how green should grasp it.

OG:
Would you saw tamarack as a hardwood or a softwood?
GAB

Ah, that's a trick question and I ain't gonna fall in that trap. Probably softwood, but I have never had a tamarack log, so I really don't know. Not common here.

[WV Sawmiller]

    Good answer Tom and if I had that kind of price schedule I would discuss which category I included it in before I started sawing. I'd say its a hardwood but I include tulip poplar as a softwood and tamarack (I've only sawed one and it was a bear!) in my hardwood grouping. I might even have another special category for hickory and have told many customers with a hickory log or two if I had a lot I might have a different rate for them.

  As I have said before so many times - all pricing schemes are fair as long as both parties know, understand and agree before the sawing starts and the agreement is followed by both parties.

[Magicman]

No trick questions for me and no guessing games.  All tree/log species and all lumber dimensions are sawed for the same bf rate.  I solved that during my first year of sawing and my bf rate was established accordingly. 

[WV Sawmiller]

Lynn,

    Same here but I have seen sawyers with different rates. I try to keep mine as simple as possible for me and the customer.

[Resonator]

Maybe there a guys doing it, but I think it would be pretty hard to make any money using a manual saw.

You can make a little income, but it's a tough row to hoe. 

[doc henderson]

if you saw by the hour,, then it is proportional to each customer hour.  a blade is like a flat fee.  do both if needed to make ends meet.

[NewYankeeSawmill]

Do you have a debarker on your mill? If not I would strongly suggest you put on on if there is any possible way. Your blade life will improve dramatically.

Unfortunately not an option on Norwood's mill. Hence why I'm trying so hard to fit my business model to my mill and customers.

Thanks for the thoughts @fluidpowerpro , I haven't 'hit' that wall yet, but yes, it's out there in front of me. Trying to get closer to it. I don't think I could charge $75/hr, but think $60-65 will be accepted in my market. At my existing rate I _know_ I'm cheap (relatively to local competition as well as from a profit-perspective), that was deliberate to help grow and develop the business, and why no-debt was an important factor. I am more than covering my expenses, but not 'making' as much money as I would like for the time I'm trading off. I expected to have to do this for about a year, year and a half, so I'm target.

The future goal is to use profit to upgrade the operation (either by adding features to the existing mill or buying a different one). If I can't do it that way, I should start selling lady's shoes as @WV Sawmiller suggested! ! The goal of the operation/LLC is to supplement my trading income and provide a tax-shelter for toys. Imagine I'm a retired guy where SS covers my needs. This pays for my wants.

I don't average a blade-per-hour @TroyC , I had one customer recently with all oak and walnut, and we cooked about 5 or 6 blades per day, yielding ~1.5 logs per blade (there was one metal strike, found a bullet cutting a mantle slab). I could clean up a log, cut it, clean up the next one, but then quality started suffering and we changed. That exceeded my anticipated usage of 2-3 hardwood logs per blade, but admittedly they were all over 20" diameter (e.g. big logs), and only general use blades. I get 5-10 pine logs per blade, depending. These were on a Norwood brand 10-degree standard blade, which certainly affected life of the blade. I blew through a box of Norwoods new "BlueFlex" 7-degree blades but they performed equally poor. I'd wager a 7-degree or 4-degree double-hard will last a lot longer. I have a 10-pack en route from Menominee I ordered last week (after that job killed my inventory). I may also have to start stocking more blade types to meet the performance I'm looking for. Hoping to standardize on one type for 90% of my work, and buying in quantity to lower price.

I have noticed a big increase in the number of >2 year old mills for sale in the local marketplace @SawyerTed , I think you are right about that shine wearing off for some. Also one reason I want to kick my rates up Jan 1st! 

Thanks again all!

[YellowHammer]

I think is comes down to two questions, at least in my situation it did:
1.  What net profit does it take for you to make enough money to stay in business PLUS stay motivated to keep doing it, PLUS upgrade your equipment?  Or for that matter, not doing it, and going fishing? As I've said before, sawing is fun for the first few thousand logs, then it's work.  That's what we did, I started with an LT15 manual, then made enough money for a LT40, then moved up to a 70.   

2.  How do you achieve that minimum amount of money, knowing you can try multiple pricing strategies or tests at the same time?  It doesn't have to be just one strategy, you've been doing this for a year, so time to experiment.  People pay for value, which usually translates to customer service and quality of product, as well as delivery time.  That is the whole basis of our business, and many others.  In reality, the customer could not give a rat's rear end what kind of mill you are using, they want their wood coming out straight and as high grade as possible for the logs they supply, in a timely manner. 

Oh, I ALWAYS billed for a new band on a metal strike, not negotiable.  I can't make money wasting time digging a bent and hung band out a log, then digging the nails and staples out.  It was a good way to keep the customer motivated to bring me metal free logs.  I also had a rule that if I hit metal twice in one log, and ruined two bands, and blew my profit, then the log was coming off the mill, or I shifted to $250 per hour.  No one ever took me up on that one.

One way I separated myself from all the other local sawmillers, was that I guaranteed I could get their lumber back in a couple weeks, sometimes less.  How?  I gradually kept raising my price until I was almost twice that of the local mills who were less expensive but had many months long delivery times, some to the point where the logs would half rot waiting to be sawn. The best lumber comes from fresh logs, and the customers intuitively know that.  My customer base went down, but the people who showed up would pay more knowing they were getting a better product, faster, and so I made more money by sawing less!  What sense does it make to be backlogged for months when you can raise your price and only be backlogged for a couple weeks?  So I used my pricing as a way to throttle business.  Think of all the people who pay an expedite fee on shipping, and those same people had no trouble paying an expedite fee for their lumber.

Also, if customers are tipping you, it's their way of saying you are not charging enough for the service you are providing.  Listen to them!       

[TroyC]

I think Resonator hit the nail on the head. I'd hate to try to make a living with a manual saw.

[GAB]

I see, as do others, a few options. Frist is: Have two different rates, one for hardwoods and an one for softwoods. The difference is easily explainable and any of your clients, no matter how green should grasp it.

OG:
Would you saw tamarack as a hardwood or a softwood?
GAB

Ah, that's a trick question and I ain't gonna fall in that trap. Probably softwood, but I have never had a tamarack log, so I really don't know. Not common here.

OG:
I've only sawed two tamarack logs and going by those two logs if you think pine is pitchy you ain't seen nuttin.  I totally agree with WV Sawmiller in entry #38 concerning tamarack log sawing.
GAB

[Resonator]

I think Resonator hit the nail on the head. I'd hate to try to make a living with a manual saw.

It amounts to a part time income. Sawing alone isn't enough, I have to sell lumber, build things out of the lumber, and do other non-sawmill work.
To upgrade to a new mill, list price $38,000 for a base LT40 wide hydraulic. $53,000 for one with a diesel.

[Jim_Rogers]

Whenever any customer asked me "what's a boardfoot?" I'd reply it's a volume measurement. A square foot, one inch thick. Most people understand what a square foot is. And that answer seemed to sink in most of the time.

When I was sawing full time, I almost always sawed by the bdft. Unless I was resawing salvage beams into flooring. That job was by the hour.

I would keep track of every board/plank or timber as it left the mill table. If the customer through it in the junk pile and I thought it had some value, or that he was going to pull it later and add it to his stack (if sawing on site), I'd add it to my tally. If they wanted to throw away a good piece of lumber that's up to them. But I'm going to get paid for cutting it regardless of which pile it went into.

Many years ago, while having lunch with a bunch of sawyers we discussed how we were getting paid. One sawyer said he was getting paid by the hour at $100 per hour. And that at his last job he sawed for 8 hours. I mentioned to him that at my last, on-site job, I sawed for 8 hours as well, and that I got $1 per bdft. I had sawed 1400 bdft that day. Lots of great logs straight and wide lumber produced. I got paid $1400 for that job. He looked at me when he realized he left $600 on the table by not sawing by the bdft. He was reconsidering his sawing rate and practice.

I never wanted to saw by the hour as I never wanted a customer to tell me to saw faster. Sawing faster would/could make lower quality lumber. I wanted to saw at my speed and make good lumber.

Jim Rogers

[doc henderson]

I am a hobby guy and often charge nothing.  If I charge the time stats with unloading and loading their trailer/vehicle.  If I show them how to sticker or do planing for them same charge.  I only charge folks I barely know.  friends that do wood working, I let them throw cash as they feel inclined, and they often do things for me in return.  As a hobby I just show cash to my wife, and she feels my time is not wasted.  for friends, family and coworkers, the returns are good as gold anyway.