Is it common to sell KD lumber by gross tally?

[blackhawk]

Do you really expect a sawmill to arbitrarily or even voluntarily cut their sellable net product by 10% per year, losing potentially hundreds of thousands of dollars, if not millions, simply because an unenforceable NHLA code suggests it?

Yellowhammer - Very respectively, I never said that I expected my lumber suppliers or anyone to cut there net product by 10%.  Please read the last paragraph of my original post.  I said that instead of selling at gross tally just build the percentage into the price and sell at net.  It is all multiplication and comes out the same.  Here is an example.

If ACME Lumber quotes me $3.00 per bf.  I then have to ask them is that gross or net.  They say gross, so then I have to ask what percentage shrinkage do you use because it varies between suppliers in my area.  The say 10% shrinkage.  I need 90 bf, so I tell them that I need 100 bf so that I can get 90.  I pay them $300 ($3 x 100) and they give me 90 bf of lumber.  So, based on net bf, I paid $300/90 bf = $3.33 per bf.

If ACME Lumber sells by the net bf per, they simply increase their price per bf to $3.33 to account for the shrinkage.  If I want 90 bf, I pay them $300 ($3.33 x 90) and get 90 bf.  

Both ways, ACME Lumber gets $300 and I get 90 bf of lumber.  Selling by net tally, makes it simple with no confusion.  I don't have to ask a bunch of questions.  It just makes perfect sense.  I'm sure that is why the National Conference decided that in 1977.  When I go to the gas station, the sign says $3 per gallon.  I pay $30 and get 10 gallons, easy.


The "Code of Virginia" is state law.  Virginia just states the "code" as their body of laws.  Technically, it is enforceable.  But, I said nobody would do anything, because I am a one man operation that buys very little lumber from suppliers.  No one in the Virginia government is going to investigate something like this just for me.  I've lived in Virginia my whole life.  It would take a huge corporation to complain and a campaign contribution before anyone would listen.  

[beenthere]

It's a standard, not an enforceable standard, unless a buyer states that the standard must be used and in a contract. 
Likely the seller would not be interested in selling if that was the contract, at least without increasing the price. Sometimes engineers get used to going to a book of standards that leads them down this path. 

[blackhawk]

It's a standard, not an enforceable standard, unless a buyer states that the standard must be used and in a contract.
Likely the seller would not be interested in selling if that was the contract, at least without increasing the price. Sometimes engineers get used to going to a book of standards that leads them down this path.

Virginia's state law calls out that they follow the national standard for weights and measures.  Virginia enforces many of these weight and measure standards.  The one that is enforced most is the measurement of gasoline.  All the pumps in Virginia have to be calibrated every so often.  I have seen many times were gas stations were caught purposely cheating in Virginia and fined.  As I said, I've been around long enough to know that Virginia is not going to do anything about measuring lumber.

Enforcement is not an issue for me.  I don't want anyone to get fined or get in trouble. I'm just wanting to use common sense and pay X amount for Y amount of product and you get Y amount of product, not 0.9*Y amount of product.

[customsawyer]

I don't think we have jumped the rails. Some of us are using "grade" as a way to explain that even if a supplier is going by the "grade" book, there is going to be ways that they fudge the numbers in their favor. The same way they are using gross tally instead of net tally. We are saying that you can get mad about it all you want but it is easier to just understand the game and move forward. Now that you know what they are selling, and how they are selling it, all you have to do is order 10% more. There is a reason that most of the big mills are the ones that pushed for these grade books. It sure wasn't to do us smaller folks any favors. I have to admit that I do like having the books. It gives me a great starting point in knowing what I'm getting.

[YellowHammer]

Well said.  100% Correct.

[blackhawk]

I've known after the very 1st time that I have to order 10% more.  I know the game.  It still does not make common sense and makes anyone that sells that way look deceitful in my opinion.  Yeah, it is somewhat easy to order 10% from this supplier, 7% more from another, and 12% more from a third.  But it is way more easier, if they just increase their price per bf to cover whatever losses they have, tell me that price and I pay for 100 bf and get 100 bf.  

[YellowHammer]

It still does not make common sense and makes anyone that sells that way look deceitful in my opinion.  Yeah, it is somewhat easy to order 10% from this supplier, 7% more from another, and 12% more from a third.  But it is way more easier, if they just increase their price per bf to cover whatever losses they have, tell me that price and I pay for 100 bf and get 100 bf. 

Once again that's what I'm saying, but obviously not very effectively.  

If one mill "just increases their price per bdft" to correct for Net, and another mill doesn't, then when they bid or quote prices, they will appear to be 10% higher on all their product prices across the board for the same (we know it's not) quantity of wood, and will lose business because, on the surface, their price will appear to be 10% higher.  Low bids win contracts.  How much business will they lose? Probably a lot more than 10%   

If they drop their price to match the uncorrected price of other mills selling gross to compete, then they will lose the 10% off their price. 

Either way, they will lose money.  

Is it deceitful?  OK, but it's not against the law, so....oh well.  On the other hand, if you had asked them, they would surely said they "sold gross tally", so they didn't lie, they simply didn't clarify and you didn't ask.  Whose fault is that?  Both

In your title you ask "Is it common to sell KD lumber by gross tally" and the answer is simple: 

1.  "Yes." 
 
2.  Is it regulated by enforceable law "No." 
 
3.  Why do operations do it? "To make more money, to not lose jobs, and to allow them to compete against others who sell on gross, so they can stay in business in an extremely competitive commodity wholesale market, so they can feeds their kids, their employees and their employees kids."

4.  Why don't they voluntarily follow NHLA rules?  "Because the rules don't guarantee anything and can be manipulated just as easily as not".

[blackhawk]

1) Agreed, it is common based on both of our experience.

2) It is technically enforceable by law in Virginia.  It is just that no one in (at least my state) will enforce it for a small time operator like me.  I've mentioned this twice before.

3) You say that if the mills increase their price to cover for selling net that they will lose bids and lose money.  But, you also said in your first post that "Some of my suppliers do it, some don't, I'd say 50/50 around here."  So, if 50% of your suppliers do it, how do those 50% stay in business.  They have evidently figured out how to make it work for them.  You said that you yourself sell by net tally.  You are doing well.

4) Why does the NHLA exist and why have any rules or standards if they can be manipulated for one's own purpose?  Let's just make, sell, and do whatever we want.

[123maxbars]

Lots of good education in this post. In TN this is common practice and nothing new here.  @YellowHammer gave a good explanation in answering the original post. This is one of those times on the FF when you take notes and say "thanks"instead of looking for justification for your grievances.  

[beenthere]

Time that blackhawk gets the messages and accepts their intent to help him understand. 

[blackhawk]

Time that blackhawk gets the messages and accepts their intent to help him understand.

It is hard to judge the meaning behind your last post.  A forum is supposed to be where ideas and views on issues can be discussed.  I think this has been a courteous discussion by all parties to this point.  I have no hard feelings against anyone.  I respect everyone's opinion.  It seems my opinion differs from most everyone else, which is fine. Is a different opinion and cordial debate wrong?

[Cedarman]

We all know a box store 2x4 is not 2" x 4".  We buy by the piece, not board foot, so we have to understand that.
When I sell to customers, I ask them do they want full size or store bought size.  Some just assume 5 1/2 x 5 1/2 instead of 6x6. For many customers they do not know to ask the question.
So from this discussion, as a customer you have to ask the seller to be specific on exactly how they are selling their wood.
From their answer you can figure out how much you need to order and what your actual board foot price is going to be.
In football, holding is against the rules. But players know that they can get away with some holding before the flags come out.  Sawmills know how far they can push the grade before the flags come out.
Its all about learning how to play the game.

[Magicman]

Along those lines, I have to ask my customers exactly what dimensions they want.  Since I do not sell but only custom saw, the price for sawing is the same and that is spelled out in my sawing contract.  The lumber can be either depending upon the use.  1" lumber is generally full size but I just sawed a job where the 1X4's were 3/4 X 3 1/2, but the 1X6's were full 1X6.  I also recently had one where the 2X4's were full size, but the 2X6's and larger were store dimensional size.  No deceit nor funny games, just providing exactly what the customer wants. 

[Ron Wenrich]

Dealing with commercial buyers, they know the grades and what to expect and what they can pay.  The non-commercial buyers know what they want, but don't understand how to order something from a mill.  

I always asked what the intended use was for.  If someone was looking for 1x6 fence boards, you don't have to sell him FAS lumber.  I tried to match a product with the customer.

[Hilltop366]

It would be nice if a standard was used across the board but at the very least sellers should be up front on what measure they are using.

A lot of places gas is volume corrected to 15°C so is a gallon of gas a gallon of gas? It is at 15°C.

[blackhawk]

Cedarman - I understand your intent with the 2x4 analogy.  I think the big difference is that everyone sells a 2x4 as 1-1/2 x3-1/2.  It is the same from Lowe's, Home Depot or the local building supply.  If a contractor orders 100 2x4s for a jobsite from any of the three, they deliver 100 2x4s and they are all 1-1/2x3-1/2.  The contractor doesn't have to multiply the number that he needs by a percentage and keep track of which store uses which percentage.  All building supplies sell it the same way and you don't have to ask.  They go by a standard.  The approved standard for KD hardwood lumber is to sell by net tally.  If everyone would sell by net tally, following the standard, that part of the game could be eliminated.  

[Ron Wenrich]

At one time, in PA you could sell firewood by any measure you wanted.  It could be by the ton, by the cord, or by the truckload.  But, the problem with a cord is who defines a cord. 

The state stepped in and made it only legal to sell firewood by the cord.  They defined a cord as 4x8x8 and is 128 cu ft.  The industry knows that standard.  Do you think homeowners know that standard?  There's lots of ways to cut corners on that standard. 

A better standard would have been to sell by the ton.  It would be unhandy for the weekend firewood cutter, but it would be a lot more understandable by the customer.  The only problem selling by weight is whether its dry or green. But, a customer would know that they would have a set number of Btus in a ton of wood.

[Cedarman]

When you buy from the box store you know the 2x4 are 1 1/2x 3 1/2 because they are planed to a standard size.  This is softwood lumber.
Hardwood is different. Cedar is different. I have customers call for 1x 6 x 8', like Ron says I ask the customer what are they making.  If cedar chests, then they probably want full 1".
If for fencing, then 3/4" x 5 1/2" will work. I price based on volume of wood in the product, so it saves the customer money by getting what they need.
I hate to have a customer show  up and not get what they expect to get.  So I have to make sure the customer and I are on the same page so to speak.
Since many mills don't seem to care, then it falls on us customers to make sure we get what we expect to get.
It might be why we are so busy and making a nice profit to boot.

[Peter Drouin]

I price based on volume of wood in the product,

That's what I do. The only way to be honest with your customer. Charge what you want but the volume is there.

[blackhawk]

Cedarman - I agree, customer and seller should be on the same page.  Even for those of us in the lumber business, I still don't think the burden should fall on the buyer to be sure that get what they want in terms of net tally vs gross tally.  Again, I'm just speaking on the issue of net and gross tally,  I think you should be able to order 100 bf and actually get 100 bf.  In my head, there is no gray area there, it's measurable.  

[Cedarman]

When we receive payment in cash, how many of us count the money in front of the buyer?  I always do.  Once in a great while, I come up short, once in awhile I come up long. In the end, I want to be even.  Customers love it when I hand them the extra bill, especially if it is a hundred. I don't think I have ever been intentionally shorted and most customers ask that I count it to make sure it is right.
It would be great if all sellers were up front with their customers, intentionally or not intentionally, we need to be on our toes.

[longtime lurker]

Different grade rules and industry norms here but from reading this it surely is the same business, with the same sets of issues as a buyer as a seller.

As a buyer I expect fairness. I don't haggle on price and when a supplier looks after me I keep buying from them. I recently got in a load that was... very ordinary but technically within grade. No problem except that the last load from the same mob had the same issues. Solution... I voted with my feet. I'm waiting on stuff from a new supplier now.

As a seller I apply fairness so I run two sometimes contradictory principles: (1) would I use it myself and (2) does it meet grade. Would I use it myself weeds out some ugly but technically within grade boards in up market products
 Does it meet grade I tend to apply to lower grade products with correspondingly lower prices.

I've worked hard to build a name as a supplier of quality product and I have every intention of maintaining that reputation. But you don't get rib fillet when you order and pay for topside steak, and I'm not in the business of giving away select grade boards when the order specifies 3 grades lower.
Fairness also means being fair to me.

[Peter Drouin]

On the flip side separating the grades means more roof--- space.

[Ron Wenrich]

But, it also establishes a floor.

Question for blackhawk.  Since you're aware of differences in the gross vs net volume, why not order on gross volume?  You're more of an informed consumer than most.  Both buyer and seller are on the same page.

Its not uncommon for commercial lumber to be sold with a discount for money received in 10 days (for example).  You're quoted a price per grade, but your check is a bit different.

[blackhawk]

Ron - In my experience for my area, suppliers don't give you a choice.  3 of them sell by gross tally and another 3 sell by net tally.  I want to order on net tally for all the reasons that I listed in my posts above.  The main 2 reasons are that it just makes common sense and there is a national standard that says to do it that way.  Order 100 bf for x price and get 100 bf for x price, simple and clear.