Pricing

[Rick-Wi]

I have found wholesale pricing for FAS, but how do you determine the price of F1S, #1 Common, #2 Common, #3 Common?

It seems to me that this pricing is all over the board, and it is determined by who has the most and how bad they want to unload it.

Rick-Wi

[dewwood]

I base my pricing primarily on The Hardwood Market Report which comes out weekly.  There is also one called The Hardwood Review which is similar.  It lists both green and dry wholesale lumber prices for different regions of the country.  I take their price use a factor to arrive at a retail price and then adjust that by local competition and supply and demand.  If I have a bunch of Ash sitting here I start pushing it and maybe adjust my price to help move it out the door.  

I do not change my prices weekly because the prices will not fluctuate enough in a week to justify that.  I do change them when prices start to move in one direction indicating a trend.

I hope this gives you some ideas!

Dewey

[woodmills1]

dewwood I also get the market report, but have you noticed except for a slight rise in #3 red oak hasen't moved for like two years here in the north.  and for most species week after week same price, though maple has moved around a lot.

[Ron Wenrich]

Normally, F1F is $10 below FAS and selects are $20 below.

We have a few wholesalers that we sell most of our production to.  Their prices have been at or above HMR for most grades.  So, we can use that as our guidepost.

We have also found markets that do grading on the best side.  Most notably the casket grade markets and counter top markets.  This allows us to take some 2 Com and upgrade it to casket.  That pays a little better than the 1 Com.

The counter tops take all our ash and hard maple.  They grade on the good side and I just saw everything into 8/4.

Red oak prices haven't moved much for the past 5 years.  I don't expect them to move much for a long time to come.  This happened to hard maple back in the '70s.  Red oak took off and maple sat there for 25 years, even dropping a little.  Then, maple took off and let red oak sit.

Customer preferences run in cycles.  Ring porous species like oak and ash may have become dated.

[dewwood]

woodmills1,

Yes I have  noticed prices being very stagnant.  Ron's comments give additional insight into that fact.  I do not change my retail frequently unless definite trends are appearing.  Cherry and maple being the most recent examples of dramatic price change.  I am talking about a trend over several months or years as Ron mentioned.

We have started to see things picking up a little in this area.  There is a lot of activity in the woods, which is pretty normal for this time of year.  One of the wholesale mills I deal with had been pretty much selling everything it could produce(a lot is for export) until the last few months things have slowed down a bit for their export market.  The local market is starting to firm up however.

Dewey

[Kevin_H.]

Ron,
Do you grade your lumber before you sell it to the wholesaler, or do you trust them to do it?
What is the lowest grade they will accept.

[Ron Wenrich]

We rough grade at the mill.  We throw out all the low grade and do the seperations.  A lot will depend on the wholesaler.  I used to grade the lumber, but found that their grade is just as good or better.  A lumber grader on the green chain will pay for himself in the long run.

If you have well sawn and trimmed lumber, their grade is seems to be pretty good.  They like it 1/8" heavy, and I saw a lot of wide boards.

We have one outfit that gets a load of red oak each week.  They come to the mill and do the inspection.  Depending on the inspector, their grade is pretty good.  They will grade some things better then NHLA.  They cut all the lumber into panels, so they will give a good grade if the yield is there.

Some of the others get fussy over burls or a little too much wane and will squeeze the grade.  Those guys usually pay a higher price, but it is harder to get the grade.

Most will take 2 Com and better.  Some wil specify F1F and better on some species, but don't kick over a little below that grade.  

We have one wholesaler that doesn't want anything under 6'.  He also doesn't pay for anything below 2 Com.    He doesn't get a lot of lumber from us.  A little too fussy.

Right now, there is not much of a log inventory anywhere on the East Coast.  Our Canadian buyer has been beating the bush for lumber and is coming up dry.  Most wholesalers are trying to maintain or build their inventory a little.  If we get a really bad winter, it will make for interesting pricing this spring.

I've been out of logs for 2 weeks.  Nice vacation, but rough on the income.  The mud season may be over for the short term.

[Rick-Wi]

I thank you all for the comments, I guess I will have to invest a few bucks to get a news letter to see what pricing is here in WI.  

It has been a no cut all summer with the other work, but now that the winter is here, the edger in place, and the kiln is done it will be sawdust making time.

What I am doing is trying to put together a web site to sell some of the better stuff, figured Cherry, tiger Maple, Walnut crotch wood, extreamly wide Walnut +24" 14' long FAS,  and the oddities, small amounts of Sycamore, Mulberry and some Maple and Cherry burls. But I know someone will ask, do you have #1, or #2 Common. Have the website done, just need to nail down what will be charged.

Thanks for the help,
Rick-WI

[Rick-Wi]

Also, do you charge more for wide boards that make grade? Will have, red and white oak, + 14", Cherry +12", ash +14", wanut +24".

Thank You,
Rick-Wi

[Ron Wenrich]

The quotes in those newsletters are for guys selling trailerloads of wood.  Go into Lowe's or Home Depot and things change.

If you're trying to sell over the Web, you might get into a shipping problem.  Those UPS and Fed-Ex guys have a weight and size limits.  You can go with a freight company, but delivery may be a problem.

There are all types of premiums that can be applied to lumber, even at the wholesale lumber.  You can be looking at a $50-100 premium for F1F and better.  There are classes of 8" and wider, 10" and wider, and 12" and wider.  These all have an associated premium.  There are also premiums for different thicknesses.

Premiums are added for kilning and surfacing.  If you are going the retail route, then you will also need the premium for the smaller lot.  I have had orders for 50 Mbf of lumber on a phone call.  That would take a lot of retail customers.

[dewwood]

Definitely charge more for the wide lumber, if not you will have nothing but 4" - 6" boards left to sell and all of your customers will be wanting 12" so they can cut it up into smaller pieces.  The wood magazines do a good job of telling their readers just what size boards they need to do a project then the customer brings you the plans and says I need these boards.  My point being if you price your lumber on random widths and random lengths you will be doing a lot of sorting for free.  I also charge a sorting fee and a premium for wider boards, the wider the board the higher the premium.

The reason I do this is to protect the next customer that comes in and wants 100 bd ft of random width at the price published.  It is not fair to him to give him lumber right off of a stack that has been picked over several times.

Most customers don't have a problem with higher prices for "special considerations".  Some don't have the equipment to mill their own boards, some just don't want to glue up or they just need a special board for that special project.

It takes additional time to educate your customers in the way lumber is sold, but normally once you have explained some of the basic grading rules and the fact that not all trees produce 14" lumber they are usually willing to accept this and the next time they just order without the additional time spent working with them.

I know this kind of rambled but I was trying to make several related points about setting your pricing structure.

Dewey

[Scott_R]

Check out Woodfinder.com. They have about 300 listings of wood sources. You can check out the competition in your area for prices they charge or maybe set up a listing of your own. Scott

[Brian_Bailey]

Scott - I had a listing with woodfinder for three years until I dropped them this fall. I had hoped that the listing wood bring in customers from my area that I couldn't afford to reach thru normal advertizing. The listing did not pan out for me as the only inquiries I seemed to get was for oddball stuff that had to be shipped a long distance. I know other folks have had good success with their listing on woodfinder. I quess it just depends on your locale and what your offering.

Dewey - I'm convinced that we are sharing the same customers   :D !