Want to do it again.........help.....

[KDEC19]

Ok here we go.....I purchased an lt40 hydrolic years ago and used on farm and some sawing for others....Things went well and i thought lol that i needed a bigger operation......So i went in very deep and got a lt40 super and edger and firewood processor and all related support equipment.....big mistake....Slowly over the last few years have sold everything out and am starting from ground zero......Due to taxs I am selling our farm and buying my parents house.....Will reduce our overhead to zero....I have a tow truck body shop job rt now....Have been working for myself since 1989...I want to by a woodmizer lt40 for 25k and purchase it out right.  Ok my biggest propblem with work has always been getting what im worth.....If someone could give me the rates to charge it would help greatly in figuring this out....My friend owns a big tree company and wants wood sawn the day the mill gets here.....my prop is the pricing.....always hear it varies ....depends ....aand so on a so forth....  I want real numbers....Senerio 1////Saw for tree companys.....convert thier lumber to specs....give me the price please......Then maybe number two would be mobile sawing...... kind of same idea but smaller scale.....I really love sawing kind of like my only calling i have ever felt.....Have done everything from landscaping to excavating to land clearing farming...basiccally iffin a yuppie or and one wants it done outside i have done it...lol....  Should I bite the bullet again ......I love wood and the industry and if ya saw my last few tax returns i am never gonna be rich and i do not care...Just need help with the math and some niche ideas to make this work....God bless my sawmill idea....thanks Keith D

[DanG]

Ouch!  It sounds like you've been through the mill, so to speak.  Going backwards ain't any fun at all.  At least you had assets to sell and avoided homelessness.

To sort of answer your question; there are lots of real numbers on this forum from all sorts of people, but the reality is, it depends.  Nobody's numbers ever seem to fit anyone else, and sawyers never seem to get what they are worth.

If I were in your shoes, I would look for a good used mill for a lot less than $25k and saw parttime while keeping the day job.  This just doesn't seem like a good time to jump back in on a fulltime basis.

[customsawyer]

I would not be scared of buying a mill at 25k if I know I have the work for it. My advice would be to make certain that the tree company is willing/able to pay before I bought it. Also make sure that there plan is not to have you saw the lumber and then resell it. This will only work in certain areas and will be very spotty at best.

[Jeff]

I'm not going to try and recommend you to move one way or the other, but I can point out to you Lou's lt40 on the for sale board to help confuse you even more. :D

[Bandmill Bandit]

I will give you the method I have used to determine my rates based on my region and the type of work I do and have done, but mostly I will explain the principle that I work on.  This comes from years of doing custom work in various markets from custom corral cleaning, general farming operations like silaging, from cutting to covered in the pit or bagged, haying from cutting to covered in the stack,  seeding prep through to spraying, small equipment dirt work with skid steer and small track hoe type machines, Hay and silage delivery, equipment moving,  fencing, and probably a few others I have forgotten about.

First figure out hard costs and soft cost averages and then add a fair profit margin. The profit margin is the most subjective part of this as it will be affected by competition or lack there of in your region. For me that comes to range of $90 to $105 so I set the hourly rate at $100 an hour. Once you have set that price it needs to be SET IN STONE in your own mind so that there is no possibility of communicating an "I dont know what I am doing perception" to your customers by no being able to give an accurate perception of what your service is worth. It is best to be on the high side of the average in your region.  

To find a fair per unit rate determine what your average hourly out put is on a reasonably average to good day. I find that by taking total production for an average week and divide it by the hours in the week I worked the job to produce the units completed in that week to come up with a per unit price. Mine comes out to $.35 per BF.  That justifies the hourly rate. Make sure the hourly rate covers your costs and produces a fair profit and by fair I mean fair to you and the customer.

This is the corner stone and Anchor point of your business. If you desecrate these rates you will operate only as long as you can afford to subsidize your operation. It is best to leave you mill covered and go to your day job than to go do a job you know you cant make a dollar at.  

I charge a minimum $500 move and setup fee that comes off the invoice once I have cut over a $1000 worth of lumber based on .35 cents a board foot or $100 dollars an hour, which ever is the greater. The customer supplies a tractor with FEL or bobcat etc.  I will allow up to $15 an hour credit for a good helper. Customer pays for bands. Any down time caused by metal or foreign material in the logs is charged at $100 an hour.

For a good customer that works to improve my performance on his job I will look for reasons to give reasonable additional discounts.

Any staging and clean up work is charged at $100per hour. I ALWAYS give the customer a real good idea of how I want things staged to maximize efficiency that will help the job cost them less and get me out of there the quickest leaving behind a satisfied customer with a organized and sorted stack of good lumber and an organized stack of waste material so that it can be converted to fire wood with minimal effort.

With proper staging and a good helper I can consistently cut between 250 and 300 BF per hour not counting my mill maintenance time. I own and LT40HDG28.

I keep track of hours sawing, hours staging and clean up, travel time one way and hours maintenance including sharpening(I dont invoice these hours but I do allow for it in my soft costs numbers).  

It takes time to establish a good reputation. Once customers know that your rates are not only fair but that you dont wast time on the job you will have all the work you want and no one will bark about you rates.

Its the dollar figure at the bottom of the invoice divided by the units of quality product the customer is left with that counts at the end of the day.

I had more than a little help from this forum in organizing years of experience both good and bad into the formula I now use as described in this post.
 

[Chuck White]

Jeff; I was going to put a plug in for Lou's mill, but you beat me to it.

It would also mean a round trip to Michigan's UP, but that really looks like a beauty and priced to sell!

KDEC19; Check "for sale" right here on Forestry Forum.

If you don't get in too big of a hurry, you can usually buy used for somewhere around half price of new!  ;)

[zopi]

Dude...snag Lous mill...it is a creampuff without alot of bells and whistles to go wrong...stash the rest of that cash where it akes a little doing to get to it...save it until you figure out what else you will need...single blade edger jumps to mind...stick with the basics and stay small and under the radar a bit until business forces you to grow....and it should if you juggle it right....the hardest part of any business is knowing when to grow, and how much....I am fighting it now...want to let it grow, want to jump into a bigger mill, but the time is just not right, yet...
Keep your nest egg business working, and start sawing on the side, build the name, sooner or later you will have to hire a manager to handle the first business as the second grows...I expect to hit that point next summer sometime...

Despite what the panic mongering talking heads on tv are saying, things are starting to get better...retailers are seeing some upswing in spending...I think the business will get better and take off...speaking of mone that is...just have to keep hustling...

[gator gar]

If someone doesn't snatch Lou's mill they're crazy!!! It's a good thing I didn't see it when I sold my Lt 28 cause I would have been enjoying the sights and the thoughts of owning that mill on the way up there to get it. Man, that right there is a deal.

[losttheplot]

.  Ok my biggest propblem with work has always been getting what im worth.....If someone could give me the rates to charge it would help greatly in figuring this out....My friend owns a big tree company and wants wood sawn the day the mill gets here.....my prop is the pricing.....always hear it varies ....depends ....aand so on a so forth....  I want real numbers....Senerio 1////Saw for tree companys.....convert thier lumber to specs....give me the price please......Then maybe number two would be mobile sawing...... kind of same idea but smaller scale.....


just need help with the math and some niche ideas to make this work....God bless my sawmill idea....thanks Keith D

You need to do a business plan, that is the only way to work out what you need to charge, to make a successful go of it.

To get you started you need to work out your costs.
Mill fuel, Truck fuel, Bands....etc
How much does it cost you to run the mill for 8 hours.

How many board feet can you average EVERY 8 hours.

How much is your time worth.

These are questions that only you can answer.

There might be small business advice offered by you local government or a community collage etc...

Perhaps someone who has done a sawmill business plan could give you some more pointers.

Good luck.

[T Welsh]

What everyone else said, you have been there and back and now starting over, buy a used mill (Lou,s) Great chance at a killer deal.and charge a price per hour that covers your costs. prices changes if logs are brought to you. start low and slow and get er done at your pace! not a bank payment pace! I will tell you that I charge in my area $75.00 an hour on site and $50.00 an hour at the yard. I have done a study of bf per 8 hr day and it equals out to 0.35 cents bf. I know people in other areas get lower prices, its all about economics you have to charge what your area will let you get. the economy still is up in the air. I like your willingness to not give up. take baby steps and do not get ahead of yourself. let the mill pay for itself and when you feel like you can swing for an upgrade,question yourself about all the bad things that could happen. and plan for that they will happen! and you will make a go of it. Tim

[Brucer]

... Once you have set that price it needs to be SET IN STONE in your own mind so that there is no possibility of communicating an "I dont know what I am doing perception" to your customers by no being able to give an accurate perception of what your service is worth....

You would not believe how much difference this makes. I ran a Wood-Mizer for another guy back in '04. He would always hesitate when asked for a price, look at the customer, pause again, and then throw out a number. It was obvious to me he was trying to figure what he could get away with, and it just as obvious to the customer.

I only saw lumber and timbers these days, but I have a price list in my truck. Any time a customer asks for a price, I grab the price list and look it up -- even when I know what the price is. When I'm dealing with a new customer it's fun to watch them relax as soon as I pull out the list -- even though they haven't heard what the price is going to be.

Why's this important? Because a lot of people who go shopping for custom timbers (or custom sawing) have no feel at all for what the price might be. This puts them at a negotiating disadvantage and they aren't comfortable with that. Then they discover that there's no negotiating involved -- it's not a barter fair, it's a business. Here's what the guy charges and he's been in business for a while. It must be a reasonable price.

Once in a while someone will put out a feeler -- "I can buy the stuff over in 'X' for about 3/4 of that." My reply is always, "Well that's a pretty good price. Sound's like you should go over there to get it."

I keep track of hours sawing, hours staging and clean up, travel time one way and hours maintenance including sharpening(I dont invoice these hours).  

It's a pain sometimes, but knowing those kinds of numbers is important. It can give you an edge over your competition. It will tell you where you should be looking to make improvements. It will let you schedule work better.



One thing I'll add to  Bandmill Bandit's comments -- scheduling

I always schedule the jobs in the order that I receive them. No jumping a job up to the head of the line because it pays better, or because I might get a lot of repeat work. First in -- first out.

Last year I had to turn away a lot of new customers because I had a really big job on the go. I apologized, told them why I couldn't do the work, and referred them to a competitor who made a good product. Every single one of those customers came back to me this year with more work. Why? Because last year I solved their problem for them -- I helped them get the material they needed.

I have one exception to me first in/first out rule. If a customer left a piece off the original cut list, or (worse) if the customer miscuts a piece, I will squeeze in the missing item as soon as I can. I don't let this become an excuse for sloppy planning on their part. It's one more thing that helps me get repeat business.

[Bandmill Bandit]

hey brucer
You are bang on with your additional comments to my post and a little bit of searching will find more info on this topic in the forum from quite a few contributors. Again much of what is in my post can can be found in those various threads through out this Forum.

My post was getting  so long I thought I better quit or some one might tell me to write a book.

[pnyberg]

Keith,

Here are my numbers:

• $1 per mile one way to bring the mill from Coventry to the logs
• $60 per hour for time on site including setup time, but not pack up time
• $25 for blades that hit foreign objects (e.g. nails)

I'm about 98% mobile.  Occasionally a customer will want to bring logs to me, in which case I charge a $20 setup/cleanup fee, and then my regular hourly rate for milling and figuring out how to get logs out of the back of his pickup truck.

To repeat what customsawyer said, if your tree service friend is planning on selling the lumber you mill for him, I think he will find that the market is thin.  I wouldn't go into this on the assumption that he'd be a large part of your business.

--Peter

[bandmiller2]

I'am an old retired codger and don't want to turn and burn by the hour,strictly BF.Big pine jobs not too fussy .50/bf, oak 1.00/bf a little less if customer brings the logs.I'am at no loss for logs as their a byproduct of a tree service co. and we're up to our bippie with them right now. Frank C.