BID ON A FORUM AUCTION!
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a foote note: my area of wisconsin in a 30 mile radius there are 11 mills doing what i do, can you say competition
Quote from: Ironwood on September 30, 2009, 09:31:38 amI like .50 cent or more. For me they are really paying for my time and handling. Ironwood+1. I charge a daily rate, which usually equals out to .50 - .70., depending upon the species. I also charge for handling on loads less than 1000 bd ft.In the archives is a post that I made several years ago on this very same topic. I looked at it from not only direct costs, but also depreciation, return on investment, business taxes, repair costs, labor, etc. When I made the investment in my kiln, it was in anticipation of the following:1 - I would have a positive return on that investment, the same as if I had put it in a CD. Typically I like to see at least a 10 - 15% return, which means that I should generate 2 - 3K annually in ROI from the 20K investment in my kiln.2 – If my business had to borrow the money to make the investment, then not only should I see a positive return on the investment for my business, I would also need to factor in the payments on the loan. Using simple arithmetic, if I amortize 20K over 5 years then I’m looking at 4K per year in payments. So I’m now at 7K per year for investment return and payments.3 – A kiln is not going to last forever – it is a depreciating asset. Thus, over a period of say 7 years my 20K investment will disappear. I need to recover that money, in addition to my return. Simply put, figure another 3K per year in depreciation.So now I’m at 10K per year, just for ROI, payments, and depreciation. If my kiln stays in operation for 50 weeks per year, then I need to generate $200.00 per week, or $28.57 per day, before labor and operating expenses, just to cover principle, interest, depreciation and ROI.4 - Next, we have labor costs. It takes two men several hours to stack, sticker, load, baffle and unload a 4000 bd ft kiln. As a business owner, not only do I need to recover my labor costs, I also need to make a profit on that labor. So, if I’m paying two guys 15 bucks an hour, by the time that I calculate in overhead, taxes, etc, that 15 bucks an hour is now somewhere around 23.50 per hour each. If I want to make 30% profit on their labor, it is now 33.57 per hour each, or $67.00 for the pair. If they are able to load/unload 4000 bd ft in 6 hours, I now 200 bucks in loading/unloading costs, plus 30% profit.Based upon a 30 day kiln cycle, that’s another 6.71 per day, for a total of $35.28 (labor and ROI, payments and depreciation). 5 - Now, we have operating costs. It seems like on an annual basis I’m spending around 1K in spare parts, maintenance costs, etc. on the kiln .Another 2.85 per day, taking our total up to 38.13 per day.6 - Next, we have utility costs. These are going to vary depending upon several factors, including your utility rate, how well insulated your kiln is, and your average temperatures, just to name a few. Maybe another 6.60 bucks a day if your bill runs $200.00 per month. So we’re at 44.73 per day. 7 – If one man spends 30 minutes per day in checking the load, doing the sample boards, etc, then you’re looking at another 16.78 bucks a day in labor (1/2 of the estimated 33.57 estimated actual labor cost + profit), taking us to $61.51 per day.Thus, if I have 4000 bd ft of 4/4 oak wood in my kiln – dried from green - my costs plus a small amount of profit will be 1,843.30 for that load, or .46 per bd ft.But what if the load is less than 4K bd ft? My daily operating costs remain pretty much the same, my depreciation, ROI, and daily labor costs are about the same, perhaps I have a small savings on the labor associated with loading and unloading (estimated 50 bucks for 1.5 hours of time savings), but that’s about it. It will still take 30 days in the kiln to dry 3000 bd ft of 4/4 oak from green to 8%. So if I subtract 50 bucks from the 1843.30 for the load, I’m at 1793.30, divided by 3000 bd ft., or .59 per bd ft.If you’re drying 100,000 bd ft at a whack, with a kiln that’s heated by waste wood, perhaps you can get your costs down low. IMO, the reality is that most folks do not charge enough to kiln dry. I look at many of my fellow Forestry Forum members with nothing but respect for their hard work and desire to be independent businessmen. They work incredibly hard for not a whole lot of income, and unfortunately too many end up going broke down the road because they did not charge enough for their efforts. And the rest of us have to compete with that, which only keeps the prices artificially low.
I like .50 cent or more. For me they are really paying for my time and handling. Ironwood
