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cost per board ft calculations

Started by gtr, May 25, 2006, 08:18:15 PM

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gtr

Has anybody got a formula for calculating what it costs to produce a bd/ft of lumber on a portable mill?

Tom

Ron Wenrich has put together some numbers that will fit a formula.  They are in an old post somewhere back in the volumes of info available in the old posts.

In a nutshell, every business is different because each has it's own goals.  I think you really have to study your own situation to get a decent answer. 

I'll see if I can find that old post.

Tom


gtr

Thanks Tom ...........those links are interesting

G

Ron Wenrich

Operating costs would fall into 2 categories - fixed and variable costs.  Fixed costs are those things that you have whether you saw 1 board or 1 thousand.  They are things like insurance and depreciation.  Rent could also be thrown in there.

Fixed costs will vary pretty much depending on use.  If you use the mill a lot, then the fixed cost per bf go down.  If you don't use it much, then fixed costs become way too much to support the operation.

Variable costs are those things that cost money only during operations.  Fuel, wear and tear, labor, and blades are usually the most prominent for portable mills.  It usually looks cheap if you aren't figuring your labor at a very high rate.  I think that is a mistake.

It makes a lot of sense to have a pretty good idea how much you can saw in a day with various sized and species of timber.  I keep records for every day of my sawing on a big rig.  I know that if I'm sawing 16' poplar, I will get about 80% more lumber out than I will with short poplar.  I also know I'm not going to get much production sawing locust posts.

The reason that is important is that bf costs are dependent directly on the production rate.  Small logs equal high production costs.  Crooked logs equal high production costs due to hard handling and volume loss.  Some logs just have no business on the headblocks.

If you are doing it part time, then you should figure how many days of the year you are sawing.  Divide your fixed by the number of days sawn.  That will give you a daily figure for your fixed costs.  Try getting your variables into a daily number as well.  Breakeven would be your costs/production.  Charge any less and you lose money.
Never under estimate the power of stupid people in large groups.

VA-Sawyer

Ron,
You are correct about "some logs just have no business on the headblocks". I used to charge 'by the "good" boardfoot". People always wanted to put junk up on my mill just to see what it looked like inside. If it was all trash, then it didn't cost them anything unless I dinged a blade. If it was one of those 'one in a hundred' beautys then I got paid my normal bf rate. I was taking all the risk on those junkers. I quit sawing for certain people because of all the time I was losing sawing their trash.  >:(
    Now, I saw by the hour, and that changes everything. If the customer wants to put a rotten log on the mill just to see inside, I have no problem with it.  If we spend an hour trying to saw out a knotted, twisty, bent and half-rotten fork because he thinks the grain will be special, well... lets just say I can smile through the whole thing.  ;)

gtr,
As an answer to your question, let me say this.  I figure my fuel at about 1.2 gals per hour of sawing. I average about 2000 bf during the life of a blade. ( Some will cut 3500 + feet, and some die at a very young age due to metal poisining.) I sharpen my own and will do so 4 or 5 times during the life of a blade.  I spend between $20 and $25 per hour for parts. That is probably about double the normal amount because of all the upgrades I'm trying to do on my old mill. 
If it is just me sawing and stacking Oak , then I expect around 125-150 bf per hour. If I have excellent help so I don't have to touch the wood, then 350-400 bf per hour is quite doable.
Don't expect to start out sawing like Arky. He does about 2000 bf per day, 5 or 6 days a week. Week after week, with a LT40. Unless you have something solid and steady lined up, I would say that 40 to 60 mbf of sawing is a reasonable target for the first year of portable sawing in this area. I figure that other members can tell you better about the market in your area.
Hope this answers some of your questions,
VA-Sawyer 

Ron Wenrich

How much do you charge for your blade sharpening?  You would have to add that into your variable costs. 

The drawback on charging by the hour is that some folks think you're padding the clock.  Of course, you really don't want to saw for these guys anyways, since nothing will suit them.   :D  Other than that, by the hour would work fine.
Never under estimate the power of stupid people in large groups.

VA-Sawyer

Ron,
I do figure my sharpening cost into my cost of production figures.  I didn't give a total for my costs per hour and I didn't give my 'cost of sharpening' because his figures will most certianly be quite different. He probably should use the WM Resharp plus shipping costs for his initial calculations. I'm just trying to let him know what my 'observed' numbers are concerning blade life in bf and sharpenings.  By the way... 1.2 gph is for my Onan 24 Hp engine with over 3000 hrs on it. "Your mileage may vary".

As far as padding the clock.... well, I can figure my sawing time 3 basic ways. 

1.  My time and mill time straight off the clock. I charge mileage, so the clock starts when I arrive.

2. My time by the clock and mill time by the hourmeter on the mill.

3. My time and mill time by the hourmeter.

I tell my clients when they call, that I charge $60 per hour. I don't go into any detail beyond that on the subject of billing during that initial call.
In practice, I normally use method 2 for most clients. I see it as the most fair for all involved. I tend to not charge for break times or time I spend just in friendly talk. I can be a real talker at times. I will also discount my time some on those days where I'm 'just not with the program' .  I do charge for time spent helping them stack wood or move logs or walking through their woods with them while they are seeking my advice on which trees  are probably worth sawing.  I try to be as fair as I can with this.

There are a few customers that get method 1 billing.  They are real PITA's and I charge for the pain I have to endure while sawing for them.  I keep hoping they will find someone cheaper.  ;D

I also have a few that get method 3 billing.  I even drop my rate for some of them. They are special customers,  usally people I think of as friends first and customers second.  The only reason any money changes hands is to keep it from getting abused. ( Yes, I pay them for the same reason, if I use their services ).

Sawing has become more fun since changing to an hourly rate. Business is up a lot from last year, so appearently the customers aren't having a problem with it.  Those that have their logs ready and good help standing by, are getting a lower cost per bf compared to last year. Those that don't do their part to help my hourly production are still getting a good product with a smile. They just tend to pay more for it. Most, have seen the light, and we are now both happier under the current conditions.
  I could have never started out charging by the hour.  My early rates of production were quite poor. Sawing by the 'good' bf made me focus on quality, not quanity.  Now I can produce a quality product at a fair rate of production. I tend to get compliments on the quality and customers seem to be satisfied with the quanity I'm producing now. I actually have one customer that is hauling logs from 6 hours away because he 'prefers the way I saw". Bringing me the logs isn't his main reason for making the trip up here, but he does bring me logs to saw when he makes the trip.  Customers like him are a pleasure to saw for. 
VA-Sawyer

SwampDonkey

You should factor in a minimum charge per site to. Some 'jilpoles' will have you run all over the country to saw 4 sticks of wood.  Costs time and money to travel and setup and such to. ::)
"No amount of belief makes something a fact." James Randi

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2020 Polaris Ranger 570 to forward firewood, Husqvarna 555 XT Pro, Stihl FS560 clearing saw and continuously thinning my ground, on the side. Grow them trees. (((o)))

treecyclers

I have 3 ways that I price my endeavors for my clients.
1) Flat hourly rate that starts when I drop the mill for set up, and stops when it's hitched back on the truck.
2) Boardfoot rate, which depends on species, volume of logs being milled, and whether or not they're decked in a reasonable fashion
3) For select species, I will do a split output or cash back upon sale. There are only 2 species that I will do this for, Alligator Juniper over 30" DBH and Ironwood over 18" DBH.
I have calculated what my average cost is per hour of operation, down to the penny, which is pretty accurate, and doesn't include my pay in the calculation - it's strictly for the machinery and fuel.
Adding to that my rate of pay ($25/hr) which I divide into minutes, or $.41 per minute.
Rounded out, it comes to about $.75 per minute, or $45 an hour for the whole operation.
I also have a variant for when people bring logs to my shop, which is a 20% discount on the hourly rate, as I don't have to move the mill, and I have everything set up in place ready to cut upon their arrival.
Your output will also have an effect on your costs, as milling hardwoods is a lot slower than softwoods.
I charge a lot more for milling mesquite than I do for milling pine, as I munch a lot more blades and it's very slow going, as mesquite is very hard and dry even when green.
My suggestion? Figure out what the market will bear, what wholesale prices are through the major vendors, and go from there.
On hardwood lumber, 15-40% markup is typical, slightly less for softwoods.
Right now, I get $1.50 a b/f for ponderosa pine 12 and wider, rough, random lengths over 7', $2.00 a b/f over 16" wide, and $3 for over 20" wide.
I figure my cost averages about $.46 per boardfoot, plus or minus a couple cents depending on the price of diesel and gas. Diesel for the truck, gas for the mill.
Figure out the cost of EVERYTHING that you need to mill one boardfoot, and calculate it based on the number of hours that you work.
Write it all down, and work it out.
SD
I wake up in the morning, and hear the trees calling for me...come make us into lumber!

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