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Author Topic: A little different type of Pricing Question  (Read 637 times)

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Offline OakSavannah

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A little different type of Pricing Question
« on: December 06, 2017, 07:30:14 pm »
Been lurking here since I dreamt about buying a sawmill, and as of a few months ago I now own a Wood-Mizer.  Learned a LOT here but I am still confused or missing something about BF pricing.  Forget about hourly rates for now, understand that argument fully, but charging a flat BF rate has me stumped.

Say I have a custom sawing rate of $0.50/bf for the sake of discussion.

I get a log brought to me and asked to cut 4 - 4x4X10.  That’s $26.67

Same guy asks for 16 - 1x4x10 from a second log.  Same price but much more work and sawing.

It seems to me – my novice brain here, that charging per square foot sawn – ignoring that 3rd dimension of thickness is accurately reflecting what my saw, and I am actually doing.
What am I missing.  Appreciate being set straight in my thinking.

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Re: A little different type of Pricing Question
« Reply #1 on: December 06, 2017, 07:35:15 pm »
Those little 1x4x10's are easier to pickup... Less work...
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Online terrifictimbersllc

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Re: A little different type of Pricing Question
« Reply #2 on: December 06, 2017, 07:54:59 pm »
...and they're easier to make than for example straight free of heart 4x4s.  But yes you can have situations where the thicker lumber is faster but it isn't always and it evens out overall.
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Offline irvi00

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Re: A little different type of Pricing Question
« Reply #3 on: December 06, 2017, 08:02:26 pm »
Thats why I charge hourly for other peoples logs. If its my logs, and the farther it has to broken down the price per thousand goes up. Charging by time covers blade changes, filling the lube bottle.....etc.

Offline Ianab

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Re: A little different type of Pricing Question
« Reply #4 on: December 06, 2017, 08:47:40 pm »
Charging per bd/ft only works for "standard" jobs. That's normal sized logs, sawn into normal sized boards. Then you can estimate your hourly production, and what you need to charge "near enough". You should always be able to turn a profit on the job, without ripping off the customer.  The bd/ft rate makes it easy for you to estimate the job cost (by scaling the logs) and the customer knows what he's paying per board before you even start.

But if the job isn't "standard", you really have to fall back to an hourly rate.  Some jobs are simple, someone wants 6x6 cedar posts cut from small but tidy logs. 4 cuts and it's done. Or they want "D" logs for a log cabin, again 2 or 3 cuts and on to the next one. You can motor through the bd/ft on that sort job, but you are probably ripping the customer off.  Other jobs are more difficult or time consuming. Over size logs, under size logs, quarter sawing etc can all end up taking more time per bd/ft. Then you end up working for nothing.

Set your bd/ft rate on the cutting 1x4s. You can always give the guy with the 4x4s an "easy job" discount . That's easier than adding a surcharge for the "messy jobs".  For those, you fall back to your hourly rate.
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Offline WV Sawmiller

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Re: A little different type of Pricing Question
« Reply #5 on: December 06, 2017, 08:59:29 pm »
   I have said it before and will again - any pricing method used is fair if it is fully understood and agreed upon by both the sawyer and the customer before the first board is cut.

   I've not seen square ft pricing although many of us, me included, count anything cut under 1" is counted as if it were 1" so in effect that would be square ft.

   I suggest you be flexible in your pricing so you can still be profitable and competitive.

   Pricing I have have seen so far is:

BF - unsawed log or finished lumber
Hourly
By the log
Softwood
Hardwood
Shares of the logs or lumber
Different prices for oversize/overlength logs
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Offline Magicman

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Re: A little different type of Pricing Question
« Reply #6 on: December 06, 2017, 09:21:55 pm »
Except for very unusual jobs, I saw bf.  I make more on some jobs, less on some, but in the end it all averages/works out.

And Welcome to the Forestry Forum OakSavannah.
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Offline starmac

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Re: A little different type of Pricing Question
« Reply #7 on: December 06, 2017, 09:42:41 pm »
Myself, I would think portable jobs would have a lot of variables, especially looking at some of the stuff folks think is ready for a mill.

From what I gather, MM has a pretty good customer base and knows at least some of his customers and how they operate and what they expect. New customers, I would just about have to look the job over in person before pricing it at all.
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Offline longtime lurker

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Re: A little different type of Pricing Question
« Reply #8 on: December 06, 2017, 09:53:57 pm »
I rarely do contract sawing but when I do I got the simplest system: everything is priced on volume.  In my case thats cubic meters but it could be Doyle or some other log scale instead. That way I can price a job without sawing a thing, I don't lose out if the logs are ordinary, and I don't have to worry about a tally of finished wood.

Having figured what it scales I then charge one of three rates:
Regular price for 6/4, 8/4, 12/4 in standard sizes.
Regular price+ 10% for 5/4 or thinner in standard sizes.
Some other number for oddball stuff considering how much headache you bring me.

I disagree with all the guys saying "fair". I run a business and the only fair I want to hear about is fair reward for my time, expertise and equipment aka profitable.
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Offline WV Sawmiller

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Re: A little different type of Pricing Question
« Reply #9 on: December 06, 2017, 09:59:56 pm »
Starmac,

   I often do site visits before starting a mobile job. Partly to look at the quality of the logs but mostly to scope out the best location to set up my mill and train the customer on how to stack/prepare the logs. Sometimes I can do this on the phone and by e-mail. My last job probably did the best job of getting the logs ready and was a real pleasure to saw. I e-mailed him a 1/4" Int'l log rule and our final tally was well in the ball park of what he had estimated and I had advised him.

   I don't think any sawyer would be prudent to only have and use one pricing method.

Lurker,

   When I use the term fair my definition is that both parties knew and agreed to the pricing before hand and there are no surprises. Unfair would include surprise charges such as mileage, set up/break-down, moving the mill once on site, band charges, etc. I consider all these legitimate fees if and when they are discussed and agreed ahead of time.

   BTW - I expect the sawyer to be happy with his income and the customer to be happy with the quality and quantity of lumber he got from his logs.
Howard Green
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Offline Magicman

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Re: A little different type of Pricing Question
« Reply #10 on: December 06, 2017, 10:11:26 pm »
Unless it is very convenient for me, I seldom pre-survey (look at) jobs prior to taking the sawmill.  To do so would be time and a wasted trip because in 15 years of sawing, I have never failed to saw a job.  I did have one that took a couple of hours of backhoe work to clear a landing for the sawmill setup, but I ended up sawing over 10Mbf, so I was well ahead.

I have started having the customer text me pictures of the logs.  It has not made a difference because even pictures can be deceiving, but it is interesting to see them.
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Offline irvi00

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Re: A little different type of Pricing Question
« Reply #11 on: December 06, 2017, 10:17:44 pm »
In my point of view, what you're doing is too complicated. Demand and availability is what drives the price. How much demand for custom sawing and how many people are offering the service in your area? I have to turn away work almost daily because I'm swamped. Literally months behind.

Offline drobertson

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Re: A little different type of Pricing Question
« Reply #12 on: December 06, 2017, 11:26:21 pm »
Welcome savanah, from Beloit! I sure miss coming up that way since the kids moved on, love the brats and cheese! And to your question, I have a question, no not really, just messing with you, I kinda just rolled those numbers you put up, and for the sake of just ball parking, as you said, on log cut into 4- 4x's, depending on the mill of course and a few other potential variables, 5 minutes,. the other log cut and edged into 16 1x4's 10-15 minutes,  so figure the numbers 52 bucks in 15-20 minutes, right? man this is bumping 200 bucks an hour, now before anyone gets all into me about yea but? this and yea but that, as someone said it varies with each job, and with time and experience you will be able to call the shot that works for both parties, you make money, and the customer is happy and comes back, fact is brings more work from others,  pricing by the board foot worked for me, and on some wierd jobs, big clumsy things, well, time and experience will prevail on everyone being happy.. the worst part for both parties might be hitting excessive metal in logs, this bites, good luck and be sure to send some pics as you go along.
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Offline Tom the Sawyer

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Re: A little different type of Pricing Question
« Reply #13 on: December 07, 2017, 12:15:03 am »
OakSavannah,

Over the years, this general topic probably has had over 1000 comments.  It really makes no difference what others do (even your competition), it comes down to whatever you feel comfortable with.  Studying the comments lets you familiarize yourself with the many methods (20+) and, perhaps, find something that seems workable for your situation. 

There aren't that many who vary their board foot rates by the thickness, I am one who does.  Although it certainly is not for everyone, it works great for me.  After a detailed time and yield study, I verified that it does cost somewhat less to mill thicker boards (it is not proportional) and I charge less per board foot.  I also learned that there are circumstances (short logs, small diameter, specialty milling) where board footage rates don't work, so I charge by the hour.

I would encourage you to keep detailed records of your operational expenses, setting fees when you don't know your costs could be a disaster.  You have to pay your costs, the shortage comes out of your pocket.
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Offline Brucer

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Re: A little different type of Pricing Question
« Reply #14 on: December 07, 2017, 12:50:14 am »
When I was sawing customers' logs, I had two prices -- per BF and per hour. The BF rate applied for whatever I sawed (up to 20' long -- longer than that and the price goes up).

More sawing required for 1x as opposed to (say) 8x8. But the same amount of time to load and level the log, same amount of time turning it to square up the 4 sides, same number of passes where the blade was cutting through the surface of the log (more chance of dirt, more blade wear).

For ordinary logs, I gave the customer a simple price structure -- I figure the whole job by the BF, and by the hourly rate. Customer pays whichever price is lower. That way the customer knows ahead of time what the upper limit will be, but also has a chance to lower the price by A) supplying help, and/or B) by setting up the work site to make things flow better.

I always followed the National Lumber Grades Authority (in Canada) rules for measuring lumber -- for anything less than an inch thick, BF would be defined as the length in feet times the width in feet. That compensates for cases where the customer wants a lot of  really thin material. Of course I always spelled out the grade rules before taking on the job.

I had my own rules for non-standard stuff (which I always explained to the customer ahead of time). For example, for a tapered post I calculated the BF of the cant before cutting the tapers, and I upped the BF price by 15%. Experience led me to that method -- same compensation for the time and effort spent as for cutting a square timber.

My BF charge always applied to what I actually cut. Bring me an Aspen log with center rot and ask me to cut it into 1" boards, I'll charge you for the boards, whether there's rot in them or not.

Three things really matter in setting your price: 1) make sure the customer always understands what you're charging and how you will calculate the price. Take your time and make sure he/she really does understand; 2) set your pricing so you'll make enough money to make custom sawing worth your while; 3) don't try to figure out your "profit" on each job -- it can't be done. Figure out instead how much money you made on several consecutive jobs and adjust your rates as needed..

I like to keep things simple. Two many kinds of calculations and your customers will get lost in the numbers. That leads to misunderstandings, which leads to bad feelings.
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