Andy how are you doing,have not seen you around much,I imagine you are pretty busy.I have not seen your son in law on here for a long time either,how is he doing. Good to see you posting, Dave
is your wood pricing viable, with increased fuel cost's
- Thread starter TMFARM 2009
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Andy how are you doing,have not seen you around much,I imagine you are pretty busy.I have not seen your son in law on here for a long time either,how is he doing. Good to see you posting, Dave
Junkrunner
ArboristSite Operative
I was doin alittle figurin, a quart of 2-stroke gas and less than 1/2 gallon of regular, I can easily work-up a full cord of wood. I've got countless cords out of 1 saw chain and wedges. I just don't see where a big price increase is justified. It takes a "collected" time of roughly 2 to 3 hrs for 1 cord, from the woods to the ready to buy pile. Now the delivery fee I can see adjusting.
I've bin burnin wood for heat as long as I can remember and I've bin sellin wood on the side steadily for last 5 yrs. I usually end-up refering other people, if i'm at my limit. There's no shortage of customers and no shortage of people sellin..
If the price goes much higher it would be just as cheap to burn fuel oil, gas or electric..
If gotta buy a wood stove, put up a chimney, pay a premium on your homeowners policy THEN buy the wood too... I don't see where you would save anything... Plus the added labor??
I've bin burnin wood for heat as long as I can remember and I've bin sellin wood on the side steadily for last 5 yrs. I usually end-up refering other people, if i'm at my limit. There's no shortage of customers and no shortage of people sellin..
If the price goes much higher it would be just as cheap to burn fuel oil, gas or electric..
If gotta buy a wood stove, put up a chimney, pay a premium on your homeowners policy THEN buy the wood too... I don't see where you would save anything... Plus the added labor??
flyboy553
Oakaholic
For me, cutting firewood is a hobby. I burn around 12 - 14 full cord a year and sell somewhere around 50 - 60. I haven't sat down and figured fuel costs out, but I have thought about it as I watch the fuel prices rise - 3.69 in our town yesterday, up 25 cents in a day and a half. This, on my way home from sealing a deal to supply 3,000 bundles of campfire wood to a campground for a set price! lol
A guy who runs a late model dirt track car certainly has no illusions whatsoever of recouping his money from the ultra-spendy sport, but yet he keeps going year after year.
My advantage is that I at least get some of my investment back, whether it be in heat form or in cash sales.
Ted
A guy who runs a late model dirt track car certainly has no illusions whatsoever of recouping his money from the ultra-spendy sport, but yet he keeps going year after year.
My advantage is that I at least get some of my investment back, whether it be in heat form or in cash sales.
Ted
Dalmatian90
Addicted to ArboristSite
Fuel oil is running $3.82/gallon in my area right now.
Firewood would need to be $600/cord before oil is cheaper.
It already sells a steep discount here -- $225 for a seasoned, all-oak cord here seems fair; you can certainly find them down around $185 if you look.
Less then half the price of oil makes up for a lot of labor and dusting.
blackdogon57
Addicted to ArboristSite
Think of firewood as a commodity that shadows the price of other fuels. Price of diesel here is Ontario is over $5.00 a gallon. Guys like me who buy and process semi-loads and re-sell cord wood are getting dinged by both the loggers and the truckers as their costs rise. It also costs me more to process and deliver wood. My cost to buy,process and deliver one cord of wood is a little over $200. I sell between 350-400. As the price of oil and gas keeps rising so will the price for firewood in colder climates where people rely on wood as a source of heat.
Well put....:msp_thumbup:
its all about the 2.5 rule for profit!!
TMFARM 2009
Addicted to ArboristSite
i see that this topic falls on deaf ears, for the most part..if fuel prices soar upward so does everything else....that gallon of milk that is $3.00 a gallon is now $5.00 a gallon and so on, the problem is once the oil companies get you used to paying more money they are not going to let up... there fore the natural gas electric and fuel oil will all increase too...for those who dont think it will just keep your head in the sand.... the rest of us will be ready to adjust pricing accordingly
so we can keep operating...
the whole reason i posted this thread is that the last time fuel came up to this level, i seen a lot of people go belly up in business...including our hay operation...we hadn't bought and locked in a price for fuel, it cost us double for the years fuel expense and at the same time had a drought,it closed us down...
we still have other business's thriving but some will be hurt deeply.
i know some logging companies struggling in this economy,your firewood buis, may also if you aren't careful..:msp_wink:
so we can keep operating...
the whole reason i posted this thread is that the last time fuel came up to this level, i seen a lot of people go belly up in business...including our hay operation...we hadn't bought and locked in a price for fuel, it cost us double for the years fuel expense and at the same time had a drought,it closed us down...
we still have other business's thriving but some will be hurt deeply.
i know some logging companies struggling in this economy,your firewood buis, may also if you aren't careful..:msp_wink:
freemind
ArboristSite Guru
Your words have not fallen on deaf ears....
I was selling a "pickup load" of wood for 50 dollars. In Indiana, most people selling here, sell "truckloads" and "ricks". A rick is about half a truckload.
Those ricks have been selling at 65 bucks.
Everything is getting more expensive. Feeding me is getting more costly too, not just the firewood equipment.
If people want firewood, they will have to pay MORE, or I will just burn it for myself. In all honesty, I will likely increase my price 50%. If I can't get 75 bucks for a truckload, no sense even wasting the time to deliver it.
TMFARM 2009
Addicted to ArboristSite
one of my points is that we should get paid more for what we provide to the people who dont want to get dirty and work hard for it....and yes i have seen o cl, that farmers are selling $50.00 truck loads of wood.... some landscapers are too..
that is the nature of the firewood biz. lots of knuckleheads doing this for a 6pack a day.
Also lots of people who do it on the side and don't know what their time is worth nor do they figure in the cost of the trucks and saw's they use (does, "my trucks paid for" sound familiar?) These guys have ZERO idea what it takes to run a business. If you want to sell wood and you don't know what to price it at. imagine you were paying an employee a wage to cut/split/stack/load/unload it. How much did it COST YOU TO PRODUCE THAT CORD? keep in mind that's only some of the direct costs, you have indirect costs like the truck, trailer, insurance, workmans comp, property tax, etc.
I challenge all you guys out there to run the numbers, see what it comes back at. Garundamntee you'll surprise yourself. The guys that ARE going to make money are the ones running processors and multi wedge machines (ok, maybe a couple super splits too). You CANNOT make viable money doing this with a single wedge machine you bought for $1300 at TSC and a strong back. Ultimately you need speed and power to get it done right. that includes not handling the wood any more than once until its ready for delivery. every single time you bend over to pick up a piece of wood before its going out on the truck for delivery you just cost yourself more money.
If you want to make money then you need equipment, that ain't free, but I betcha it's a lot cheaper than employee's handling wood many times over in the long run.
TMFARM 2009
Addicted to ArboristSite
i see some one here that has done the numbers!!!!!
BlackOakTreeServ
ArboristSite Guru
Here CA, I sell oak for $300 a cord with $15 dollar delivery fee up to 15mi. yep, I get 315 a cord!
With gas going up like a wild fire, I will charge a bit more for delivery fee.
With gas going up like a wild fire, I will charge a bit more for delivery fee.
redprospector
Addicted to ArboristSite
Hey there Dave,
Doing pretty good. The nature of my business has always been feast or famine. Right now I'm in the feast mode, so I don't have a lot of time to "hob nob". I may be on here a little for the next few days because I'm waiting for parts.
Romeo's doing pretty good too. He got a "promotion" at work that dosen't involve internet access. He's on and off once in a while though I think.
Andy
redprospector
Addicted to ArboristSite
I can't believe I just spent 20 minutes typing up the way I figure a maintenance & replacement schedule for my equipment, and my login timed out or something cuz when I hit "submit reply" It told me I wasn't allowed to post & to log in. :msp_angry:
Maybe I'll do an abreviated version.
Andy
Maybe I'll do an abreviated version.
Andy
redprospector
Addicted to ArboristSite
Ok, I'll try this again.
What everyone else in your area is getting has nothing to do with pricing a product. You have to know what you have in it to be able to make a profit.
Most in the firewood business will have at least 3 saws, a splitter, a truck or 3, and a trailer or two. You need to figure out what the useful life of each piece is using a unit of measurement like hours or cords, or whatever you choose. Then figure a realistic replacement cost for each. That will tell you how much an hour/cord/? it cost you to own the equipment. Use a realistic new replacement price, not what you paid for it.
Then figure your maintenance cost. Let's say you've got a tractor that you change the oil in every 200 hours, and it cost $100 to change it. That's $0.50 per hour it cost you for keeping the oil changed. Then you have to figure in for probable break downs, tires, etc.
These figures don't include fuel, and labor. That get's added in at the end.
I run 70 to 80 cc saws, and the figure I use for maintenance and replacement is just under $3.00 per hour. That's not counting fuel and bar oil.
It cost more than most think.
Andy
What everyone else in your area is getting has nothing to do with pricing a product. You have to know what you have in it to be able to make a profit.
Most in the firewood business will have at least 3 saws, a splitter, a truck or 3, and a trailer or two. You need to figure out what the useful life of each piece is using a unit of measurement like hours or cords, or whatever you choose. Then figure a realistic replacement cost for each. That will tell you how much an hour/cord/? it cost you to own the equipment. Use a realistic new replacement price, not what you paid for it.
Then figure your maintenance cost. Let's say you've got a tractor that you change the oil in every 200 hours, and it cost $100 to change it. That's $0.50 per hour it cost you for keeping the oil changed. Then you have to figure in for probable break downs, tires, etc.
These figures don't include fuel, and labor. That get's added in at the end.
I run 70 to 80 cc saws, and the figure I use for maintenance and replacement is just under $3.00 per hour. That's not counting fuel and bar oil.
It cost more than most think.
Andy
Yep, that puts me in the firewood business alright...
In more than one business, I have seen owners operate with no regards as to the replacement cost of their equipment. Take towing for example. Man goes out and drops $25k on a well used rollback, puts his name on the side and he's in business. To get the tows he contracts out super cheap to AAA or the likes and runs making just enought to cover fuel and a small wage. 200k miles later that used truck is super used, and there is nothing in the till to replace it. There is no point in being in any business if you are just trading dollars.
When I first started in the business I priced my product on the low end to get the phone to ring. Not so low as to cost me money, but at the end of the day I questioned if it was worth my time. Now I price my product right where I want it to be profitable, and care little about the prices of others. Guess what, the phone still rings..:cool2: I have a quality product, good customer service, and a loyal following. That and I really do like the business which is perhaps most important....:msp_thumbsup:
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Dalmatian90
Addicted to ArboristSite
Redprospector had a very good post (need to go back and give his some rep love).
I'm going to take a slight quibble with how he phrased that first line, though.
A few years back I was doing some work in the nicest manufacturing plant I've been in -- and on the wall in their finance department was a sign, "Price is not related to cost."
There's a lot of folks who do firewood who start off with just their cash costs and add a little bit to it to come up with a cost. As MN & Red said, you're not getting ahead doing that.
You need to understand your costs for certain.
Pricing comes from both value you provide customers, and constraints in your market.
Firewood tends to be driven by price restraints from folks selling it for way less then the value of the product -- we're at about 1/3rd the price per BTU compared to fossil fuels right now.
Look at Oil, Propane, and Natural Gas for contrast -- there may be minor pricing differences or short term spikes for one or the other, but over time they all track each other closely in price-per-BTU.
They realize even if their costs don't change, the value to their customers does and they change their prices to take advantage.
Meanwhile, oil can double in price and firewood barely moves in price because there's so many beer money producers out there figuring price not based on value to the customer, but based on cost plus a little.
And they don't even figure out cost as what an on-going business needs, just what they need to buy toys or beer. Since fossil fuel (gas, oil, etc) is a relatively small part of the cost, fuel spikes don't drive up cost per cord proportionally.
There's other folks who honestly feel guilty about charging by value and not simply taking their cost and tacking on some presumed fair level of profit (well, if it costs me $1 to produce, I'll charge $1.20...). They leave fair money on the table when the alternatives to the customer all cost $3. You could charge $2 and still provide tremendous value to the customer, and make enough profits to re-invest in your own business.
That's creating a situation that wood is an enormous bargain right now and darn challenging to make a decent profit.
I Bumped Mine a Tad...
I raised the price of my bundles this year to $4 each, up from $3.50 last year. Customers can get the unit price down by buying two bundles for $7 and three for $10.
Next year's truckload price may have to go up also. If fuel prices go up, everything else usually has to, and that includes firewood. I'm already stretched out on cost reduction as far as I can go.
The ragheads have us by the throat. :bang:
I raised the price of my bundles this year to $4 each, up from $3.50 last year. Customers can get the unit price down by buying two bundles for $7 and three for $10.
Next year's truckload price may have to go up also. If fuel prices go up, everything else usually has to, and that includes firewood. I'm already stretched out on cost reduction as far as I can go.
The ragheads have us by the throat. :bang:
