Pricing Contract Cutting

[GRTimberCO]

The quick background is about 5 years ago Istated a logging business to supliment my income. I purchased a truck and a 4430 John Deere tractor to skid and load with and did all my cutting with chainsaws. For three years I gave it qall I had time for. Fuel went up and most of the income went to keeping the farm tractor repaired. I saw an opportunity to get out pretty clean and took it.

Recently I've been talking to a couple local loggers I'm friends with about cutting for them in the evenings when I get off work. The problem we've run into is pricing my work. We can't come up with a way to price it by the ton or load because my work will be mixed in with what they cut with the feller bunchers during the day. Hourly none of us know how to price it either. They are used to working semi-skilled labor at a cheap day rate and I'm wanting to work at my convienence, maintain my own equipment, and make considerably more than minimum wage.

Any ideas?

 

[2dogs]

Somewhere between $50.00 and $120.00 per hour. That is assuming you have everything you need including insurance. I would think $85.00/hour would be a good starting point.

 

[paccity]

Somewhere between $50.00 and $120.00 per hour. That is assuming you have everything you need including insurance. I would think $85.00/hour would be a good starting point.

thats about right. last year we were down to 85.00hr , this year it,s a little better so 100.00 to 125.00. is what were getting mostly . sometimes you got to feel it out a little per job. last year was tight so had to lowball it just to stay working. insurance is the real killer.

 

[nw axe man]

thats about right. last year we were down to 85.00hr , this year it,s a little better so 100.00 to 125.00. is what were getting mostly . sometimes you got to feel it out a little per job. last year was tight so had to lowball it just to stay working. insurance is the real killer.

I talked to a guy the other day that told me that L&I in WA is upwards of $16 an hour now. This place sucks for business.

 

[Greenwedge]

penny inch

Penny inch him. It is a wonderfull way to do business, and it is fair for everyone. Just measure behind your hinge, write your measurement on the stump along with tree #. I have made alot of money doing it this way. What is so cool about it is it does not matter what size wood your in, you always make about the same amount depending on your work ethic.

 

[nw axe man]

Penny inch him. It is a wonderfull way to do business, and it is fair for everyone. Just measure behind your hinge, write your measurement on the stump along with tree #. I have made alot of money doing it this way. What is so cool about it is it does not matter what size wood your in, you always make about the same amount depending on your work ethic.

Never heard of it. Great idea!

 

[GRTimberCO]

Penny inch him. It is a wonderfull way to do business, and it is fair for everyone. Just measure behind your hinge, write your measurement on the stump along with tree #. I have made alot of money doing it this way. What is so cool about it is it does not matter what size wood your in, you always make about the same amount depending on your work ethic.

Never heard of this either. What would be a good baseline to start with $/inch?

Thanks for all the replys fellas. Are y'all carrying liability on just yourselves? Otherwise I've got medical onmyself with a couple different life insurance policies.

 

[horseloger]

I do alot of contract work and on a cut and skid job we get .15 cents per board foot on just cutting and bucking job I get 3.5 cents per board foot! I just keep track of my footage as I go and they pay at the end of the week ! After the jobs done all wood is taken up and any adjustments are made to the count .

 

[nw axe man]

Just make sure in your medical insurance contract that you're covered while falling timber. If they knew that you were doing that for a living I'm sure they'd balk at it. You don't want to get hurt and then find out that they won't cover you. If you've already got the life insurance you're OK. If you were going to apply for it you would have to disclose the fact that you're a timber faller. They charge extra per thousand of coverage. You also need disability in case you're knocked down but not out.

 

[warrior350]

Free

All my contracts are free. Project swamp willow is on hold till Monday.
Today I will be falling a acre of old Oaks and a maple aprox 50 big trees in all in Leaburg OR. I will be splitting on site to share fire wood with contractee as part of the agreement. Project swamp willow is a 50 acre fir plantation where all blow downs are now mine. The value of both sites combined is worth about $20,000 of fire wood. I have a private saw mill my friend owns in case I find any more ceders at swamp willow farms.

 

[coastalfaller]

All my contracts are free. Project swamp willow is on hold till Monday.
Today I will be falling a acre of old Oaks and a maple aprox 50 big trees in all in Leaburg OR. I will be splitting on site to share fire wood with contractee as part of the agreement. Project swamp willow is a 50 acre fir plantation where all blow downs are now mine. The value of both sites combined is worth about $20,000 of fire wood. I have a private saw mill my friend owns in case I find any more ceders at swamp willow farms.

Its not really free though! It's still your time and expenses incurred. It's just valued differently. You will find out what it actually cost you at the end. Revenue minus your cost will give you your profit (hopefully!) I track all my costs to the penny/cubic meter, gas/oil, crummies, safety, travel, supervision, first aid, etc. Including admin and overhead. Once you've got a few jobs under your belt you'll be able to go back over your data when pricing new jobs. See where you have to tweak things or not. Can be invaluable.

 

[Gologit]

Its not really free though! It's still your time and expenses incurred. It's just valued differently. You will find out what it actually cost you at the end. Revenue minus your cost will give you your profit (hopefully!) I track all my costs to the penny/cubic meter, gas/oil, crummies, safety, travel, supervision, first aid, etc. Including admin and overhead. Once you've got a few jobs under your belt you'll be able to go back over your data when pricing new jobs. See where you have to tweak things or not. Can be invaluable.

That's good advice. If you don't know what it's costing you to work you can get some bad surprises later on.

A lot of times it isn't the big costs that get you...you prepare for them and recognize the expenditure. It's the little nickle and dime stuff that can just absolutely murder you.

I was like most people...we'd get the log check, pay the bills, and if there was anything left over we must have been making some money. Not so. Not even close.
When we started doing cost analysis I was amazed at how much money dribbled out on "stuff". There's very little actual profit in logging and you have to keep track.

I have a guy that does my books and costs everything out and keeps me informed. What I've saved and the increase in my profits (such as they are ) more than pays his fee.

One caution...if you keep good books and know exactly where your money is going and how much you're really making for the hours you're putting in... you might find out you'd be better off working at Burger King.

 

[coastalfaller]

That's good advice. If you don't know what it's costing you to work you can get some bad surprises later on.

A lot of times it isn't the big costs that get you...you prepare for them and recognize the expenditure. It's the little nickle and dime stuff that can just absolutely murder you.

I was like most people...we'd get the log check, pay the bills, and if there was anything left over we must have been making some money. Not so. Not even close.
When we started doing cost analysis I was amazed at how much money dribbled out on "stuff". There's very little actual profit in logging and you have to keep track.

I have a guy that does my books and costs everything out and keeps me informed. What I've saved and the increase in my profits (such as they are ) more than pays his fee.

One caution...if you keep good books and know exactly where your money is going and how much you're really making for the hours you're putting in... you might find out you'd be better off working at Burger King.

Right back atcha, Bob, good advice! I totally agree, the big costs take care of themselves, it's the little ones that add up and can kill you. I allow for crummy maintenance in my price, but in the last couple weeks I've had 2 fuel pumps, hubs, and numerous other things go wrong, costing thousands. Even though you allow for it, it still hurts and still takes some from the bottom line. Where's the applications for Burger King? lol

 

[Greenwedge]

Never heard of this either. What would be a good baseline to start with $/inch?

Thanks for all the replys fellas. Are y'all carrying liability on just yourselves? Otherwise I've got medical onmyself with a couple different life insurance policies.

When I was penny inching my employer payed me a penny per square inch. He had us measure behind the hinge of all of our trees and we would write the measurement along with the tree # on the stump so he could keep tabs on us. How you do the math is simple. Just x's number into itself and move the decimal point over 2 i think. A 20" tree would be worth $9.00. A 40" tree would be worth $16.00, 50" =$25.00 etc. This is what I made as an employee falling and bucking. If you were tree lengthing I imagine you would have to go with 1/2 a cent a square inch. Beings your contracting and running your own insurance you will need more. I really do not know what to tell you as far as a starting point. There are so many variables....how thick the timber is, what kind of timber you are cutting, how much wedging and or jacking is involved, the quality of limbing they want done, terrain, etc, etc. If you come up with the right price it is just a dandy system though. There is never any question if the wood you turned in is there for they can walk through your strip after its skidded and check your measurements and account for every stump. Peace of mind for the cutter and whomever is employing the cutter alike.

 

[GRTimberCO]

When I was penny inching my employer payed me a penny per square inch. He had us measure behind the hinge of all of our trees and we would write the measurement along with the tree # on the stump so he could keep tabs on us. How you do the math is simple. Just x's number into itself and move the decimal point over 2 i think. A 20" tree would be worth $9.00. A 40" tree would be worth $16.00, 50" =$25.00 etc. This is what I made as an employee falling and bucking. If you were tree lengthing I imagine you would have to go with 1/2 a cent a square inch. Beings your contracting and running your own insurance you will need more. I really do not know what to tell you as far as a starting point. There are so many variables....how thick the timber is, what kind of timber you are cutting, how much wedging and or jacking is involved, the quality of limbing they want done, terrain, etc, etc. If you come up with the right price it is just a dandy system though. There is never any question if the wood you turned in is there for they can walk through your strip after its skidded and check your measurements and account for every stump. Peace of mind for the cutter and whomever is employing the cutter alike.

I sat down last night with a calculator and a pen and played wit hthese numbers some. I beleive you've given me something I can work with and sell. Using the formula for area of a circle (πr^2), for the smaller trees the square inches don't change very much from a 15, 16, 17 inch tree but as you get into the larger trees the number of square inches start jumping in pretty large increments. This works out pretty nice in that there isn't much difference in cutting a 16" and an 18" tree across the stump. Cutting a 36" and a 38" can be two different animals altogether.

On a straight felling job at at .2 cents per square inch a bunch of 16" trees would be felled for $1.26 a piece where as that occasional 36" would be priced at $6.39.. Like you said, if you hit on the right price this could really work.

 

[mdavlee]

I think your math is cheating you a little bit. What pat was saying is multiply say 20x20 which is 400. Move the decimal over 2 spots and that's the cost of the tree. $4 if it's a penny and inch. If it was 2 cents an inch it would $8 a 20" tree.

What you were doing means you'd be cutting a 100 trees a day to make $200 if you had bigger trees.

 

[GRTimberCO]

I think your math is cheating you a little bit. What pat was saying is multiply say 20x20 which is 400. Move the decimal over 2 spots and that's the cost of the tree. $4 if it's a penny and inch. If it was 2 cents an inch it would $8 a 20" tree.

What you were doing means you'd be cutting a 100 trees a day to make $200 if you had bigger trees.

I understand what he was saying and it would be more advantagous for the cutter to do it that way but I don't believe I can sell that, atleast not for just felling trees. That price would be pretty high in this part of the world. I don't know about the rest of the country but fuel is still 4x's what it was 7 years ago, wood is about the same price if not slightly lower, and there is NO demand for pine logs anymore. The two yards that are still buying pine logs are limiting these loggers to 1 load per week. Most all the guys I know skid tree length and keep a saw hand with the knuckleboom to limb anything that want go through the delimber. Most of the logs gets bucked on a bucksaw before being loaded and the limbs go to the hardwood pulpwood markets.

The reason I've been playing with this system based on a mathmatical square inches is that it is more transparent to both parties and gives some wiggle room for both to negotiate with. Some jobs you could make great money at .2 cents per square inch and others I could see you losing money at .3.

 

[earache]

I charge by the chainsaw tank quite a bit. There is a thread on it.

 

[Rick Alger]

I've done this using a tree scale stick. Just wrote down a conservative estimate of the volume of each tree as I went along. Worked out fine.

 

[floyd]

Adding costs into your price is good. Bad part is the money is often NOT put in a seperate account to write the check when the bill comes for the repair.