The wood we cutand hauled the end of summer was much less as far as overhead so next years price will be lowered
Sign I saw in the office of a sucessful factory this fall that you should always remember:
"Price is not related to cost."
Yes, you need to cover your business expenses or you won't be in business to long. But sometimes that means you sell something for less then the cost of production to get the cash in your hand so you can put it towards something that will give you a higher rate of return.
It also means if you're always pricing yourself at cost + fixed percentage, you're probably not in a good marketing position and/or you're always struggling because you never make more then that little profit limit you set for yourself.
I'd price fuelwood in relation to alternatives -- fuel oil or propane. Traditionally firewood does sell at a large discount compared to fuel oil in my area, even after you adjust for lower efficiency. Call that the convenience discount for having to haul the wood in and tend the fire instead of turning up the thermostat.
But if the cost of oil goes up by 50%...you shouldn't keep your prices the same just because you cut the wood when it was less expensive. Bump the price up by 50% and see if you sell it, if you can't come down to maybe a 40% increase -- which makes it an even better value then before.
But don't leave money sitting on the table just because your expenses were lower!
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Let's put some numbers here:
Right now No. 2 Home Heating Oil sells for $2.46/gallon in my area.
It has 138,800 BTUs in a gallon, but is burned on average at 83% efficiency so you get 115,204 BTUs of useable heat. 115,204 / 2.46 = 46,830 BTUs per dollar
A cord of seasoned White Oak has 27 Million BTUs, but I'll guess the average efficiency is around 50%. That's 13,500,000 useable BTUs. 13,500,000 / 46,830 = $288 per cord as a price where both oil and wood cost the same to heat your home.
At the $225 price point that seems the sweet point looking at ads around here, you're still looking at a discount of 22% less then oil costs -- that's savings in what the person gets in exchange for less convenience then just turning up the thermostat.
Back last January with oil around $3.39, that cord of oak was worth $397. Whack 25% off to adjust for wood being less desirable then oil to most people, that's still $300. I didn't see many people asking that much, it was still mostly in the $225-250 range.
But what's wrong with trying to sell a product based on what the market will bear? Yep, a cord of the best stuff will cost you $300. But it saves you from spending $400 -- that'll leave you a $100 in your pocket.
That's something most businesses, industries, and trades understand well. Farmers, and woodcutters are like them, for some reason seem to like to always do cost + margin -- if they can produce something for less, they default to selling it for less...even when the public is willing and able to pay more. That's a big reason they stay behind the economic 8 ball as an industry...they're always cutting each others and their own throats over how they price their products.
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