Price sawmilling by the cut?

Pricing by the hour, the board foot and the cut. (From WOODWEB's Sawing and Drying Forum) February 12, 2003

I am a prospective sawmill operator from southwestern Ontario. I have been reading a lot on a couple of forums, and have been thinking about various rate structures. Some of you (possibly many of you) may find one idea I have crazy, but it should create discussion. What do you think of charging per cut as opposed to board foot? Example: $2.00 per 8 foot board and if customer doesn't want to pay for board, it goes to sawyer. I know there will be some discussion around cutting smaller boards (2x4, etc.). Size of board and type of wood are definitely factors.

Forum Responses
(Sawing and Drying Forum)
From contributor L:
I think you may very well scare customers with that price. If a 1x6x8 took 2 cuts to free from the log and then to edge, that's 4 dollars for 4 bd/ft. I saw the same board for 80 cents. Not sure many would use your service.

I can buy most lumber cheaper than a buck a foot and by pruching I keep my logs for firewood before paying that. You wouldn't do much good around here (Tennessee), but who knows what the market will bear in your area.

From the original questioner:
Do you edge everything you cut? If you saw unedged boards, do you charge less for 6 inch boards than 12 inch boards? It seems to me that passes of the saw really should determine price. Be patient here and realize that I haven't cut an inch of board yet.

From contributor L:
I have sawed close to 65 thousand feet over several years' time, so I saw very little.

I edge all boards needing edged and all by the bd/ft price when I do it for others. I do think it would be wise to have two prices depending on whether you're sawing 1 inch or 2 inch, but every board seems excessive. In fact, I think it's too excessive to work in my location.

At your rate who would pay for the slabs that come off without making a board? You will have at least four of these on every log. I think any milling operation will do better making things as simple as possible. Make it too complicated or too expensive and you will scare customers away.

Being fair to people and helping them make the best decision when it comes to sawing their logs will get you business. People need to save money or why even bother with your service? Just go buy lumber and not have the trouble or the mess.

From the original questioner:
I was imagining some discussion with customers regarding board feet cut and the time actually determining how much you have cut. I really was thinking of a simple and easy way to charge, but I'm sure you guys doing the work have put much thought into it already. It seemed to me if you were cutting 1x6 you would be getting half the money you would get for cutting 1x12 if you simply charge by board foot. Is that thought flawed?

From contributor L:
You're right, as the 1x12 would make twice the footage. I certainly understand your thinking and agree that anyone doing this needs to make money. However, I think complicating it couldn't be good.

I've been thinking about the same thing. It might work for custom sawing. It would have to be a lot less per cut. It would be a much better guide for blade life, though. I cut an oak log, made 40 cuts 5/8 thick and got 153 bdft. If I made 40 cuts 2" thick I'd get 396 bdft. I might try to come up with a price next time I don't have anything to do.

I charge by the hour. I look at my watch when I start setting up and again when I'm finished packing up. If I have any down time I take that off. Depending on how their logs, their readiness and their help (some choose not to help and some just get in the way) affect how much I cut per hour, I usually average 200-250 bf of 4/4 per hour. $50.00 hour, no setup fee, no different fee for different thicknesses, no time spent figuring up board footage at the end of the day. The only extra charge is for damaged blades. On some jobs I may be able to do better sawing by the bf, but I don't feel cheated if I cut 300 bf an hour on one job, or that I cheated them if I can only cut 100 bf an hour. Can't be simpler that that.

From contributor B:
I'm in Ontario, and I charge by the BF when the customer delivers the logs. I normally explain what I think is the best way to saw them after I've had a look and talked to the customer about exactly what he's looking for out of the logs. I've had people bring logs that I would class as firewood and expect to get grade lumber from. Can't be done! You can't get a silk purse out of a sow's ear. Once you've explained all this, it's up to them. Remember, it's their money. If they want stuff cut an odd way, charge a different rate for it. You have to be up front with people or they won't return and the word of mouth advertising is out the window.

From the original questioner:
Hourly rate sounds simple except for one thing. If I tell people $50 per hour, it might scare them. They don't know what they are getting for that price. I agree that you must talk to them and explain the options and what they can expect to get in return. Many times you might need to explain in terms of equivalent pieces of wood at the lumber yard so they can visualize the value.

If you charge by the hour, you have to work steady and not make any mistakes, as the customer is paying you for every cut, right or wrong. If you charge by the bdft, you only get paid for lumber the customer wants. You don't have to hurry; you can take your time and make correct decisions based on what you see as you open up a log.

You need to establish a system or set of rules to operate by. If you cut by the hour and you saw up 1000 bdft at 200 bdft per hour, it takes you 5 hours and if you charge $50 per hour, youíve made $250. But if you charge by the bdft and you get 30 cents or 35 cents, youíll get $300 to $350 for the same amount of lumber. If youíre new to milling, you may only cut 100 bdft per hour, or less. If you charge $50 an hour then youíre milling rate per bdft is high. And your customer could be upset. But if you charge by the board foot of lumber produced and you make some wrong cuts or wrong sizes, then the customer doesnít pay for the lumber unless he decides to keep it and puts it in the lumber pile, not the slab pile.

Everyone will say itís hard to keep track or count up the lumber at the end of the day. There are two ways to do it. One way is to write down each size of lumber on a clipboard as you are milling it (best way). Or stack the lumber in a neat pile, all rows the same width, and measure the whole pile at the end. (Easy to make errors this way, as sometimes long lumber is stacked with shorter lumber).

In my area custom milling pays 35 cents per bdft of lumber produced not log scale tally.
In your area the rates may be lower and then your hourly rate should be lower, if you charge by the hour. I only charge by the hour when re-sawing old timbers. Except for miscellaneous services like pulling and scanning logs for nails. I charge by lumber produced as most band mills will produce an overrun.

If there are mills in your area, call them and ask them what they charge to determine your rate. If you price yourself too high youíll lose work; if you price yourself too low youíll be loaded with work and wonít be making the most you could. You should get what the market will bear.

I have a list of questions I ask customers, like: what thickness lumber do you want, what widths, do you want it quartersawn, etc. You need to have this written down and include it with your rate sheet, which states each rate for each different thing. For example: I charge extra for quarter sawing, just 5 cents per bdft. But I also charge an extra nickel for wider than 12Ē wide lumber due to the need to cut slower to make nice wide boards. Some people want wide lumber, some donít.

Iíve developed this list of questions based on experiences since starting milling in 94, and getting burned by not stating in writing the charges for extra or different cutting methods and practices. And the rate sheet has evolved also, adding things that were needed and subtracting things that didnít work. But these need to be in writing and shown to the customer beforehand. If he doesnít read them or understand them, then you need to ask him the questions, one by one, and write down his answers on the list. Later if something is questioned you can respond with the answer ďthis is what you told me to do.Ē

There arenít a lot of questions but some need to be answered so that you're sure youíll be making the correct lumber for the customer. It all depends on what the lumber is going to be used for. One customer who wants barn boards will want things sawn a different way than one who wants furniture lumber. Hardwood vs. softwood is also a different set of cutting methods and/or procedures.

Some people will say "whatever you can get out of it." Well, I donít accept this answer and question them more to make sure they understand, up front, that Iím trying to satisfy their need and make what they want and can use. You donít want to mill it all one inch thick if he wants 2by stock for building a shed. And you donít want to make all 2by stock if he wants boards for a fence.

Here is the set of questions I ask the customer for a portable sawmill job:
What thickness do you want your lumber?
Do you want the lumber quartersawn?
Do you want me to make stickers for you?

Do you want me to make blocks for stacking the lumber on?
What widths do you want your lumber?
All evens, or odds too?
Do you want lumber wider than 12 inches?
What is the shortest piece of lumber you want me to save?
What is the width of the narrowest piece of lumber you want me to make?
When edging lumber, would you rather have a long, narrow piece or a short, wide piece?
Do you want me to scan every log for nails?
If I hit a nail, do you want me to pull it, scan and continue or throw the log away?
Where do you want me to put the slabs?
Where do you want me to put the edgings?
Are there any specials instructions you need to give me?

From contributor B:
I agree with everything stated in the post above. This should give your customer a good feeling, knowing what he's getting up front. A happy customer is a return customer.

From contributor L:
I know making money is the issue, but to me the customer's complete satisfaction is the first factor in you, the miller, making this money.

Happy, well-educated customers will bring you other customers by spreading the word about you. Taking the time to make sure they understand the things mentioned above is so important. Customers saying that ol-so-n-so cut their stuff up, took their money and ran, knowing it wasn't suited for the customer's purpose, hurts you fast. On the other hand, it will help your business tremendously when a customer says "you know, he told me this wouldn't work even though we wanted to try, and I ended up saving 300 bucks listening to him."

However, if you decide to do this, remember three things mentioned above.

1. Educating the customer prevents misunderstandings.

2. Prior to sawing is the time to mention things. You will not keep customers happy telling them one thing, then learning you made a mistake and changing your policies mid-stream. If you make a mistake, eat it yourself and learn from it. Move on and remember when it's presented to you again.

3. Always make the best quality product for the best possible price. Sometimes this means slowing down on a wide cut. Even point this out to the customer. Tell him "I have to slow down to make you, the customer, the best board I can." They really appreciate your consideration to them.

From contributor J:
I charge .12 a board foot, but just this week a person brought four red oak logs for me to saw. The butt log had telltale iron stains from nails. Upon closer examination there were two exposed nails and my metal detector found four more areas where the log had built-in blade sharpeners. I had to take all of the logs off of the bunk and remove the log with the nails. I then scanned all other logs but no more iron was found. The three logs yielded 221 bf, which would have been a $26.50 sawing charge, but I rounded up to $40 for the extra messing around I had to do. If things go smooth, I will usually just charge for sawing, but if I have to go out of my way I will round up at my discretion.

From the original questioner:
Contributor B, what do you charge? It must be appropriate for your area since you are getting all the work you want.

I don't expect to get more than I can handle here in Essex County, but who knows. Our tree count is very low and a limited resource. It looks like contributor J works pretty cheap. That doesn't provide much toward equipment costs.

Just finished sawing our own logs on our LT40, bought in October. I'm putting out feelers for custom work. Pricing $.20 bd. ft., 50/50 or $35 per hour. Most seem more receptive to 50/50. We realize we will have to market the lumber. This is part-time sawing.

From contributor L:
David you will do real good on 50/50 shares. Learn a few niche products and you can do great on shares. I'd rather saw like this than charging by the bd/ft or by the hour. Of course I pick my jobs carefully.

From contributor B:
My base rate is $.30 bdft, but I'm flexible. Did eight small 8 foot white cedar for a neighbor a while back and as payment he brought over two 10 foot butternut logs. I got just over 200 bdft of grade lumber from them. It's now air drying in my barn. I believe I came out ahead for a couple hours work on the small cedars.

By the way, I cut through the middle of an old lead bullet in one of the cedars. They came from up north somewhere. Missed the deer, got the tree - a long time ago, I guess.

I also saw for $.30 a foot. Other factors which no one else has mentioned are dirty logs and slab wood. Logs that are coated with dirt can dull a bandsaw blade in short order. Most of the time I reject logs that are extremely dirty. You cannot make any profit if you spend more time sharpening blades than you do making lumber. Slabs are extra work for me, so in most cases I require the customer to retain them.

Out here in the Willamette Valley of Oregon I saw with Mobile Dimension sawmills. They are circle saws with two edger blades. Anyway, I charge $225 m for soft wood (fir); hardwoods range from $235 to $285 m. The fee is for cedars and yew, due to the wear on the shanks for the knock out teeth. I do cut on a 50/50 basis and let the customer select first in the material he takes. For the special adaptive unit I have designed for one of the mills. The "slabber," which is a Lucas Mill attachment that was adapted to the Mobile Mill. I purchased the 60" unit for cutting table slabs out of straight grained logs or crotch wood. For this unit I charge $65 an hour. I just completed a 60" crotch of English walnut for a customer. Each of those tabletops is worth no less that $350 each. Each new customer must come to the mill site before I will saw for them or bring logs to the mill. My intent is for them to see the operation and how it all operates and what my expectations are and to hear what their expectations will be. I demonstrate the mill and explain its operation.

The comments below were added after this Forum discussion was archived as a Knowledge Base article (add your comment).

Comment from contributor A:
There are many other customer satisfaction/profit facters not adressed. Is the sawyer going to handle lumber after the sawing process? Many customers are ignorant about or unable to care for their sawn lumber. I strongly advise, on custom sawing jobs, tat stack and sticker be adressed. Then, should, the educated customer decide to use your labor to acomplish this, there will be less chance of you and others hearing this, "My lumber turned blue, warped, cracked, rotted, etc." Of course, the price goes up.