Considering increasing our Firewood prices

[arboriculturist]

1 minute ago, richardwale said:

Had a call yesterday from a customer I sold to last year for the first time. Her boiler had packed up and her usual log man was out of contact. Anyway she called yesterday to order some more hardwood and I said prices were the same as last year and I'd ring her later with a delivery date. Called approx 4 hours later and she apologised and said her husband had managed to contact their previous log man and he was delivering 2 cube of hardwood for £120. wish I knew the bloke as I'd buy everything he had at that price.

As long as we live there will always be someone selling for less and customers come and go.

All you can do is produce the best product you can, promote it and offer a reliable service.

We have always focused on the top end of the market like Woodworks and others, it's worked well.

Sometimes people request lower cost and they have softwood.

[gdh]

1 hour ago, Big J said:

Out of curiosity, out of the £100 (to use that figure), how does that break down? In terms of raw material cost, processing cost, delivery cost and profit?

 

I only ever played at firewood production, but found that the most irritating part of it was delivery. I offered quite large discounts if people collected. 

 

At the end of the day, to produce a full trailer load (7 cube) only took about an hour and a half on the processor, but usually at least 2 hours to deliver. 

 

The last load we had into the yard was quite dry spruce from a windblow site. It was £40 a tonne delivered in (cheap now, I know) and the breakdown was this:

 

Per cubic metre:

 

£12 - cost of spruce

£4 - wages for processing

£2 - electricity/diesel costs for processor and forklift (estimated)

£6 - wages for delivery (based on 7 cube load)

£2 - cost of fuel for van for delivery

£3 - yard costs (based on the above work taking half a day)

 

So £29 costs on a £55 sale price. On a 7 cube load you're making £182 profit per half day after all costs.

 

I appreciate that the raw material costs are quite a bit higher now.

 

I would agree that delivery is where you can loose money very easily which is why we try and do big loads and just tip it out but when you go further it still wipes out any profit.

 

I've got a list on my computer of costs per 1.8cube (our smallest load) like that and it's surprising how many hidden costs there are;

Hardwood £62

Labour including stacking etc £11

Processor £5

Loaders

Box rotator

Transport from timber stacks 

Sheds (at some point they need rebuilding) 

Chains 50p

Tractor for processor £2

Bars 20p

Insurance 

Diesel £1

Storage boxes

Advertising /website 

Pickup

Trailer

Repairs (the biggest variable and easy to loose a few thousand) 

Servicing machines 

And interest on a few massive loans...

 

I'm not going to do all my figures but it gives you an example and I probably missed a few without looking at my list.

 

 

[arboriculturist]

That's a good list.

Everything breaks occasionally, just a massive processor blade return spring went under 12 mths old - £ 130, everything goes wrong occasionally and definitively wears out!

It's looking like my £30/ m3 margin looks fairly accurate.

Not forgetting the 5% vat that has to be adsorbed per m3, where small suppliers don't.

It all goes with the territory, so have to take it on the chin.

Diesel price increase is a killer though when you are running flat out for days on end and the increased delivery fuel costs.

We rarely deliver unless the truck is full or very local. Offer incentives to take full vehicle load, people like a saving.

I would be interested to hear Ash's, Alcydyons and Charlesgraves  view on production costs, as I think they are high volume producers.

[Big J]

Repairs are a big one certainly. I reckon I spent £100 a week on average on fixing things that would routinely break. Sometimes more. 

 

 

[ash_smith123]

They've been saying that for several years.  It still keeps coming in though.  You are probably still right mind

There's been hardly any hardwood available in South Wales this year! The last couple of softwood loads came in as "chipwood" with 5/10% ash in it. They are just not separating it at roadside. Heard from a few people Euroforest are sending pretty much every scrap from around here to as biomass plant in Kent to avoid massive failer to supply fines. CW are even struggling to find it. Softwood it is then!

[arboriculturist]

2 hours ago, ash_smith123 said:

On 04/08/2018 at 07:45, Steve Bullman said:

They've been saying that for several years.  It still keeps coming in though.  You are probably still right mind

There's been hardly any hardwood available in South Wales this year! The last couple of softwood loads came in as "chipwood" with 5/10% ash in it. They are just not separating it at roadside. Heard from a few people Euroforest are sending pretty much every scrap from around here to as biomass plant in Kent to avoid massive failer to supply fines. CW are even struggling to find it. Softwood it is then!

That is why I have now put our prices up.

 

The supply situation is only going to get worse and it will be a question of who you know if you are to maintain continuity of supply.

 

I know smaller buyers who have been waiting for months now.

[SbTVF]

Luckily we secured ourselves a good supply this year and have plenty in with more coming almost weekly but the price have gone up £10 ton in the last 12 months because all the agents know how in demand it is and are expecting more.

Prices going up accordingly of course but I’m expecting it to have to do so even more in not too long!

[ash_smith123]

Yes had a load of ash in at £70 a ton..softwoods £55 now too but luckily it's been so dry the chipwoods coming in at 15% when split [emoji106]

[ash_smith123]

Yes had a load of ash in at £70 a ton..softwoods £55 now too but luckily it's been so dry the chipwoods coming in at 15% when split [emoji106]

[Chalgravesteve]

My business model is different to most, in that firewood is a secondary business for me. My main business is a golf club, so I have 5 greenkeepers who are already employed anyway, but they have substantially less to do in the winter than they do in the summer. Well, they did. Now they are bloody busy all year! So, my initial set up was always based upon the fact that I don't have any staff overhead as they were already being paid anyway. I also owned most of the equipment, I've got 2 processors now though so I've spent a bit there. I also have an RHI kiln and we process arb waste, selling it in barrow bags not loose bulk.

 

However, I do consider the real cost of producing the bags, and whilst we have incoming arb waste free, the wages costs are higher because its much slower to process and needs more manual handling, to process it, get the bulk wood into the kiln, get it out again, pack into barrow bags and deliver it. Our kiln dried product is a stovemix and will be absolutely anything, but we always make sure that every bag contains hardwood. We do process some really big chunks though, which could mean that an entire bulk drying cage can be filled with the same tree which might be a softwood - so we keep a stock of pure hardwood to mix in if need be. I dont sell pure hardwood except in nets which I buy in and sell to people who want to collect and they can't collect a barrow bag because of the size.    

 

My barrow bags are 50x50x100 so 4 = 1m3 and because we are essentially handpacking, as I don't want them to sag and fall over on the truck, I know that three of my bags is roughly 1m3 loose. 

 

I sell 1 bag delivered at £49.50, 2 at £47, 3 at £44 and 4+ at £39.50. I know 4 bags are a proper 1m3 and I sell that then for £158 - £198.00.

 

My market is not the loose load 2m3 customer. Mine is the customer who doesn't have that much space to store it, wants it delivered in a nice clean back, to the log store on a sack barrow and left in the bag so the customer doesn't have to get their hands dirty.  They don't want to pay the £7.99/£9.99 for crap seasoned logs from a garage forecourt though. I've got an 85% returning customer rate. They buy and they keep coming back and buying more, plus we keep getting more new customers. 

 

I'm fortunate that I have a very good head of population in my area, and excellent road access, so deliveries are easy within a 15-20 mile radius. I've got 6 bags on the truck to deliver now, its a 24 mile round trip to 2 destinations and I expect to be back in about 45mins to 1 hr.

 

I am looking at the prices though, and what I will probably do, is leave the 1 bag price as it is and increase the multiples slightly and the 4 bag+ price to around £41/42 if things start getting to tight in my view.