Very roughly how many cu mtrs of firewood do you sell per year.

[Stere]

Would be interesting to know a guess at the profit margin each cube sold.

[arboriculturist]

3 hours ago, Stere said:

Would be interesting to know a guess at the profit margin each cube sold.

The net margin after tax will barely reach double figures.

 

Many people don't factor in all their time spent on the business and that is often the financial element that when not included makes people think they are in a business with good margins.

 

A lot are in the business because they like the lifestyle it gives them at 'some' times of the year.

 

Edited January 13, 2021 by arboriculturist

[Justme]

1 hour ago, arboriculturist said:

Many people don't factor in all their time spent on the business and that is often the financial element that when not included makes people think they are in a business with good margins.

 

Like the "free" delivery that has a real cost to the business in cash & time.

[gdh]

4 hours ago, Justme said:

Are the £150 & £310 inc or plus vat?

 

If plus vat then surely the delivery alone on 4m3 is worth more than £7.50 per m3 over the trade collect price?

 

Either way your prices look very cheap.

 

Putting it up £10 to £15 per m3 & sell half your volume for about the same bottom line profit.

 

 

 

Domestic loads include vat at 5%. There's not a big difference between that and trade because delivery is basically break even for us. The profit is (hopefully) in the processing side.

 

Putting it up £5 has lost us customers to cheaper suppliers in the past. We've got a loyal ones who stay with us but £10 would be too much of an increase, especially when the oil price is relatively low.

 

I've no plans for a massive increase but if we did increase it by £10-15 I expect sales would be less than half of now and that would have the knock on effect of it costing us more per cube because the machinery, sheds, boiler, loans, insurance etc would be divided over a much smaller amount.

[gdh]

4 hours ago, Stere said:

Would be interesting to know a guess at the profit margin each cube sold.

It depends on what you cost your own time at but if you put it in at a minimum of £10 an hour I think it's about 5% after labour.

[Justme]

4 minutes ago, gdh said:

Domestic loads include vat at 5%. There's not a big difference between that and trade because delivery is basically break even for us. The profit is (hopefully) in the processing side.

 

Putting it up £5 has lost us customers to cheaper suppliers in the past. We've got a loyal ones who stay with us but £10 would be too much of an increase, especially when the oil price is relatively low.

 

I've no plans for a massive increase but if we did increase it by £10-15 I expect sales would be less than half of now and that would have the knock on effect of it costing us more per cube because the machinery, sheds, boiler, loans, insurance etc would be divided over a much smaller amount.

If you dont loose 10% of customers you did not put prices up enough.

 

Yes fixed cost will be split over less units but still more total bottom line profits. 

Locally an m3 costs around £100. 

We too have cheap sellers doing it on the side. Never be the cheapest bloke. You get all the crap clients.

[Justme]

13 minutes ago, gdh said:

It depends on what you cost your own time at but if you put it in at a minimum of £10 an hour I think it's about 5% after labour.

5% is not worth the risk. Might as well gamble in stocks ect 

 

Your 2500m3 in only making your wages plus about £10k.

 

I would make that on about 200m3 after costs and wages. If I sold that much. I far less.

Edited January 13, 2021 by Justme

[gdh]

10 minutes ago, Justme said:

5% is not worth the risk. Might as well gamble in stocks ect 

 

Your 2500m3 in only making your wages plus about £10k.

 

I would make that on about 200m3 after costs and wages. If I sold that much. I far less.

It's not really a big risk at this point, we've been at it long enough to limit most problems. It's not easy by any means but at worst we just wouldn't buy wood back in one year. There's no chance of making a massive loss because we just wouldn't sell if the price crashed.

 

It always looks easy from the outside to make money with firewood but in reality there's a lot of hidden costs that until you try and make it a full time business you don't really notice.

 

It's the old saying of 'if it was easy everyone would do it'.

[arboriculturist]

I have  always advocated a small increase each year, if only to keep up with a 'normal' inflation.

 

That said any published national inflation rate has nothing whatsoever to do with our industry. Look how timber and diesel prices can fluctuate.

 

Kept prices the same this year - god knows why as decent processor grade timber seems to harder to guarantee and efficiency can suffer taking literally 10 times as long to process as correct spec. roundwood.

 

We can all pretty much guarantee, Firewood businesses will go the same way as Farming - far far fewer, larger setups.

[Silverhooker]

None this year as i only supply neighbours, and one has put in under floor heating and the other moved on and the house is empty.

Might have to talk to the wife now as I've run out of excuses to go and cut logs.