What do you all figure it cost you to put out wood ?

[TaylorJohnson]

What do you all figure it cost you to put out a cord of wood ,, or a 1000. Just wondering . I know there are some variables but just a rough idea. Taylor Johnson

[Carl Russell]

I figure I need to make $200-$400 per day when I am working in the woods. That being said I have worked many days for less than $50, and broken equipment.

I figure depending on the size of the timber and length of skid how I will price a job. Big timber, short skid, I might produce 2mbf/day = $150/mbf, possibly as low as $125/mbf. Small timber, long skid, 1mbf/day = $200/mbf.

Cordwood is hard because it isn’t worth what it costs to haul out, but I can’t cut and skid wood for less than $50/cd.

I can’t afford to work days longer than 6-8hrs in the woods, with all the other chores and farm work I have going at home.

Carl

[Scott G]

Taylor,

This is a big question that many loggers/forestry contractors face. The short answer is along the lines of what Carl mentioned. Know what you need to make in a day, know your production, and see if the value of timber/services gets you where you want/need to go.

The problem is that so many people wing it and don’t account for all costs, depreciation, and realistic production. To know your costs and average production rates are paramount to surviving and hopefully thriving. To do a job at or below cost is at best just buying work and at worst subsidizing the project with your resources.

You need to account for all operational pieces of equipment such as saws, trucks, trailers, that new forwarding trailer you got, etc. Your horses, although not “equipment” need to be factored in the same way since they are basically the “base machine”. These costs include direct & indirect as well as fixed and variable. Very basic examples include items such as gas, oil, maintenance (including your time for maintenance), repairs, transportation, feed, shoes, rigging gear, and on & on & on. It takes a serious introspective look and time to do it right. The principles of business are the same regardless if you’re a horse logger or a plumber. You have to look at every aspect of what you do in detail.

Depreciation is something many folks completely overlook. Even though by strict accounting terms you can expense out something like a saw rather than depreciating it, you still need to account for that replacement value in your hourly operational rate to accommodate a replacement when it wears out. If you don’t, you are running that saw for free. Again, the same goes for your truck, horse, etc…

Finally, even though it is elusive to most loggers, you need to factor in a profit. Profit is not your wages. You are an employee of your business. In order for the business to survive at a static level, let alone grow, there has to be a profit margin built in.

Production estimation requires a high degree of honesty to one’s self. You need to factor in all your time which in turn needs to be accounted for and paid for by your productive time. You spend 8 hours in the field. How much of that time is spent working on other stuff than cutting and skidding? The other time doesn’t make you money but is still required for running and maintaining your business and you still need to make your wages. When I calculate a reasonable production rate/time I will then place an additional “get real” factor on it by reducing it to 80%, for example, to incorporate bad weather, bad days, unexpected circumstances, etc… This method has proven decent enough for me; I’ll vary the percentage depending on the situation, job, season, etc.

One of the most useful tools I have is a calculation spreadsheet that was developed by R-6 of the USFS for calculating stumpage rates. It is machinerate.xls and I used it extensively when I had my large mechanical operation as well as currently for my horse logging business, calculating out delivered biomass energy costs, rates for subs, contract budget estimation, etc. You can input any type of harvesting system that you want from a full blown mechanical CTL operation with a harvester & forwarder to a guy with a saw and a guy hand piling slash. You could take this and enter everything that you use from a saw to a horse and after customizing the cells for your purposes, come up with exact projected costs on a per unit basis whether that is CCF, MBF, Ton, etc.

When I have time…. I am going to completely customize the spreadsheet to accommodate a horse logging operation. Once that is complete I will make it available to anyone who wants it at no cost. Being someone that has learned the hard way I am a firm believer in accurately estimating costs and revenues. In my opinion, this type of information is essential to surviving, and ultimately thriving, in this business. You have to know your costs!

For now, if anyone is interested in getting the normal version of machinerate.xls and modifying it to their needs e-mail me and I’ll send it to you. I’d post it here but the forum does not support Excel files. There is a good tutorial and examples on the first few worksheets explaining how to customize it for your application. I’d be happy, however, to help out with hints after you get started.

Take care,

[Carl Russell]

Thanks Scott, there is a lot of background behind my comments. I also wrote a business plan before I got started including all of the detailed analysis that you mentioned. It just has been so long that most of my appraisal is now just second nature.

I am always amazed in the logging business how many operators just work on figures that have been handed to them. There’s no wonder that competitive harvesting rates are so low in some areas, as many machinery operations just use economy of scale to keep cash-flow up to hide the fact that they are losing money every hitch. No wonder our forests are in such poor condition, and the logging profession is seen akin to the old pig farmer.

I think it is really important that horse-loggers learn to take advantage of the low production of the typical animal operations to limit the need to move rapidly from one job to the next, so that the jobs taken are affordable. Essentially because we can’t use economy of scale to make up for losses. But I also believe that if horse-loggers learn to think about their logging operation in calculated economic terms and present themselves as professionals, then the whole of us will benefit.

Know your costs, be able to clearly describe them, present yourself as a professional with a valuable service, and get paid what you deserve.

Carl

[Gabe Ayers]

This is a great “loaded” question, pun intended on the loads one may extract
per skid.

Just as with every question and situation everyone has their own take on it.

What does it cost to operate means different things to different folks. The
deep analysis used by Scott is appropriate and will surely be a part of the future of developing this work to be a wider chosen method.

For some the question is about how much hay, grain, saw gas, maintenance cost, and all the details that come out of the value of the products with the balance being the profit. That is a good model.

However, I must submit that these models are lacking a “quality of services” evaluation. The common way of buying standing timber through a bidded process lacks the same “quality of services” aspect. Given that we all know we will never compete with machines and hopefully we are all accepting that reality and customizing our approach and prices for quality services to reflect the difference our style of harvesting or forest management offers landowners.

It is this “Quality of Services” factor that makes our services superior to many landowners and how we refine/define that aspect will play a greater role in our future “business” than is commonly understood or practiced.

That is the position we (HHFF) have held, promoted and practiced for a long time and continue to refine.

For instance – I suspect it is difficult to include reduced erosion in a spread sheet, or enhanced residual aesthetics, fire risk reduction, reduced fossil fuel usage, increased productivity of the residual stand, education of the landowners about the value of the ecological services the forests provides and the many commonly not quantified values of the theater of our operations or the community forests. How do we account for the opportunity cost of this lifestyle choice? How much is personal independence worth?
What is the price for human dignity?

These values may be the greatest of our services and aren’t easily accounted for in a conventional approach.

This response is in no way intended to reduce the value of the accounting of costs of operations and details precisely lain out in Scott’s spreadsheet program – we will definitely download and employ that program. It is just a suggested addition to the way we may describe and define our work as being potentially greater than the numbers available from a sharp pencil analysis.

On the contrary this response is to keep the sharp pencil approach from reducing the values of our services to a spread sheet precision only. The point is that there is more to this work than is commonly accounted for and those values could be the tipping point information to access the best quality sites for those practitioners that provide the most superior services.

The demographics are so dramatically different in different parts of this country and the world, so adjustment of our definition of services will be more important in the future.

Thanks for asking the question Taylor and for all of those invested in sharing this thinking with anyone interested enough to find themselves reading these pages.

[Carl Russell]

Biological Woodsman;10980 wrote:

… The point is that there is more to this work than is commonly accounted for and those values could be the tipping point information to access the best quality sites for those practitioners that provide the most superior services. ……

And there are also non-tangible rewards to the work that are not easily accounted for in typical terms as well.

[Scott G]

Carl,
I too have a good mental picture of my current costs as to where I need to be in order to make it work. Usually on small service contracts, I can provide a quote/bid on the spot because I already know my current costs based on an hourly basis. If it is a small sale, a simple cruise and working the same numbers on a piece of paper will do. I do, however, go back to the ‘puter to check on numbers periodically or when anything major changes. The rest, as you know, comes from experience; Access, length of skid, topography, forest cover/timber type, landowner attitude, etc. all go into figuring out the final number. The same end result is the amount of resources and time needed expressed in dollars plus my wage.

Jason,
What I was explaining were outright realistic operational costs for the business. There is no question on why we do what we do and the values other than financial that we benefit from. The reality is, however, if you do not know your true costs and do not plan for sustainability through depreciation and a small profit (hopefully) you are going in completely blind and entering a very high risk situation. Those of us that have been doing this for awhile have a pretty good handle on this, even if the numbers were just ruminated on in our heads. However, if you find yourself with horses past ready for retirement, a dead truck, and you’re paying for fuel & feed out of your personal wages, the simple truth is that you are screwed. Business is business regardless. The ethics, superior services, etc. are the values that set a business apart from the rest. From a horse logging perspective, the superior low impact harvesting is a higher value service that is (or should be) shouldered by the landowner, not the logger. The landowner realizes benefit from the superior service and hence is expected to pay more for it. Whether that increased value is compensated for by a higher hourly rate, decreased stumpage rate, first right to return on a sale due to your investment, or being first on the list for referrals; it is the value that builds your business. There is a big difference between value and cost. If a logger truly does not know what his financial costs are and he is bidding out a superior service without solid numbers, he is walking on extremely thin ice.

In order to provide all of the benefits and services that we all know exist from an animal powered harvesting system, and enjoy their life at the same time, the logger needs to be able to stay in business and not starve in the process or end up in a financial apocalypse.

My thoughts,
Scott

[lancek]

Yea this is all true but how do you sell this to the customer!Very few land owners look beyond the high bid and do not realise the inportent inpact that our type of logging has to offer

[Scott G]

Treat potential bids the exact opposite of how we practice sustainable forestry…

Take the best & leave the rest.

No job is worth going broke over. As horse loggers we are in short supply, find your niche and market the hell out of it.

There are people out there who want your services and are willing to pay for a quality job. Going for the high bid on stumpage or low bid on service is an exercise in futility. We just need to think a little outside of the box and be a bit more picky about the work we take on…

[cousin jack]

@Scott G 11029 wrote:

Treat potential bids the exact opposite of how we practice sustainable forestry…

Take the best & leave the rest.

No job is worth going broke over. As horse loggers we are in short supply, find your niche and market the hell out of it.

There are people out there who want your services and are willing to pay for a quality job. Going for the high bid on stumpage or low bid on service is an exercise in futility. We just need to think a little outside of the box and be a bit more picky about the work we take on…

The problem is getting started though and getting a good reputation. The only way I could get going was to buy the standing timber and sell for firewood, meanwhile the wood owner has got me piling up all the brash, doing this and that, which is costing me time and money. Now, because firewood prices are rising he wants to charge me more for the standing timber, it’s hard work as you all know, but he just see’s what firewood is selling for to the end user and what I pay him, he dos’nt seem to equate the time, skill, sweat, fuel, repairs,haulage. What I am trying to say though is I have to put up with this to get going, and I am “winging” it at the moment, grateful for advice though 🙂

[Carl Russell]

cousin jack;11030 wrote:

The problem is getting started though and getting a good reputation. The only way I could get going was to buy the standing timber and sell for firewood, meanwhile the wood owner has got me piling up all the brash, doing this and that, which is costing me time and money. Now, because firewood prices are rising he wants to charge me more for the standing timber, it’s hard work as you all know, but he just see’s what firewood is selling for to the end user and what I pay him, he dos’nt seem to equate the time, skill, sweat, fuel, repairs,haulage. What I am trying to say though is I have to put up with this to get going, and I am “winging” it at the moment, grateful for advice though 🙂

There definitely is a period of time for paying dues. I also started out with a sense of apology for not knowing all that I thought I should. That goes for services that I might been able to provide, as well as skills that I required to be efficient and therefore profitable.

The point is to be clear about your actual cash expenses, so that as you are learning you can see what that learning is costing you, but then as you gain experience that equates to services then bring the charges in line with the expenses.

There is also a need to work “out” of the woods. Chatting up people who can provide new work opportunities, etc. And be looking for the work that you know will be advantageous to you. Networking, and open and honest communication with people in your community can be a very positive resource, that will cost to cultivate, but will provide results for many years.

Carl

[TaylorJohnson]

Cousin Jack,
Take a rough figure of your time and figure up a bill at about $45 dollars an hour or so. When he starts wanting more money and telling you how much that fire wood is worth hand him the bill and tell him if he pays the bill he can have the fire wood and get rich on it him self. You and your team should be worth as much as a skid steer. Call some one up that does skid steer work and see what they would charge you to back fill a basement or level your drive way, I bet you would be lucky to get them there for $45 dollars an hour. You are worth that with your team ( if you know how to run your team and are efficient in the woods , witch I assume you are) . All of that extra work you have to be careful on or else they will work you to death for nothing.
I have told land owners that I wanted 40 or 45 and hour for my work ( that is not just teamster work that is chain sawing to ) and if they buck I tell them , well if you want I will work for tip you pay me what ever you think it is worth at the end of each day but you have to be there to watch me work. If they can set out there all day watch what I go though see me sweet out a gallon or 2 of watter and not think it is worth it then that is fine . I have never had any one take me up on that but if I ever do I will put my work ethic and abilities up against there conscience any time. You have to get paid, I know it is hard at times and I to am willing to work for much less when I am broke but working for nothing is a bad habit that a lot of loggers fall into. When they bring up that bizz about piling brush say that is not a problem at all I charge $30.00 an hour for that type of work , I can take it out of your stumpage or I can give you a bill at the end of the week,, don’t miss a breath and say now you don’t have a problem paying a weekly bill do you if so let me know and I can break up the time I spend pilling so as not to cut you short. Just some ideas . Taylor Johnson

[simon lenihan]

scott mentioned about spreadsheet for calculating stumpage rates, well about 15 years ago i sat down with the head of the forestry contractors association to develop a fair system of payment based on what it actually costs to put a tonne of timber roadside. Fifty horseloggers participated in a survey of what their daily costs were, depreciation, saws, horses, vehicles, etc, etc. This was a very comprehensive study and all data went to dublin where it was inputed in to a programme that was set up specially for this study. The study was based on an average extraction distance and merchantable timber, the cost per tonne came out as £23.00, i never exceded
£13.00 that year. All we did was work longer hours to compensate for this and always thinking that good times were around the corner.
simon lenihan

[cousin jack]

@simon lenihan 11034 wrote:

scott mentioned about spreadsheet for calculating stumpage rates, well about 15 years ago i sat down with the head of the forestry contractors association to develop a fair system of payment based on what it actually costs to put a tonne of timber roadside. Fifty horseloggers participated in a survey of what their daily costs were, depreciation, saws, horses, vehicles, etc, etc. This was a very comprehensive study and all data went to dublin where it was inputed in to a programme that was set up specially for this study. The study was based on an average extraction distance and merchantable timber, the cost per tonne came out as £23.00, i never exceded
£13.00 that year. All we did was work longer hours to compensate for this and always thinking that good times were around the corner.
simon lenihan

What price do you think that same study would come up with today?

[Scott G]

@cousin jack 11030 wrote:

The problem is getting started though and getting a good reputation. The only way I could get going was to buy the standing timber and sell for firewood, meanwhile the wood owner has got me piling up all the brash, doing this and that, which is costing me time and money. Now, because firewood prices are rising he wants to charge me more for the standing timber, it’s hard work as you all know, but he just see’s what firewood is selling for to the end user and what I pay him, he dos’nt seem to equate the time, skill, sweat, fuel, repairs,haulage. What I am trying to say though is I have to put up with this to get going, and I am “winging” it at the moment, grateful for advice though 🙂

Ralph,
You start out with “X” for base stumpage value. Slash treatment such as hand piling, clearing social trails, TSI, etc.. all get get deducted from X as value added services. If you are buying the standing timber than that is all you should be doing, albeit with a low-impact harvesting system. All other forest improvement/enhancement practices need to be factored in as services and deducted from the stumpage check or paid for outright. Even though it is tough, stick to it and do not be afraid to say no to the landowner and walk away. I doubt there are folks offering your type of services knocking on his door to outbid you for firewood. If so, so be it. It is better than losing money. In my area people would think they died and went to heaven if somebody offered to do the work for the wood alone. It all boils down to the landowners values. Don’t sell yourself short man, you are worth a lot more than you think you are…

[Author]

Posts