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Calculating Timber Prices

A Timber Prices Formula For Sawmills

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Determining timber prices for your sawmill will depend on the going rate for the forest product you are making minus expenses and profit.

Investigate Rough Lumber Prices

Workers at the Carson Sawmill prepare wood
Bruce Bennett/Getty Images Sport/Getty Images

Lets say you want to determine timber prices for red oak on the stump. You call other sawmills in your area and determine the average price for red oak grade lumber is $800 per thousand board feet. You determine your harvesting cost to be $100 per thousand bf, trucking at $100 per thousand bf, and milling at $250 per thousand board feet. You take the $800 and subtract $450 in costs, and you have $350 per thousand board feet.

Calculating a Profit

Now before you start making phone calls and offering $350 per thousand for standing red oak, don't forget to figure in a profit. After all your not doing this just for fun, you need to eat too! Okay, so lets figure out your profit. Use your cost figure and ad 50% - 70%, so for example ($450 x 1.5 = $675 per thousand bf) or ($450 x 1.7 = $765 per thousand bf). So the price range you can pay for red oak on the stump is $35 - $125 per thousand board feet based on your cost figures. Lumber price, less Cost & Profit.

As you can see determining the price you can pay for a piece of timber can be a complicated process. It may be best if you are just getting started to buy your logs form a logger. They can give you a price for the logs you need shipped right to your mill.

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