Should dealers increase their prices.......

[Firewoodguy.com]

An hour ago saw a news program on CNBC that had a story about a couple former stock brokers in NYC that had gone into firewood retail. They got the wood delivered to a place that had formerly been associated with the mob. They sorted and made prompt deliveries.

They were selling good stuff, cherry - oak - apple and so forth. For $300 a face cord (defined clearly by the reporter as 16" wide).

Report showed several places that were happy with the wood and especially the service they were getting. Restaurants and somewhat wealthier homeowners/renters.


$900 a cord.

 

[kevinmoelk]

Howdy Firewoodguy.

The bottom line is dictated by market forces, period. Dealers can sell wood for whatever the market will bear. So if one is able to sell wood for $10,000 a cord, then that is what the market will bear. Seeing as firewood appears to be localized in a region, local variables factor in highly into the equation. If one was doing business in a wealthy area, chances are that higher prices could be demanded, and paid for the firewood. However, try selling a $900 cord in some little po-dunk town that's got plenty of wood available, and I imagine no sales would occur. If you were doing business in NYC or SanFrancisco to the wealthy socialite types, they'll pay whatever you want, probably doing little research to find the best deal. They've got the money and saving a hundered or two hundred bucks is of no consequence to them. Supply and Demand, Supply and Demand.

-Kevin

 

[wahoowad]

Go ahead firewood guy, raise your prices. Show us how it's done!

Those 2 guys really found a cool niche and seem to have exploited it well. My hats off to them. Maybe I should consider selling prime firewood to all the snooty restaurants and rich folk here. Lord knows there are enough. People would be really surprised at how good truly seasoned wood burns too! I don't think there is a reputable supplier around here judging by the feedback I see on our local want-ads message board.

 

[kevinmoelk]

Go ahead firewood guy, raise your prices. Show us how it's done!

Those 2 guys really found a cool niche and seem to have exploited it well. My hats off to them. Maybe I should consider selling prime firewood to all the snooty restaurants and rich folk here. Lord knows there are enough. People would be really surprised at how good truly seasoned wood burns too! I don't think there is a reputable supplier around here judging by the feedback I see on our local want-ads message board.

My answer would be that if what you say is true, then there is a possible good business idea for you.

I don't think selling to "snooty" people is a sin of any kind. Some people don't want to source their own wood, some people have more money than time, and what about elderly people who are no longer able to source their own wood? Firewood dealers perform a needed service. Whether you choose to take advantage of that is your option.

I think you're egging firewoodguy on wahoowad, he never said HE was going to raise prices. He only relayed a show he saw.

-Kevin

 

[restorer]

Go ahead firewood guy, raise your prices. Show us how it's done!

Those 2 guys really found a cool niche and seem to have exploited it well. My hats off to them. Maybe I should consider selling prime firewood to all the snooty restaurants and rich folk here. Lord knows there are enough. People would be really surprised at how good truly seasoned wood burns too! I don't think there is a reputable supplier around here judging by the feedback I see on our local want-ads message board.

My answer would be that if what you say is true, then there is a possible good business idea for you.

I don't think selling to "snooty" people is a sin of any kind. Some people don't want to source their own wood, some people have more money than time, and what about elderly people who are no longer able to source their own wood? Firewood dealers perform a needed service. Whether you choose to take advantage of that is your option.

I think you're egging firewoodguy on wahoowad, he never said HE was going to raise prices. He only relayed a show he saw.

-Kevin

If those guys are working in New York City for instance, they could be in the ball park. Think of all the costs they have, just in licenses and fees alone. If they are running a one ton truck, it could cost several thousand just to get permission to do local deliveries.

Besides, they have uniform charges, cap costs, fine work boots, covers for the boots so they don't damage the floors, truck gloves, white gloves for inside homes, etc., etc., etc.

 

[Mike Wilson]

These guys are selling kiln dried hardwood, delivered and stacked, in Manhattan. The 300/face cord price is for wood that's all of the same species, all apple, all oak, etc. If you are interested in a mixed cord of kiln dried wood, its 275/face... big discount. Also, I imagine you're aware of the general firewood restrictions in most coops in the city... no seasoned wood allowed, must all be kiln dried, etc. They are afraid of bugs. Plus, these guys have to rent space in the Bronx to store it all in. Definitely a niche market, and not used by people like us, who heat their homes with it...

So in response to the original query, no, average firewood people should not raise their prices based upon atypical operations like this. It would be the functional equivalent of a Honda dealer in Massachusetts raising his prices because somebody opened up a Bentley dealership in Midtown West... who cares. But, overall, good for these guys.

Here's their Web Site, and here's the CNBC Video that firewoodguy here is referring to.

-- Mike

 

[wg_bent]

An Interesting tactic. Stand on the corner in NYC with a cord of wood and sell peices for a buck a pop. It would have to work. Heck if a guy can sell 35000 christmas trees starting at 80 for a 3' tree and going on up to 800 for the 12' trees, It sure seems like a person could sell a cord of wood for a LOT more than in poooooodunk poughkeepsie.

 

[wahoowad]

wrenchmonster,

Firewoodguy, a firewood dealer, asked "Should dealers increase their prices......."

So I said yes and encouraged him to give it a go. If it works for him then I might want to give it a go myself. It's only firewood after all!

 

[Firewoodguy.com]

Go ahead firewood guy, raise your prices. Show us how it's done!

Those 2 guys really found a cool niche and seem to have exploited it well. My hats off to them. Maybe I should consider selling prime firewood to all the snooty restaurants and rich folk here. Lord knows there are enough. People would be really surprised at how good truly seasoned wood burns too! I don't think there is a reputable supplier around here judging by the feedback I see on our local want-ads message board.

Thank, but I already raised my pricing as of Jan 01 due to cost of manufactoring and other expences, So, I realy can't raise my pricees again unless I has justify the increase. The suppy and demand theory don't work legally in this region. Its refered to, in this region anyway, as price gouging, and its prohibited and enforced. But I guess its all depend on location, location, location and the delivery coverage you can supply and service. We cover a 60 mile radious and sometime farther. But you have to go with the flow and deliver where the market is. I have delivered to town's where I didn't know existed. But anyway, its someting to think about. We are not in the colonial times any more, we are in the 21st century where we have tons of regulations to abide by. As consumer's told me before, that "not all firewood is created equal". and I found out that they are right.

 

[Firewoodguy.com]

Howdy Firewoodguy.

The bottom line is dictated by market forces, period. Dealers can sell wood for whatever the market will bear. So if one is able to sell wood for $10,000 a cord, then that is what the market will bear. Seeing as firewood appears to be localized in a region, local variables factor in highly into the equation. If one was doing business in a wealthy area, chances are that higher prices could be demanded, and paid for the firewood. However, try selling a $900 cord in some little po-dunk town that's got plenty of wood available, and I imagine no sales would occur. If you were doing business in NYC or SanFrancisco to the wealthy socialite types, they'll pay whatever you want, probably doing little research to find the best deal. They've got the money and saving a hundered or two hundred bucks is of no consequence to them. Supply and Demand, Supply and Demand.

-Kevin

True, I guess we all live in "po-dunk towns" if you are comparing us with San Francisco and NYC. If I recall back some 8 years ago, My friends and compeditors used to laugh at me and had the same thoughts as you did. But now when I see them, I conside that the jokes are on them now.

 

[kevinmoelk]

Wahoowad, I think FWGs questions was more general, rather than asking "Should I raise my prices?" Still, no harm, I understand what you are saying.

FWG, you've made some comments before concerning how the buisness operates and to me it makes little sense. Price gougeing in my view is taken into account when a NECESSARY commodity, say like gasoline, is in short supply. When the supply is limited, people get desperate and suppliers realizing this start to think "Hey I can charge more for my gasoline, because people will pay for it." The supplier then increases his pricing, squeezing out every last cent out of the consumer. Or you can have colusion where youself and all the other local competing dealers get together one night and formulate a plan to drastically increase the price firewood, while this would be highly unethical and potentiall illegal, in the long run you'd only be killing your own customer base. Consumers would switch to alternative heating sources.

In the case of firewood, I see the large difference being that it is not a necessity. Perhaps some elaboration on the laws that govern your business would help to shed light on WHY you can't increase your pricing. Is the firewood business regulated by the USDA or some other regulatory commission? You make hints of regulations to abide by, but then leave the readers hanging on for more information.

Also, on a related note, from a theoretical point of view creating a price increase point for firewood based upon manufacturing costs is ridiculous in my opinion. Sure manufacturing costs have to be factored in... the bottom line has to be effective enough to cover expenses. However, I'm sure there is some consideration of profit, and what other competing dealers are charging. Afterall, it's the advertisment of premium firewood that differentiates yourself FWG, from the guys selling wood from behind their garage, right? Whenever profit motive is involved, so too are the theories of economics.

-Kevin

 

[MrGriz]

Also, on a related note, from a theoretical point of view creating a price increase point for firewood based upon manufacturing costs is ridiculous in my opinion. Sure manufacturing costs have to be factored in... the bottom line has to be effective enough to cover expenses. However, I'm sure there is some consideration of profit, and what other competing dealers are charging. Afterall, it's the advertisment of premium firewood that differentiates yourself FWG, from the guys selling wood from behind their garage, right? Whenever profit motive is involved, so too are the theories of economics.

-Kevin

Wrench, I'm not sure what you are getting at. How can adjusting the price of your product to reflect an increase in cost be ridiculous? I'm confused as to what your point is.

Of course a product must be priced taking the costs of manufacturing and distributing that product into account. No one sells a service or product to break even so profit must also be a factor. If any of these components is out of line and the price is driven too high comparatively to others in the market, the consumer will buy from a competitor, unless a higher level of quality, service or value is provided.

Please set me straight as to what you are saying.

 

[Firewoodguy.com]

They got the wood delivered to a place that had formerly been associated with the mob.

I'm gonna make ya an offer ya can't refuse.

FYI; I think if I was you, I would back off in judging people. Its noted that these professional guy's has a web page, therefore they a PC and maybe already a member of this forum. Furthermore, maybe they now have friend's that would like to meet you too, since you are evaluating and judging them. What U think !! Just my 2 cents worth

 

[Andre B.]

Gordon Gecko as W. Smith

??????????

Me thinks you need to cut back on the caffeine.

 

[Andre B.]

I see.
Not my kind of movie, I tend more to SF fantasy stuff, get enough reality in my day to day life.

 

[webbie]

Somewhere a consultant that knows a lot less than I do is making a lot MORE money. It is human nature to look around and see someone else and think "I could do that well if.....". But I would have to change my industry. Companies in the stove biz just do not pay like investment bankers or other corporate titans.

Same with Firewood. Someone somewhere is making more.......but each vendor must study their markets and determine who the primary customer is. And my guess is that firewood will never be gold mining!

I do agree with the Greed business. Look what name is on top of the popular buildings - TRUMP. You will never know the name of the guy who quietly builds quality and sells it for a fair price.

The real question from Wall Street is "How many Firewood Processors can one water-ski behind". I see a hostile takeover in the works - TRUMP firewood, serving all of greater NY.

 

[Firewoodguy.com]

Somewhere a consultant that knows a lot less than I do is making a lot MORE money. It is human nature to look around and see someone else and think "I could do that well if.....". But I would have to change my industry. Companies in the stove biz just do not pay like investment bankers or other corporate titans.

Same with Firewood. Someone somewhere is making more.......but each vendor must study their markets and determine who the primary customer is. And my guess is that firewood will never be gold mining!

I do agree with the Greed business. Look what name is on top of the popular buildings - TRUMP. You will never know the name of the guy who quietly builds quality and sells it for a fair price.

The real question from Wall Street is "How many Firewood Processors can one water-ski behind". I see a hostile takeover in the works - TRUMP firewood, serving all of greater NY.

Good thought !! I wonder if Mr Trump would like to buy or be a partner in an exisiting firewood business? I think I will call him. Well call it [email protected]

 

[Mike Wilson]

Greed is good, very good. If you can get away with it, and its legal, go for it. Boutique firewood is a market, so satisfy it. Hell, everything is a market, even weird things like chemical disposal. Look at all the money they made with Chemwaste...

-- Mike

 

[Firewoodguy.com]

Greed is good, very good. If you can get away with it, and its legal, go for it. Boutique firewood is a market, so satisfy it. Hell, everything is a market, even weird things like chemical disposal. Look at all the money they made with Chemwaste...

-- Mike

Greed ain't good.... , I don't think its anything to do about greed or getting away with it. I alone been marketing the same products for 8 plus years. I would call it greed. I don't know if you know it or not, selling firewod in this region is like selling prescription drugs and its very well enforced. They are quite a few firewood dealers within a 50 mile radious that sell firewood from (refering to unit pricing) $450 to 750.00 cord in this region. Just search on Google. You also have to compare like apple's with apple's.

 

[kevinmoelk]

Also, on a related note, from a theoretical point of view creating a price increase point for firewood based upon manufacturing costs is ridiculous in my opinion. Sure manufacturing costs have to be factored in... the bottom line has to be effective enough to cover expenses. However, I'm sure there is some consideration of profit, and what other competing dealers are charging. Afterall, it's the advertisment of premium firewood that differentiates yourself FWG, from the guys selling wood from behind their garage, right? Whenever profit motive is involved, so too are the theories of economics.

-Kevin

Wrench, I'm not sure what you are getting at. How can adjusting the price of your product to reflect an increase in cost be ridiculous? I'm confused as to what your point is.

Of course a product must be priced taking the costs of manufacturing and distributing that product into account. No one sells a service or product to break even so profit must also be a factor. If any of these components is out of line and the price is driven too high comparatively to others in the market, the consumer will buy from a competitor, unless a higher level of quality, service or value is provided.

Please set me straight as to what you are saying.

MrGriz, as I stated above (see bold), manufacturing cost are a consideration. However, constantly fluctuating your product price based upon marginal rises and falls of manufacturing costs is a bad idea. The reason why? Perception. If I was a customer of firewood dealer "A" and he charges me say $200 a cord one year, then the next year he charges me $225, then maybe $280 for the third year. What is my perception of the fluctuations? I'd be concerned with firewood dealer A's ability to dampen costs and provide me with a reliable cost over the course of years. I'd much rather buy firewood from dealer "B" who can offer me $235 a cord for 3 years. This allows me as a consumer to better budget my costs for firewood. A little spreadsheet forecasting could help maintain a more consistent price point for firewood dealer A. Consumers don't like buying items with large fluctuations, it tends to make them a little crazy, much like the prices for gasoline in recent times.

FWG, again you mention these regulations that the firewood business is under. Could you PLEASE elaborate in specific detail how the system works?

-Kevin

 

[MrGriz]

Wrench, I do see the point you are making. Consistency in price and quality of one's product or service is very important in creating confidence and loyalty with your customers.

I guess the part I missed is the 'constant fluctuation' in price due to marginal rises and falls in manufacturing costs. Where did you read that into FWG's mention of a price increase as of the first of the year? Maybe I missed something, but I do not know when he last raised prices or what the circumstances were. If prices to the consumer have been fluctuating regularly or wildly, as you suggest, I agree with you (from a consumer's point of view, don't want to get into it from a business owner's point of view). If prices have been relatively constant and an adjustment has been made to compensate for a change in processing cost, I do not have a problem with that.

Remember though, if prices do not fluctuate to reflect costs, someone is constantly getting screwed.

 

[kevinmoelk]

MrGriz, I think we are both talking about fudge factor. I've been a sole proprietor before, so I've been on the other side of the fence too.

FWG I believe, and he can correct me if I misunderstood him, stated over on the "webmaster" thread that he factors price point of firewood based upon manufacturing costs. I think he was also saying that the price goes up and down much like gasoline.

For the record FWG, I agree with you in that Greed is a bad thing. Desire I would say "Yes" but greed "No". It's greed that drives some very financially successful people to forget all the hard working people who helped to make their business a success. Greed focuses upon the bottom line and removes the human element out of business, which I feel is bad for our society.

-Kevin

 

[Firewoodguy.com]

Also, on a related note, from a theoretical point of view creating a price increase point for firewood based upon manufacturing costs is ridiculous in my opinion. Sure manufacturing costs have to be factored in... the bottom line has to be effective enough to cover expenses. However, I'm sure there is some consideration of profit, and what other competing dealers are charging. Afterall, it's the advertisment of premium firewood that differentiates yourself FWG, from the guys selling wood from behind their garage, right? Whenever profit motive is involved, so too are the theories of economics.

-Kevin

Wrench, I'm not sure what you are getting at. How can adjusting the price of your product to reflect an increase in cost be ridiculous? I'm confused as to what your point is.

Of course a product must be priced taking the costs of manufacturing and distributing that product into account. No one sells a service or product to break even so profit must also be a factor. If any of these components is out of line and the price is driven too high comparatively to others in the market, the consumer will buy from a competitor, unless a higher level of quality, service or value is provided.

Please set me straight as to what you are saying.

MrGriz, as I stated above (see bold), manufacturing cost are a consideration. However, constantly fluctuating your product price based upon marginal rises and falls of manufacturing costs is a bad idea. The reason why? Perception. If I was a customer of firewood dealer "A" and he charges me say $200 a cord one year, then the next year he charges me $225, then maybe $280 for the third year. What is my perception of the fluctuations? I'd be concerned with firewood dealer A's ability to dampen costs and provide me with a reliable cost over the course of years. I'd much rather buy firewood from dealer "B" who can offer me $235 a cord for 3 years. This allows me as a consumer to better budget my costs for firewood. A little spreadsheet forecasting could help maintain a more consistent price point for firewood dealer A. Consumers don't like buying items with large fluctuations, it tends to make them a little crazy, much like the prices for gasoline in recent times.

FWG, again you mention these regulations that the firewood business is under. Could you PLEASE elaborate in specific detail how the system works?

-Kevin

Kevin, this is a short version of the current regulation. It maybe the same in your region but enforced to a much greater detail. As a firewood dealer, you do have the option to correct any consumer complaint but you are still charged with a violation of $3,000 first offence, second and third offence is a criminal offence within a ( one or three year period ? ) up to 10,000 fine..


N.H. DEPT. OF AGRICULTURE WEIGHTS & MEASURES LAW REQUIRES: that cordwood (fire wood) must: 1. Be sold by the cord or fraction of a cord; 2. Contain 128 cubic feet per cord when stacked; 3. Be accompanied by sales slip stating the amount of wood sold & the price.
Published In: The Union Leader
on 01/03/2007

FYI; you might allready know; some of you might want to take in concideration in "fluctuating " your prices with out just cause (e.g. known in this region as price gouging). Example; you sell a customer on A street a cord for $150.00 due to the fact you lowered your prices because of lack of sales (e.g. supple and demand). Now the customer on A street tells her friend on C street about the firewood she purchased for $150.00. Then the customer on C street calls the same dealer a few days later, (note; not informing the dealerthat she was refered to by a friend of hers)and now the price is $200.00 because of your so called ( supply and demand theory). She then agrees and you delivery the firewood and you recieve payment for $200.00. Lets say this happen to another friend on J street, and your price is now $175.00. But unaware to you, This person works for Attorny Generals office and setting you up a sting operation and you fall for it. Guess what ? Thats right ! You are going to need a good attorney to get out of that mess, if you get out of it at all. Anyway, Good luck.

 

[Firewoodguy.com]

Wahoowad, I think FWGs questions was more general, rather than asking "Should I raise my prices?" Still, no harm, I understand what you are saying.

FWG, you've made some comments before concerning how the buisness operates and to me it makes little sense. Price gougeing in my view is taken into account when a NECESSARY commodity, say like gasoline, is in short supply. When the supply is limited, people get desperate and suppliers realizing this start to think "Hey I can charge more for my gasoline, because people will pay for it." The supplier then increases his pricing, squeezing out every last cent out of the consumer. Or you can have colusion where youself and all the other local competing dealers get together one night and formulate a plan to drastically increase the price firewood, while this would be highly unethical and potentiall illegal, in the long run you'd only be killing your own customer base. Consumers would switch to alternative heating sources.

In the case of firewood, I see the large difference being that it is not a necessity. Perhaps some elaboration on the laws that govern your business would help to shed light on WHY you can't increase your pricing. Is the firewood business regulated by the USDA or some other regulatory commission? You make hints of regulations to abide by, but then leave the readers hanging on for more information.

Also, on a related note, from a theoretical point of view creating a price increase point for firewood based upon manufacturing costs is ridiculous in my opinion. Sure manufacturing costs have to be factored in... the bottom line has to be effective enough to cover expenses. However, I'm sure there is some consideration of profit, and what other competing dealers are charging. Afterall, it's the advertisment of premium firewood that differentiates yourself FWG, from the guys selling wood from behind their garage, right? Whenever profit motive is involved, so too are the theories of economics.

-Kevin

Kevin, In this region, firewood is only regulated by "method of sale" by Dept of Agri. You can increase you retail price due to the increase of manufacturing. But I would suggest you have good knowledge as to how and why your prices has increased (e.g. cost of logs increased, insurances increased and etc.)

 

[kevinmoelk]

Kevin, this is a short version of the current regulation. It maybe the same in your region but enforced to a much greater detail. As a firewood dealer, you do have the option to correct any consumer complaint but you are still charged with a violation of $3,000 first offence, second and third offence is a criminal offence within a ( one or three year period ? ) up to 10,000 fine..


N.H. DEPT. OF AGRICULTURE WEIGHTS & MEASURES LAW REQUIRES: that cordwood (fire wood) must: 1. Be sold by the cord or fraction of a cord; 2. Contain 128 cubic feet per cord when stacked; 3. Be accompanied by sales slip stating the amount of wood sold & the price.
Published In: The Union Leader
on 01/03/2007

FYI; you might allready know; some of you might want to take in concideration in "fluctuating " your prices with out just cause (e.g. known in this region as price gouging). Example; you sell a customer on A street a cord for $150.00 due to the fact you lowered your prices because of lack of sales (e.g. supple and demand). Now the customer on A street tells her friend on C street about the firewood she purchased for $150.00. Then the customer on C street calls the same dealer a few days later, (note; not informing the dealerthat she was refered to by a friend of hers)and now the price is $200.00 because of your so called ( supply and demand theory). She then agrees and you delivery the firewood and you recieve payment for $200.00. Lets say this happen to another friend on J street, and your price is now $175.00. But unaware to you, This person works for Attorny Generals office and setting you up a sting operation and you fall for it. Guess what ? Thats right ! You are going to need a good attorney to get out of that mess, if you get out of it at all. Anyway, Good luck.

Okay, now we're getting down to it. There may indeed be a law, but I'm wondering to what extent that law is actually enforced? Have you known anyone to be fined?

I'm not sure if the "FYI" portion of your post was directed at me, but I'll try and answer it the best I can. The fluctuations I was speaking of are seasonal fluctuations. Certainly selling an identical product to different people for different costs is unethical and illegal... not to mention terrible for your reputation. Being seasonal fluctuations, my point was as a consumer it would be better preceived to have a more consistent price. Notice in my example the cost of a cord for 3 years is the same whether I bought from dealer A or B.

So... just so I have this clear, all things being the same (insurance, storage costs, payroll, etc.) it is the cost of manufacturing that you use to determine seasonal prices?

-Kevin