Lumber and Sheet good markups at lumber yards

[andrew whicker]

I'm just curious (I'm not complaining or trying to get everyone riled up) what the average mark up is on lumber in a yard? I'm especially curious about Baltic Birch..

I once called a CNC shop to give me a quote for something and said "well, I can bring the wood in if you need me to" (it was an odd thickness of BB). And I can't remember the exact price, but he said he could buy the same sheet for like 2/3 of the price I have pay. So I guess my mark up is really high and his mark up is pretty low (bought in big enough quantities). I'm wondering if we can get close to what the actual import cost is to the lumber yard.

I'm not sure how the pricing works in general, but I'm guessing it's a price list type thing where the commodity price fluctuates daily.

I think we've a few posters here that used to work at or still work at a lumberyard.

[Bill Dufour]

No idea but normal retail markup is 100%. 400% for Jewelry.
Bill D

[Jim Becker]

Sheet goods specialty businesses will likely have better pricing than lumber yards...that's been my experience for sure. A lot of the yards likely source from them and then do the markups. Even has a more casual woodworker, I buy from the sheet good supplier. And they deliver, free, other than a small fuel charge, for orders over $300. (Which is not hard... ;) )

[Jimmy Harris]

I'd imagine it varies based on numerous factors. Or it should, in theory. But I'd imagine 100% to be around the average.

I know at my local lumber yard, not the big box stores, they will occasionally sell boards at cost if there's not much demand for them, just to clear out room for stuff that does sell. So I can often find really good prices on lumber, assuming I'm not picky. But if I want the good stuff, I have to pay a good bit more. Then there's Rockler and Woodcraft, which often sell the same wood for usually about double what the lumber yard asks. So I imagine their markup is quite a bit higher. Especially with as often as they have sales. I think they both usually have at least some type of wood at 50% off at just about all times. So that says to me their markup is probably about 200%.

A company that knows what they're doing will price things for maximum profit. Too high and it cuts into your sales. Too low, and you miss out on every sale. So there are mathematical formulas to determine the optimum pricing. Large companies do this. It's has nothing to do with markup percentages. It's all about maximizing profit. So one item might have a 10% markup and the one next to it might be a 500% markup. Some might even be loss leaders. I'm not kidding when I say it involves advanced calculus. Though, I don't know of many smaller businesses, like a lumber yard, employ the services of someone capable of crunching these kinds of numbers. Usually, the smaller the business, the more basic the pricing structure is.

[Pat Germain]

No idea but normal retail markup is 100%. 400% for Jewelry.
Bill D

I was under the impression jewelry markup is more like 1000%. But's that's a unique situation. Only recently is the worldwide De Beers diamond cartel starting to lose their grip.

As for wood, I recall on online discussion years ago about how we might save money buying in bulk. One guy called a mill and they asked him how many thousand board feet he wanted. And that's the rub. It makes little sense for a high-production lumber mill to sell to individual hobbyists such as us. That's where a retailer comes in. They do buy in thousands of board feet and they fork out the overhead cost for storage and retail space. We must pay for that overhead plus more for profit to make it worth their while.

Perhaps a coop could potentially purchase lumber in bulk and offer discounts to individual members of said coop. But there just aren't enough people buying enough lumber in a particular area to make it practical.

I recently learned of a small, independent mill near me which sells directly to the public. I hope to check it out soon and compare their prices to my local hardwood store in town.

[Bill Dufour]

I bet lumber yards do not have to worry too much about shoplifters. That is one thing mentioned in the 99 cent store bankruptcy. They call it shrinkage. Before they shut down the safeway store in Oakland California people stole steaks under their coats.
Excuse me sir, did you accidentally forget to pay for that sheet of Baltic Birch down your pants? Is that a 2x4 down your pants? No sir, it is just my wedding tackle.
BilL D

[Richard Coers]

I doubt if the local lumber yard marks materials up 100%. There would be more lumber yards around if they made that kind of profit. There are also middlemen. Nearly everything in the lumber yard comes from a regional dealer/distributor, not the mill. There is definitely a professional contractor pricing difference. A hobbyist comes in and wants to talk about their project and may not be sure how much to really buy. That adds to the yard's labor cost. Then the hobbyist may want to pick through the pile, again labor cost, then they might want to bring back a single board that twisted, again labor costs. The pro orders a quantity over the phone, adds his estimated scrap rate, then likely pays for delivery. Of course that warrants a discount.

[David Walser]

The discussion of mark-up is meaningless without understanding the inventory turnover rate. For example, a supermarket might only make a profit of 5% on each can of soup it sells, but cans of soup might remain on the store's shelves for one day or less -- a turnover rate of 365 times/year. So, while the store might only make 5 cents for every dollar invested in cans of soup, but that equates to $18.25 in profit over the course of the year! That's not a bad return for each dollar invested. In other words, if inventory turns every day, a 5% markup equates to a 180.25% annual return. If inventory turns once a year, a 5% markup yields a 5% annual return.

With this relationship between markup and turnover rate in mind, I suspect most lumber stores have different markups for different categories of lumber. Construction lumber, with high turnover rates, probably has a relatively low markup. Specialty items -- turning squares of exotic hardwoods -- that the store expects to have on its selves for weeks if not months will have commensurately higher markups. We cannot judge the fairness of the markup without knowing the turnover rate.

[Warren Lake]

prices varied on baltic as the supplier told me he had to get it from different sources I past paid 72.00 to 90.00 on baltic 3/4 4 x 8. Their mark up is low and irrelevant. You want to see a mark up look at David Lees car collection, he sells watches.

Ive always picked solid. stuff was too critical to order and get what you get. No easy thing to get in line with a supplier that will let you do that. Some suppliers have their own mills.

[Michael Burnside]

I paid $158 (ea) when I bought two sheets of 3/4 BB 13 ply two weeks ago and I think the 1/2" was around 90 bucks, if I recall. No idea what my local supplier gets it for, but it still seems high enough that I'm keeping a lot more small cutoffs than I normally do LOL.

[Holmes Anderson]

The markup on lumber will vary by supplier, location, and many other factors. For some data points, retail shorts are 25% reduced price relative to listed retail price at one supplier local to me and I was able to get 30% discount years ago by buying wholesale quantities so I would be surprised if the hardwood retail markup is less than 50% and I would not be shocked if it is 100% or more. I assume the markup on construction grade softwood lumber is much lower. I have never bought lumber directly from a sawyer but they advertise locally. Might be a good value if you have a shed to air dry. My guess is that hardwood plywood prices are mostly about quantity. It is nice to have a large stack and not worry about retail prices but storage can be a problem.

This from a local supplier: All of our lumber is put up in 500’ packs. We offer wholesale pricing based on the quantity purchased for any customer purchasing full packs of lumber, from one bundle up to a full truckload.

[Richard Coers]

A shed is a poor way to start drying lumber. You need a lot of air flow to prevent mold.

[Bill Dufour]

I bet markup on wood and hardware is very different. But in their favor there is no loss doc to expiration date sor getting spoiled.
I heard Grocery stores it is like 2% profit but fast turnover. Reno is about 2-3% profit, Las Vegas is double that. But that is made in a few hours or days at most.
Bill D

[Doug Garson]

Years ago my wife worked for Best Buy and we got employee pricing which was basically cost. Markup on computers was low, 5 to 10% while accessories like cables, batteries and chargers was huge. I remember buying a $20 battery charger for $2.

[Ted Baxter]

I bought BB 3mm yesterday for $17.50 a sheet and 6mm BB for $25.00 2 sheets of each. I paid almost twice that last summer at the same Dakota Hardwood store here in Tulsa Okla.

[stephen thomas]

Do what Jim Becker mentions, find one of the local sheet goods jobbers, and see if you can make "will call" purchases. Or maybe even get it delivered if you buy 10 or a dozen sheets or maybe $1,000 minimum. (typical break points)
Some will not sell to you without a tax number. Some will on walk in basis. It's worth knowing what the sources are when necessary to buy it locally from someone who gets it from one of the jobbers.

Since it is under discussion, the economics of Baltic Birch is interesting. As the Economist (magazine) asks, how many SE Asia countries actually have birch forests?
The logs make it to China by rail, then either logs, veneer, or semi-finished sheets make it to a country that has favorable trading status with us, then we buy it.
The markets show that Scandinavia, e.g. produces only a small fraction of world trade. Much comes from the usual suspect but the name and the product stamps have changed.
& more middlemen make a profit, on top of the scarcity profit.

smt

[Holmes Anderson]

A shed is a poor way to start drying lumber. You need a lot of air flow to prevent mold.

Maybe a regional thing but not all "sheds" have four walls where I live. Roof-only lumber storage buildings are called sheds.

I don't do enough air drying to give advice about mold formation but last year I stacked leftover construction grade 1x white pine, freshly sawn (not KD) and unstickered, in a fully enclosed barn/shed and it is now dry and shows no sign of mold. I used some to build shelving and to my surprise it machined like KD pine, whereas the pitch was bad when I milled shiplap siding from it when green. Winters are dry here though.

[Jim Becker]

Do what Jim Becker mentions, find one of the local sheet goods jobbers, and see if you can make "will call" purchases. Or maybe even get it delivered if you buy 10 or a dozen sheets or maybe $1,000 minimum. (typical break points)

Industrial Plywood out of Reading and Lewisburg have no minimum but a $300 minimum for free shipping. There is a small fuel charge but it's less than the gas I'd use to drive to Reading not to mention the travel time. They will also replace defective on the next delivery day. (They are in my area twice a week)

[andrew whicker]

I so far haven't had a big enough baltic birch job to order bulk. My biggest job was melamine and in that instance I ordered from the cab CNC shop (i.e. parts, not sheets). I've had some pretty good sized lumber orders, but not sheet goods. OTH, 5 to 6 sheets of BB certainly feels like a big order when you spend four figures : )

It would be good to order a pallet of 1/2 and 3/4 BB and pick away at it over the year, but that would be a big hit to my budget for that month.


Edit: Our delivery rates are a flat $25.

Anyway, I was curious because I wanted to know how much the BB supplier was actually selling their sheets for... 3/4 for $50 ish?

[Derek Meyer]

Our store, a local lumberyard/home center with two locations, sells Baltic birch plywood in thicknesses from 1/8" to 3/4". Currently, we are selling 3/4" sheets for a retail price of $109.49. Our current cost for these is $79 per sheet, but our average cost is $88.15, which indicates that we were buying them at a higher price in previous orders. I do know that our retail price for these sheets has been as high as $149.95 within the past year, but as our cost comes down, we lower the retail price as well.

Markup is very market-dependent. The markup on clothing at retailers like Ross or Burlington is huge - 100% or more. My wife used to work at Ross and she would be amazed at the markup. Then again, once something is out of fashion, it gets sold at a discount, sometimes as high as 80 to 90%, so they need that markup to cover losses from clearance sales.

I used to work at a video game & computer store, and markup was all over the place. For game consoles like the Playstation and Xbox, the markup was basically 0. We bought the consoles for $395 and had to sell them for $399. If we had to pay shipping we lost money. The games sold for a 25% to 30% markup on average. We bought and sold used games and hardware, so we were able to make some money on that. Accessories typically sold for 30% markup or so.

Computer hardware was also all over the map. We got about 10% markup on a computer we built in the shop. Processors averaged between 15% and 20% markup, as did memory, hard drives, etc. Accessories, like keyboards and mice, were better, with margins up to 50%. Cables were where we made real money. We would have some that were 1000% markup or more. The idea was to be price-competitive with the other retailers in the area, like Walmart and Staples, while finding the best places to buy for low prices. We found a cable supplier that had their own factory in China, and sold through their California business. We could, for example, buy a 7' network cable for $85 cents (if we bought at least 20) and mark it up to $9.95 and sell them all day long, as that was still cheaper than Staples or Walmart. It's more difficult today, with places like Amazon and Monoprice, but those low-cost items are still where the real money is in retail.

Derek