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Discussion Starter · #1 · (Edited)
I have been scratching the surface of buying lumber at wholesale pricing since we started building our trusses in house.

Our current source for lumber is about 30% below average retail cost which is much better than I thought it would be.

Is a 30% markup on lumber similar in your area? Does anyone have reliable sources on the retail lumber markup for your area that your suppliers are marking up from wholesale market?

We use the random lengths publication to track to the lumber market and convert their pricing per board into the stick price for the lumber we use.

A 30% markup equals a 23% gross profit margin. $10 marked up $3 = $13. Margin = Profit/Sale = $3/$13 = 23.08%

Have any of you considered forming a buying group with other contractors to buy lumber by the truckload or railcar or are you already doing this?

As we build our volume we are looking into more vertical integration and it is paying of handsomely. I have a little money tied up for a bit but it's an investment in future profits.

Comments? Suggestions? Tips? Info? Experience?
 

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30 points is a good average, cheap stuff like by the piece fasteners and anything else broken to sell you smaller than normal quantities could be more than twice that. We used to bulk buy everything we could as i saw how much we were saving but it came back to bite us during slow times having all of our cash sitting on pallets in our warehouse. Now, with the exception of some really good buys that i cant pass up, i mean huge huge savings, i don't buy beyond what we can turnover within 60 days. In my opinion the cash is better spent on equipment, extra crews, facilities, marketing, that can grow the business or make it more efficient, and make a higher profit that way.
 

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Carolina Surface Prep
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Retail margins vary from single digits on studs to around 30% for wide boards and longer lengths. Dealers average small profit on common lumber.

It's not unusual to make more on the fasteners and connectors, than the treated lumber when a deck package is sold.

Remember to take shrink into account. When you buy in bulk from a distributor, you own all the wood, not just the good straight ones the dealer pulled from the pile.
 
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