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“I buy logs at 1 850 ₴ a cubic metre — the cheapest thing on the yard. My neighbour pays 2 900, and for six years I was certain he was overpaying. Then we worked out the cubic metre of finished board, and mine turned out dearer than his” — that is how Bohdan Melnyk, owner of a sawmill in the Rivne region, opened the conversation.
Every man who has stood at a band saw knows this logic. Logs are the main cost, so a cheaper log has to give a cheaper board. And you haggle over the log, because that is where all the money seems to sit.
The arithmetic breaks in one place. You buy cubic metres of roundwood and you sell cubic metres of edged board — and those are two different units. Between them stands the yield: what share of the log reaches the board, and what share goes into slab wood and sawdust. As long as the yield is nowhere in the report, the price of a log is only ever compared with itself.
Below we take the sawmill apart into two units — a cubic metre of log and a cubic metre of board — and get to the reason a cheap log makes an expensive board.
Bohdan's road: from one saw to 420 m³ of logs a month
Bohdan started with a single band saw and one mate. He bought logs by the truckload, cut to order and did the sums on his phone: this much went out for the log, this much came in for the board, the difference is mine.
Nine years on, the sawmill is a different place: four men, 420 m³ of logs a month, steady buyers for the board, a shed over the stacks. And that is exactly when the feel for the numbers disappeared: volume grew, revenue grew, and profit stayed where it had been in year four.
“When there was one saw and I stood at the infeed myself, I knew by eye what would come out of a given log. Now the logs arrive every week, and what I see is a stack in the yard and the sum I left in the supplier's till. What happened in between, I cannot see.”
Why the whole economics of a sawmill sits in one coefficient
A sawmill does not sell sawing. It buys one unit and sells another, and all of the earnings live in the exchange rate between them. That rate is the yield: 48% means that out of a cubic metre of log you will carry away 0.48 m³ of edged board, and the rest leaves as slab wood and sawdust.
From there comes a rule that reshuffles every price on the yard. A cubic metre of board costs you not the price of the log, but the price of the log divided by the yield. Divide 1 850 ₴ by 48%, then 2 250 ₴ by 58%, and you will see that the cheap log, converted into the thing you actually sell, almost equals the dearer one.
Then sawing is added, by-products are subtracted, and the cheap log stops being cheap for good. You can only see this once the yield is counted for each diameter group rather than as one percentage for the whole mill.
Life before the yield became a line
The bookkeeping Bohdan lived in for those years is familiar to any sawmill that has grown out of a single saw.
- Logs were counted as money per truck. Everyone knew what a run had cost. What diameter that run had been was nowhere in the report.
- The yield was a single figure for the whole mill. About fifty-odd percent, “same as everybody”, and after that it was a question for the men.
- Slab wood and sawdust counted as waste. The money for them did reach the till, but it never became a revenue line.
- Sawing sat inside general costs. Power, blades, sharpening — one sum a month, with no diameter attached.
- Diameter groups were not separated. There was “timber”, and 18 cm and 40 cm lay in the same row.
- The board price was held flat. 7 400 ₴ a cubic metre, no matter which log it came out of.
Nothing on that list is a complaint about the saw or about the men. The saw runs, the blades are good, the moisture meter is where it should be, the board is dry, the buyer keeps coming back. All six points are accounting ones — and nobody looks into the accounts at a sawmill.
Three diameter groups: a month on one page
The first thing Bohdan did was split the same 420 m³ into three groups by diameter. The output prices are the same for all three: edged board 7 400 ₴/m³, slab wood for firewood 400 ₴/m³, chips and sawdust 200 ₴/m³.
| Monthly figure | Thin, 18–22 cm | Medium, 24–30 cm | Thick, 32–40 cm |
|---|---|---|---|
| Logs, m³ | 150 | 180 | 90 |
| Log price, ₴/m³ | 1 850 | 2 250 | 2 900 |
| Edged-board yield | 48% | 58% | 65% |
| Slab wood | 27% | 20% | 15% |
| Chips and sawdust | 25% | 22% | 20% |
| Sawing, ₴/m³ | 640 | 520 | 470 |
| Revenue per m³ of log | 3 710 ₴ | 4 416 ₴ | 4 910 ₴ |
| of which by-products | 158 ₴ | 124 ₴ | 100 ₴ |
| Margin per m³ of log | 1 220 ₴ | 1 646 ₴ | 1 540 ₴ |
| Board output, m³ | 72.0 | 104.4 | 58.5 |
| Total margin | 183 000 ₴ | 296 280 ₴ | 138 600 ₴ |
The three groups give 420 m³ of logs, 234.9 m³ of edged board and 617 880 ₴ of margin for the month. Yield, slab wood and sawdust add up to 100% in every group: nothing is lost, the split is simply different.
Why sawing costs more on the thin group
640 ₴ on thin against 470 ₴ on thick is not a typo. To carry a cubic metre of board out of thin logs you need more cuts: more logs, each giving two or three passes, and the cubic metre takes a long time to add up. The blade travels a longer path for the same volume, dulls faster and goes to the sharpener more often.
Thin timber is dear twice over: it gives less board per log and it demands more sawing per cubic metre of that board. Both lines pull the same way, and both stay invisible while sawing lives as one sum inside general costs.
420 m³ and 400 ₴ are similar numbers in different roles
Three lookalike numbers sit side by side and mean different things. 420 m³ is how much roundwood the mill takes in a month. 400 ₴ is the price of a cubic metre of slab wood sold as firewood. 200 ₴ is the price of a cubic metre of chips and sawdust.
There is no arithmetic link between them: the first number is a volume, the other two are prices.
Slab wood and sawdust are not waste but a revenue line
By-products give 158 ₴ per cubic metre of thin log, 124 ₴ per cubic metre of medium and 100 ₴ per cubic metre of thick. Next to 7 400 ₴ for a cubic metre of board that looks like loose change — which is exactly why this money gets handed to men with trailers for whatever they offer.
The loose change disappears once you convert the same by-products into the unit the sawmill sells in. Per cubic metre of edged board it comes to 329 ₴ in the thin group, 214 ₴ in the medium and 154 ₴ in the thick. On thin that is a fifth of the margin on a cubic metre of board — the very part that separates earnings from zero.
“For years I gave the slab wood away for almost nothing: they would turn up with a trailer and take it for whatever I named. And that is 329 ₴ out of every cubic metre of board in the thin group. I would fight a buyer over a hundred, while more than three hundred lay under the shed and rotted.”
158, 124 and 100 ₴ are by-products per cubic metre of log
These three numbers are easy to confuse with the trio 329, 214 and 154: they describe the same slab wood and sawdust. The difference is in the denominator. 158 ₴ are the by-products from a cubic metre of log you bought. 329 ₴ are the same by-products charged against a cubic metre of board you sold.
The second is larger than the first because there is less board than there was log. And the worse the yield, the further the two drift apart.
The cost of a cubic metre of board: what you actually sell
Now the same month, but in the unit of sale. Log price plus sawing, divided by the yield, minus the by-products — and you can see what a cubic metre of board costs in each group.
| Per 1 m³ of edged board | Thin | Medium | Thick |
|---|---|---|---|
| Logs and sawing | 5 188 ₴ | 4 776 ₴ | 5 185 ₴ |
| By-product credit | 329 ₴ | 214 ₴ | 154 ₴ |
| Cost | 4 858 ₴ | 4 562 ₴ | 5 031 ₴ |
| Selling price | 7 400 ₴ | 7 400 ₴ | 7 400 ₴ |
| Margin per m³ of board | 2 542 ₴ | 2 838 ₴ | 2 369 ₴ |
Board from the dearest log costs 5 031 ₴ a cubic metre — more than board from the cheapest, at 4 858 ₴. For six years Bohdan chose logs by the price of the log, while selling cubic metres in which that price had already been rearranged by the yield.
5 188 and 5 185 ₴: why the ends of the range meet
Two almost identical numbers stand in opposite columns, and that is not a rounding error. The thin log is cheap, but its yield is 48% and its sawing is 640 ₴. The thick one is dear, yet its yield is 65% and its sawing 470 ₴. Two different roads arrive at almost the same sum — 5 188 ₴ and 5 185 ₴.
Only one thing pulls them apart: the by-products. The thin group puts 329 ₴ into the credit, the thick group only 154 ₴, and that difference is what makes thin board cheaper than thick. The very slab wood that sawmills treat as rubbish decides which log pays better.
Cheaper logs make dearer boards
Put two figures side by side. A thin log at 1 850 ₴ gives a cubic metre of board with a margin of 2 542 ₴. A medium one at 2 250 ₴ gives a margin of 2 838 ₴. The extra paid for the log comes back on every cubic metre of board, because the yield climbs from 48% to 58%.
And that is the answer to the question the conversation started with. A cheaper log does not mean a cheaper board: the log price is divided by the yield, and the cheap log has the worst yield of all. Haggling a hundred off a cubic metre of roundwood weighs less than a single point of yield.
Two rankings that do not agree
Now the unpleasant part. Depending on what you measure in, the groups line up differently — and that is not a trick but two answers to two different questions.
Per cubic metre of log the order runs: medium 1 646 ₴, thick 1 540 ₴, thin 1 220 ₴. Per cubic metre of board it runs: medium 2 838 ₴, thin 2 542 ₴, thick 2 369 ₴. Medium is first in both. But thick drops from second place to last, and thin takes its place.
“I was certain the thick log was my best: yield of sixty-five, you barely resharpen the blade, the stack fills up fast. And so it is, as long as you count per cubic metre of log. But per cubic metre of board, thick comes last on my yard — same month, same saw.”
Why thick drops from second place to last
Because the log price rises faster than the yield. From the medium group to the thick one, a log goes up from 2 250 ₴ to 2 900 ₴. The yield over the same step climbs only from 58% to 65%. The price increase outruns the gain in yield — and a cubic metre of board from a thick log ends up the dearest on the mill.
Per cubic metre of log, thick still looks good: 1 540 ₴ against 1 220 ₴ for thin. But a cubic metre of log is not what you sell. The decision about how much of which group to buy is taken in the unit you invoice your customer in.
A sawmill month: 1 793 280 ₴ of revenue and 281 880 ₴ of profit
Let us add up the month. Revenue is 1 793 280 ₴: 234.9 m³ of edged board plus slab wood and sawdust from all three groups. After logs and sawing, 617 880 ₴ remains. Then come the fixed costs.
- Wages — 168 000 ₴: four men, a sawyer and the helpers.
- Rent and land — 34 000 ₴, no matter how many logs were delivered.
- Base power — 22 000 ₴: lighting, the compressor, heating the site hut.
- Depreciation of the saws — 48 000 ₴.
- Repairs and sharpening — 26 000 ₴: blades, the sharpening machine, small spares.
- Admin — 38 000 ₴: the bookkeeper, timber paperwork, phone, fuel.
That is 336 000 ₴ in all. Profit comes to 617 880 − 336 000 = 281 880 ₴ a month, 15.7% of revenue. And here is the main thing: those 15.7% belong to no diameter group at all. They are an average between board at a margin of 2 838 ₴ a cubic metre and board at a margin of 2 369 ₴, in a proportion nobody chose.
Three moves that need neither a new saw nor a new customer
Bohdan costed three changes; none of them touches the board price or the volume of logs.
| Move | What changes | ₴ per month |
|---|---|---|
| Shift 150 m³ from thin to medium | margin per m³ of log 1 220 → 1 646 ₴ | +63 900 |
| Slab wood as split firewood at 820 ₴/m³ instead of 400 | a log splitter is needed | +37 800 |
| Thin-group yield from 48% to 52% | 4 points taken from slab wood | +42 000 |
The first move is the biggest and at the same time the only one outside the owner's hands. The other two are smaller, but they depend on nothing except what happens on the mill itself.
The first move runs into supply, not arithmetic
The arithmetic is beyond argument: replace 150 m³ of thin with medium and the margin per cubic metre of log jumps from 1 220 ₴ to 1 646 ₴, 63 900 ₴ a month in all. On paper it is the cheapest decision in this article.
Only there is nowhere to buy that volume. The supplier sells precisely thin roundwood: they fell what has matured, and what has matured is thin. There simply is not that much medium on the market, and nobody will cut an extra 150 m³ a month to order. This line should be read as the limit of the possible, not as a plan.
“I came in with this calculation: give me the medium group, I will take the lot. They told me there is not that much medium, they fell what has matured. A beautiful move that nobody will actually sell me.”
Slab wood as split firewood: 820 ₴ instead of 400
The three groups give 90 m³ of slab wood a month. Right now it goes out as firewood at 400 ₴ a cubic metre. Split firewood on the same market goes for 820 ₴.
On the very same 90 m³ the difference is 37 800 ₴ a month. You need a log splitter and somewhere to stand it; the timber is already there and nobody has to drive anywhere. This is not a new business but one line moved across: what used to be called waste gets sold in a different shape to the same people.
Thin-group yield from 48% to 52%: where to find four points
The third move is the only one that touches the sawing itself. 4 points of yield on the thin group are worth 42 000 ₴ a month.
There are two sources, both without new machinery. The first is a cutting pattern matched to the diameter: not one setting for every log, but one for 18 cm and another for 22 cm. The second is sharpening on a schedule rather than by feel. A dull blade wanders in the cut, thickness drifts, and what should have become edged board goes into slab wood.
“Four points of yield is not new machinery. It is a setting matched to the diameter and sharpening on a schedule, not „when it starts to pull“. For years I changed the blade only once it was already wandering, and every one of those cuts went into the slab-wood wagon.”
Why 52% is a target figure rather than the current one
The article carries both 48% and 52%, and the two must not be mixed up. 48% is the actual yield of the thin group, the figure the whole month was built on: the 5 188 ₴ of input cost, the 2 542 ₴ of margin and the 183 000 ₴ of total. 52% is where you could get to; above this point that figure takes no part in the calculation.
Where those 4 points come from matters just as much. They do not appear out of nothing: yield, slab wood and sawdust always make up 100%, so board can only gain at a neighbour's expense. They are taken from slab wood, which is why the calculation shows not the pure gain in board but the gain minus the slab wood lost at 400 ₴ a cubic metre.
Two moves together: 361 680 ₴, or a factor of 1.28
Set the first move aside — nobody will sell it. That leaves two that are entirely in Bohdan's hands: the log splitter and the thin-group yield, 37 800 ₴ and 42 000 ₴ a month.
Profit rises from 281 880 ₴ to 361 680 ₴ — a factor of 1.28. Not one new saw, not one new customer, the same volume of logs and the same board price of 7 400 ₴. All that changed is the shape the slab wood is sold in, and how the setting and the sharpening work on thin logs.
What changed once the yield became a line
Three technical changes came out of it. Logs started being taken in with the diameter on the delivery note, not just the volume. The yield began to be counted group by group. And slab wood and sawdust came out of waste into a revenue line with a price of their own.
- Talks with the supplier changed their subject. Before, the haggling was over a hundred on a cubic metre of log. Now the first question is about diameter.
- Diameter groups got margins of their own. 2 542 ₴, 2 838 ₴ and 2 369 ₴ per cubic metre of board — now it is clear which group to take when there is a choice.
- By-products stopped being handed over for whatever was offered. 90 m³ of slab wood is 37 800 ₴ of difference between loose firewood and split.
- Sharpening and settings turned into money. While the yield was one figure for the whole mill, the sharpening schedule was a matter of tidiness. Now it is 42 000 ₴ a month.
No new saw, no second shift, no rise in the board price was needed. What was needed was to count the yield across three groups and to look at the result in cubic metres of board rather than of log.
The takeaway for business owners. If you buy in one unit and sell in another, your main number is not the purchase price but the exchange rate between those units. Divide the input price by the yield percentage, add the processing, subtract the by-products — and look at what the unit you are actually paid for really costs. Very often the cheaper input turns out to be the dearer one, and the ranking of suppliers flips over. Work that rate out for each group separately: the yard average describes none of them. The same thing holds for any processing with a yield — meat, grain, metalwork, cutting plans.
Parting advice
- Divide the input price by the yield before you compare it. 1 850 ₴ at 48% and 2 250 ₴ at 58% almost level out once converted into a cubic metre of board.
- Count the yield by diameter group, not as one number. 48%, 58% and 65% on one mill — each carries its own cost.
- Put slab wood and sawdust into a revenue line. 329 ₴ per cubic metre of board in the thin group is a fifth of the margin, not rubbish.
- Spread sawing across the groups. 640 ₴ on thin against 470 ₴ on thick: thin is dearer both in yield and in cuts.
- Compare the groups in cubic metres of board, not of log. 1 540 ₴ and 2 369 ₴ — the same thick group in second place and in last.
- Do not build a plan on an average percentage. 15.7% of profitability belongs to no group — it is their proportion.
- Check whether you can buy what you have costed. The 63 900 ₴ of the first move run into the fact that there is no medium roundwood on the market.
The money does not vanish — you simply cannot see it
People think a sawmill is decided by two things: the price of the log and the price of the board. You cannot start without them. But the earnings are decided by a third — what share of the log reaches the stack of board, and what the share that never got there costs.
This hole will not close by itself, and it will not show up in the bottom line: the line says 281 880 ₴ of profit, and it is telling the truth. But the moment the yield gets a line of its own for each group, the main thing becomes visible — the cheapest log makes board dearer than the one you thought you were overpaying for, and 90 m³ of slab wood under the shed is worth 37 800 ₴ a month.
How to see this at your own sawmill
Everything above rests on one breakdown: not the month in cubic metres, but each diameter group as a row, with the log price, the board yield and the slab-wood revenue side by side. As long as cost is counted per cubic metre of log, you see neither that thin logs make a dearer board out of a cheaper input, nor that by-products add 329 ₴ per cubic metre. When the same data is collected automatically, the margin on the cubic metre you actually sell becomes visible — which is exactly why owners of small and medium businesses use Finmap: to see the financial picture rather than assemble it at the end of the month.
Read also
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Topic foundation: Management Accounting Explained: What It Is and Why Owners Need It
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Frequently asked questions
Why do cheaper logs make a dearer board?
Because the log price is divided by the yield, and a cheap log has the worst yield. At Bohdan's mill, thin roundwood of 18–22 cm costs 1 850 ₴ per m³ at an edged-board yield of 48%, while medium 24–30 cm costs 2 250 ₴ at a yield of 58%. Add the sawing, which is dearer on thin (640 ₴ against 520 ₴ per m³), and input plus sawing per cubic metre of board comes to 5 188 ₴ in the thin group against 4 776 ₴ in the medium. After the by-product credit, the cost of a cubic metre of board is 4 858 ₴ and 4 562 ₴ respectively. The extra paid for the dearer log comes back with interest, because every point of yield weighs more than any haggling over the log itself.
How do you work out the cost of a cubic metre of edged board?
Four steps. Add the log price and the sawing per cubic metre of log. Divide the sum by the yield percentage — that gives you the input and sawing attributable to one cubic metre of board. Subtract the by-products, converted to that same cubic metre of board. Compare with the selling price. In the thin group that is 5 188 ₴ minus 329 ₴, so 4 858 ₴ of cost, and at a price of 7 400 ₴ the margin is 2 542 ₴ a cubic metre. In the medium group, 4 776 ₴ minus 214 ₴ gives 4 562 ₴ and a margin of 2 838 ₴. In the thick group, 5 185 ₴ minus 154 ₴ gives 5 031 ₴ and a margin of 2 369 ₴. Dividing by the yield is not optional — without that step all the groups look alike.
What board yield do logs of different diameters give?
Across Bohdan's three groups, the edged-board yield runs like this: thin 18–22 cm — 48%, medium 24–30 cm — 58%, thick 32–40 cm — 65%. The rest of the log is taken by slab wood and by chips with sawdust, and in each group the three figures add up to exactly 100%. Slab wood: 27% on thin, 20% on medium, 15% on thick. Chips and sawdust: 25%, 22% and 20%. Nothing is lost — only the proportion between the three products changes. That is why 420 m³ of logs a month give the mill 234.9 m³ of edged board: 72.0 m³ from the thin group, 104.4 m³ from the medium and 58.5 m³ from the thick.
Why do margin per cubic metre of log and per cubic metre of board give different rankings?
Because these are two different units, and the groups line up differently in each. Per cubic metre of log the order is: medium 1 646 ₴, thick 1 540 ₴, thin 1 220 ₴. Per cubic metre of board it is: medium 2 838 ₴, thin 2 542 ₴, thick 2 369 ₴. Medium leads in both, while thick falls from second place to last. The reason is that from the medium group to the thick one the log price rises from 2 250 ₴ to 2 900 ₴, while the yield climbs only from 58% to 65% — the price increase outruns the gain in yield. Purchasing decisions have to be taken in the unit you invoice your customer in, which is cubic metres of board.
What are slab wood and sawdust really worth?
More than they look, and most of all in the thin group. Slab wood goes out as firewood at 400 ₴ per m³, chips and sawdust at 200 ₴. Per cubic metre of log the by-products give 158 ₴ in the thin group, 124 ₴ in the medium and 100 ₴ in the thick. But what you sell is board, so the same by-products have to be charged against a cubic metre of board — and then they come to 329 ₴, 214 ₴ and 154 ₴ respectively. On thin that is a fifth of the margin on a cubic metre of board. It is the by-products that make board from the cheapest log cheaper than board from the dearest: the thin group puts 329 ₴ into the credit, the thick group only 154 ₴.
Why does sawing thin logs cost more than sawing thick ones?
It is not a typo: 640 ₴ per cubic metre on thin, 520 ₴ on medium and 470 ₴ on thick. To gather a cubic metre of board out of thin logs you need more of them, and each one takes its own set of cuts. The blade travels a longer path for the same volume, dulls faster and goes to the sharpener more often. So thin timber is dear twice over: it gives the least board per log (48%) and it demands the most sawing per cubic metre of that board. Both lines pull the same way, and both stay invisible while sawing lives as one sum inside general costs and is never spread across the diameter groups.
How can the thin-group yield be lifted from 48% to 52%?
By two things, and neither needs new machinery. The first is a cutting pattern matched to the diameter: not one setting for every log, but one for 18 cm and another for 22 cm. The second is sharpening on a schedule rather than by feel: a dull blade wanders in the cut, board thickness drifts, and what should have become edged board goes into slab wood. Those 4 points do not appear out of nothing — yield, slab wood and sawdust always make up 100%, so board can only gain at the expense of slab wood. That is why the calculation shows the gain in board minus the slab wood lost at 400 ₴ a cubic metre, and together the move is worth 42 000 ₴ a month.
Can you switch from thin roundwood to medium?
On paper it is the most profitable move; in practice it is the least realistic. Shifting 150 m³ from the thin group to the medium one means lifting the margin per cubic metre of log from 1 220 ₴ to 1 646 ₴, that is 63 900 ₴ a month. But there is nowhere to buy that volume: the supplier sells precisely thin roundwood, because they fell what has matured, and there simply is not that much medium on the market. So this line is read as the limit of the possible, not as a plan. The two moves that really do happen are the others: split firewood at 820 ₴ instead of slab wood at 400 ₴ brings 37 800 ₴ a month, the thin-group yield of 48% → 52% brings 42 000 ₴, and together they lift profit from 281 880 ₴ to 361 680 ₴ — a factor of 1.28.
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