The taste challenge was proof that most people prefer pepsi to coke. Of course New Coke that tastes like Pepsi bombed. Go figure. I like pepsi
If Wally-world was the only game in town, I'd be pizzed. But this year has sent many of us to the premium pellets and the small business person....I'm liking that!
Thank-you Wally -world.....and the rest of the Boxes who raised their prices this year to more than just a break even which has pushed many people to try better pellets elsewhere...our brands included.....(Ok, maybe not lordmetalz28..there is always those who will never figure it out)
always depends on what end you are on. Your cost for disel and gas are way down, Don't even begin to say it is lunch money, because when it was way up, that was not the turn being sung. Pellets are like most things in the supply and demand world. Charge what the market will bear, Not always in line with the cost of production and marketing. If you can sell less volume and reap the same profit, well that is another strategic move when oil is low. You know you will sell less, so you charge more for what you do sell. As long as you all sing from the same hymnal, it works. Less competition is worst thing for a consumer. Walmart is not a heating fuel business, they sell what they think their consumers will buy. They won't sell pellets as a lost leader. for them, a lost leader for what? That's when you sell a turkey below cost and make the profit on the trimmings. When you go buy pellets, you buy pellets, not pellets and a quart of milk and a pair of pants. Fuel that gives six percent more heat and cost 30% more is NOT a good deal if you have a good stove and are willing to do more cleaning. Better insulation and a quality stove is where to start for better heating results.
Electricity, labor costs, raw fiber and plastic are much higher costs for us that gas/disel and none of that is going down in cost. Our largest cost to get our pellets to market is what the railway costs are...at least 1/2 the final cost of what we charge for the pellets, but the railways haven't adjusted their rates one penny other than the floating fuel surcharge that moves month to month but is a small percentage of the overall rate. Typically the railroads raise their base rates every year ...regardless of their service or what the overall economy is doing....Most of my truckers haven't raised or lowered their rates in 4 years...so they sucked it up with high fuel costs with it up and now they get to put a few more dollars into their wallets when fuel is lower...but insurance, repairs, tires, permits etc...none of that is going down..... Its not so much how much it costs per mile but how much time it takes to get something to where it is going and how much empty time it will take to get to somewhere else to get a load. Most you think there is fortune to be make with pellets, but bottom line is that they are a commodity and the margins for most involved are pretty thin....You have to move volume to make any real money at it. Take some of the larger dealers around and they have 100's of thousands of dollars just tied up in forklifts, trucks, pallet jacks just to deliver pellets, and most will tell you that at the end of the year there isn't much left over to deliver said pellets, but they do it so they can sell more pellets....the volume makes it worthwhile...but it's a lot of work. I'm glad to see the boxes and such raise their prices this year, simply because it better represents what the industry has to charge to be profitable. The Home Depots of the world figured out they don't have to give them away and they will still sell a bunch of pellets and still keep market share, plus the manufactures that sold them, also figured out that if they raised their prices to them, they would still buy them as the market demand was there and the boxes didn't need to subsidize pricing. ....Of course this helps us, as this is what we compete against....but it is still a good move to the industry in general as it strengthens it and you need a strong industry as a whole if you want it to survive. Heating oil is cheaper this year than last and yet there is still a very high percentage of people that will still use their pellet stoves and though it may take away some sales, this is now a much larger industry than just a few years ago and everything I'm seeing and more importantly experiencing in sales tells me that people still want in overwhelming high numbers to still use their pellet stoves over oil.....maybe not all, but we don't need all either....There are advantages and disadvantages to using a pellet stove and each homeowner will decide what is best for them....and all things considered....I still like my odds of selling good wood pellets....bring on winter.
If'n there was a ton of money to be made by selling a ton of pellets, A ton of people would be doing it....... Dan
