Why such a large increase in mulch $?

Mr. Vern

LawnSite Senior Member
Likely the suppliers have been holding on and not increasing for so long that when they checked it came out a little higher.
We produce mulches of several varieties including colored mulches, and what Duekster said is dead on for us this year. Every expense in our supply chain has increased several percent since January 06. I re-run the costs analyses every quarter, and this January we decided to pass the cost along to our customers. We raised our prices just over 5% so it looks like a large jump, but it just gets our margins to where they were 3 years ago. We will watch them erode for the next several quarters, and when they drop by around 5% we will raise our prices again. Fuel is an absolute killer as are wages and payroll burden.

The comment about co-gen plants buying it all up is accurate as well. We were able to negotiate much better pricing from our co-gen customers this year - we had to guarantee them certain minimum supply to get the good prices, but they are motivated to buy fuel.
 

Duekster

LawnSite Fanatic
Location
DFW, TX
We produce mulches of several varieties including colored mulches, and what Duekster said is dead on for us this year. Every expense in our supply chain has increased several percent since January 06. I re-run the costs analyses every quarter, and this January we decided to pass the cost along to our customers. We raised our prices just over 5% so it looks like a large jump, but it just gets our margins to where they were 3 years ago. We will watch them erode for the next several quarters, and when they drop by around 5% we will raise our prices again. Fuel is an absolute killer as are wages and payroll burden.

The comment about co-gen plants buying it all up is accurate as well. We were able to negotiate much better pricing from our co-gen customers this year - we had to guarantee them certain minimum supply to get the good prices, but they are motivated to buy fuel.
I hate it when I am right :)
 

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