What Causes Price Changes in Hardwood Flooring?
I write a lot of blogs about flooring, supposedly because our marketing department says they want me to share what little I know with our customers. I write these blogs because it allows me to do something that my coworkers think takes a long time, allowing me to loaf more than I should. Let’s keep that between us and talk a bit about what hardwood flooring prices are based on.
You Can’t Predict Flooring Pricing. 2 Manufacturers Tried.
If there is one thing no one is a master it, it is predicting hardwood flooring prices. There are so many components to the flooring market that it is difficult to predict. Some companies have even tried to control the market to better position themselves in the market. Guess how that worked out?! The two largest flooring manufacturers in the world are both in the process of exiting the solid wood manufacturing business. What does that tell you?
Commodity Products Live by Supply/Demand
Essentially, the raw material used to make flooring is a commodity. Like all other commodities, the law of supply and demand is highly applicable. Without getting too technical, I will try to explain a few situations that cause flooring costs to move.
The Weather Effects
On the supply side, the weather is probably factor #1. If you have any loggers in your family, or circle of friends, you will probably notice that they get a lot of days off when it rains. That’s because it is terribly difficult to harvest trees in the mud. People get hurt, equipment breaks, and it plain makes a mess. When it rains more than usual, as it has in Appalachia for the last 2 years, lumber yields go down. So much for the supply side.
The Demanding Market
Then we have the demand side. When the economy is running well, and homes are being built, the demand for wood increases. Cabinets, trim, and flooring are three examples of uses for hardwoods, but there are others, and they all affect the lumber market. Framing, decking, even furniture will use up lumber resources and may affect pricing. Flooring manufacturers like Shaw like when the demand is high.
Another critical facet of the demand side is the optimal use of different grades, we are known to carry some of the best cabin grade flooring in the market. In days gone by, when we had a strong furniture-producing market in the US, the highest grades of hardwood lumber were used to make furniture. Select and Clear grades had elevated prices due to this demand, leaving Common lumber to the flooring business. Today, we sometimes see the whole log going into hardwood flooring to make a change in hardwood. To give you another view, what if butchers had to use prime rib in their ground beef due to there being no market for steaks? That would be bad for the butcher, and the farmer that raised the cows!
Here’s a video where I try to breakdown what are hardwood lumber grades with 4 different grades of oak natural solid hardwood. Each grade is different, but they share the same wood species and overall color. This video helps explain why our customers love our cabin grade and other lower grade flooring. If you like more color, go lower on your grade! Of course, if you have any questions about any specific grade we are happy to help over the phone. Or you can read more about hardwood grads in our Hardwood Grades 101 blog.
These are just a few of the factors that affect the hardwood flooring business. Other aspects, such as employee costs and transportation expenses, are continually climbing and will continue to do so.
Traditional Wood Flooring Pricing Doesn’t Apply to ReallyCheapFloors.com
An understanding of the lumber market makes what we do here at ReallyCheapFloors much more interesting. Because our specialty is overstocks, seconds, and discontinued goods, the cost to produce are not that big of an issue. Every manufacturer has a good idea of what percentage of their production will be sold as promotional products, or off-goods. Like the power bill and employee costs, the majority of those costs are built into the much larger percentage of normal flooring as overhead. The flooring is then sold through retailers and box stores.
At ReallyCheapFloors, our job is to take those discounted products from the manufacturer and quickly move them through the market. What the manufacturer has in the cost of the product has little bearing on the value of the product. It is the value of that product to the market that determines it’s price. Look again at the beef analogy (since I love to eat). Why does the butcher pay the same price for prime rib and ground beef, yet he sells the prime rib for 8-10 times more than the ground beef? Because of the difference in demand.
That is how we can maintain the low prices that we offer. For a manufacturer that needs inventory gone quickly, we are a great avenue. And for a builder, flipper, or consumer that needs to save money, we are a great option! Did I cover everything you needed to know about hardwood flooring prices? Did I miss something? Send us a message on our facebook page or email us with our contact form above.