I have written many a time about Luoman Log Homes (here and here). They came out to the market with a log mobile home and had great plans to take over the world and especially the North American market.

Like vrs. Love
I liked the TV ads, which they ran in relation to the mobile campaign and the product was functional. Unfortunately ”like” and ”functional” aren’t apparently deciding factors when people are making their mobile home purchasing decisions - try ”love” and ”beautiful” instead. What are your critical buying factors?

Failing to create a market
Looks like the pricing was a tad too high for this mobile home model and as they rolled it out as a product launch, they probably used reserved marketing budget before realizing any marked number of orders. It is difficult to innovate new products in log home industry.

Copycats in action
Think about it, isn’t it so that in any given style segment of log homes (rustic, modern, Scandinavian etc.) it is really hard to tell the difference between the manufacturers. Almost every day I come across the situation where customer comes and shows me the plans of some other log home manufacturer and asks to get a quotation of such a home. What do you think, can you distinguish between log home manufacturers by e.g. looking photos?

Collective development
It is virtually impossible to protect models, one can try, but then there are some slight changes in those final blueprints and hands are washed. This is just the way of the industry. But here we also find the secret of log home product development. Those tiny tweaks that we make to designs of other manufacturers, steadily inch the industry forward. We learn from others and with our fierce competition we collectively develop our product.

Lessons learned
What we can learn from Luoman Log Homes is that it can be costly to develop a brand new product category. One must have deep pockets to support the maturity of the segment and educating customers about new possibilities. I have no doubt that someday mobile log homes are a strong niche segment among log homes.

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Log cabin used to be a family affair in Finland. Everybody seemed to have that special log cabin somewhere on the countryside. Log cabins were self-built and maintained, big part of the fun being slate of chores needed to keep the cabin in shape. That has changed.

Nowadays the traditional approach on log cabins has stagnated and a new trend has overtaken the old way of spreading log homes to deep forests by lakes and rivers. Today the idea is to get a carefree vacation cabin that doesn’t need constant attention like log cabins used to need. Solution has been to focus on building new log cabins around skiing resorts. Around these resorts, cabins locate side by side, making it easy and profitable for service industry to take care of the cabins. Owners can forget maintenance and hit the slopes, go motor sledging, cross-country skiing etc.

How this has changed the log cabin industry? Prices have rocketed. Skiing resorts are mostly in Finnish Lapland, which basically is galaxy far, far away, no matter from where you look at it. It is not possible to build and maintain the cabin anymore, because of the distance. Distance is also the reason, why these cabins would be empty most of the year. When we combine the high price of such resort log cabin home, the difficulty of visiting it, and the couple of weeks usage that any given log cabin has - we get log cabin rentals. More and more Finns rent their log cabins during the time they are not using cabins by themselves. The variety of log cabin rentals in Lapland, Finland is at all time high.

All this is good news for travelers. When people visit skiing resorts in Finland they have much improved selection of accommodation, which in turn increases the volume of travelers. Finally increased traveler volume brings more possibilities for entrepreneurs, therefore services become more readily available. For now Lapland vacation log cabin sector is booming and there is slight bubble developing, but in the long term, prices will level off and Lapland’s tourism sector can enjoy steady flow of travelers.

I must disappoint you, because there is no specific and right way to get a log home or log cabin. However I try to demonstrate how to build a log home. I will show the process from the start to finish and explain the details and motivation. There will be pictures, video, articles and interviews that document the whole project from the idea to the finished log home.

I am able to do this, because it’s me who is going to build the log home. Time frame is staggering because I have reserved three years for the whole project, starting from the beginning of the year 2007. I don’t know how many of you will have the patience to follow the progress or the lack of it, but I publish the information here anyway.

I have noticed that many people start to chase their log home dream from the wrong side of the street. What these people do is that first they are mesmerized by some of those stunning pictures at log home magazines. The second thing they do is to start shuffling through some floor plans, because those log home magazines are all about floor plans and log home dreams.

Together those trends put people in situation where they have high hopes, possibly unrealistic budget expectations and tentative contacts with log home dealers about the price of building a log home. Inexperienced and inspired are two adjectives that make sales people think about money.

I am not saying that you shouldn’t be inspired, after all, burning desire and passion are often the last two resorts, which keep any project running while facing hardships. However, I would like you to decide between – are you a log home owner-buyer or are you a log home owner-builder?

If you envision yourself as a buyer then you don’t have to worry much, just be careful while choosing your realtor and follow normal home buying process. If you want to have the whole big log home dream of building the log home on your own land with your own hands, boy, are you in a heap of trouble…

Long gone are those days when it was possible to quickly build a half decent log home. Nowadays log homes incorporate modern utilities and technology and given the special nature of log construction – well - log homes are more difficult to build than normal timber frame or element houses. Prepare yourself! I’m going to write a series of articles that will get you started, but as you will see, it is a long road.

In the U.S. the log home industry has benefited from the strong economy and especially from the strong real estate market. At the same time, there has been some sort of revival of log home culture. Generation of baby-boomers is acquiring log cabins and log homes for retirement. Almost every established log home manufacturer is still alive and new players are emerging monthly. It has been all-out sunshine and none of that bad ultraviolet radiation.

How come any of that is even remotely related to Finland? It has been pretty much the same over here with the exception of our tiny home market. Finnish log home companies had to start exporting from early on to grow the business. Many companies were started to surf the latest money making trend. Unfortunately for our companies, the value of euro has been rocketing against U.S. dollar. This has made Finnish log cabins and log homes rather pricey compared to what they were before. Result – a severe drop in demand and therefore financial crisis.

Out-dated design makes a poor seller.

In coming years, I hope, U.S. foreign debt starts dropping and dollar will rebound. That is the time when foreign log cabin and log home manufacturers resurface U.S. markets as tough competitors. They have weathered difficult times by rationalizing their operations and improving their models. Quite a few U.S. log home manufacturer will be in serious rough in coming 5 to 10 years.

Before you all get carried away, I must point out that currently this program is only available in Finnish. It is based on the research done by the Construction faculty of the Tampere University of Technology.

Results speak for themselves. For example, my friend did crude cost calculation for his house project and walked away with estimation figure of 162 000 euros. Year and a half later he had his final inspection and the tab for construction cost was closed. The real total cost for the whole project came to 159 thousand euros – pretty accurate.

So I decided to set a price for a log home made by Honkarakenne Oyj with this tool, let’s see how it turned out:

First of all, I chose Honka’s Aikamatka as the test model. Aikamatka means “time travel” in English, but that is not why I chose it. I chose it because of the simple structural design, which is as close to ordinary house as possible. Also, later it is easier to do some comparative cost estimating with different materials, while maintaining the basic floor plan and design.

Biggest problem here is that Honka doesn’t give out their prices, so the program has to set an average pricing for a log cabin kit. Here is a PDF-file if you care to check out some details (still everything is in Finnish).

On the right bottom corner you can see a box with overall costs. I set the land price to 12 000 euros and that extra 1 200 euros goes to obtaining construction permits. Cost of construction with those specifications tallies 121 172 euros, but because I’m willing (and able) to do major part of constructing by myself, 36 350 euros can be deducted making the totaling 98 000 euros. 1 180 euro per square meter sounds quite high to me, what about you?

Back in the old days, log homes were technology, which almost every man mastered. As time went on specialized carpenters kept on developing log home designs and their own skills. Eventually things developed so far that builder would hire a master carpenter to oversee and run log home building project. These carpenters wanted to leave a mark on their work from which they could be recognized, something of business cards. Solid corners were needed to keep log structure in one piece therefore corner became natural spot for carpenters to leave their trademark. There were as many variations of corners as there were proud carpenters. Nowadays we have lost our animal sense of log home building and therefore we fall as a prey of marketing, trademarked or patented corner cut this and that and so what…

Check the picture, there is a model-protected corner cut as well as model-protected thru-bolted log fastening system. Every modern log home and log cabin has those features, so what’s so high-tech about it? Anyway I thought that we are talking about natural way of living here.

Are kiln-dried logs such a technological breakthrough as log home companies market them to be? What does this technology do anyway?

Freshly felled logs will shrink as they slowly dry out. General rule of thumb is that it takes about 3 years of drying before logs can be used as log home raw material, without experiencing drastic settling.

This means that somebody has to attend those logs for 3 years before they can be used. Processing and storage costs keep on piling continuously. Few log home company has the resources to keep their own storages. Moreover, ramping the production up and down according the demand is very difficult if one has to think about raw material cycle.

It is pretty clear that log drying costs money. If outside party does this natural drying process, it will most certainly want to set higher price for their product than normal logs have. Therefore, big enough log home companies prefer to set up technology, which they can use to kiln-dry their logs. They can get logs cheaper and adjust the drying process according their production needs.

To the customer they can sell this money saving idea by saying that this way logs are high-tech products that cost more, but boy what a quality. Watch out the marketing terminology while shopping a log cabin or log home.

Log homes and log cabins can be surprisingly difficult products to understand. You get all kinds of sets and degrees of deliveries. Moreover, log homes and log cabins are image products, just open any log home magazine and it is all about emotion to have one not about money it takes to buy one or skill it takes to build one. These are the reasons why it is so easy to be lured by advertising while shopping log building.

Seth Godin had a piece about nutty pricing. I don’t know how was the case with Seth’s example, but nutty pricing can sometimes be clever pricing. Many log home companies name various delivery choices with normal buyers campaign mentality in mind. They might have four different delivery packages for certain model e.g. like this: basic, normal, deluxe and service.

The idea is to rely on our logic thinking. We automatically go and presume that service package is the best, however they set the package pricing lower than deluxe so we believe the company when it says that service package now has special pricing because of the season (it is always the season for log homes). If we go into the details and compare the delivery contents, we notice that deluxe was indeed much better, but to notice that, you have to go and have long discussions with the sales agent.

Mind about the product and the price it is not always what the label says.

Auctioning second quality log home kits and only tonight, the newspaper ad declared. Auction will be held at company’s premises so purchaser can check the merchandise. It was simple black and white text ad, tiny and cheap looking. Certainly it got masses moving. Mill yard was packed with people, and everybody was excited, but me or that’s how it looked like to me.

You see I wasn’t excited because starting price was set almost to the level of normal selling price. Because of all the commotion and tight scheduling, many people came unprepared and unknowing what they actually were trying to buy. As we all know, log homes and log cabins are rather unified products, so most log home companies try to differentiate themselves by introducing several packages, some including windows, doors, flooring, roofing, walls etc, some including just walls. It really is difficult to make an educated decision.

All kits were sold over retail price, but because it was an auction there were some amazing tie-ins with auctioned kits, including super value like flooring material. Clever business, which reminded me of supermarket in-store ads “Buy 2, just 2 euro” and when you check the price of one, it is actually 99 cents. Know what you are buying, and remember, all manufacturers have their special corner notch that is basically the same as with other manufacturers.