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Hand made guitar prices
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Author:  Lab1 [ Thu Nov 08, 2007 10:03 am ]
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I know that this is going to be a difficult guestion to answer given the different prices in the different materials used....The owner of the music store in the area wants to buy a couple of my guitars....I have only been building for a year and I would like to have the guitars put on display...The guitars are to be east indian rosewood  with AAA Englemann spruce tops ,five piece mahogany neck..trimmed with curly maple bindings at a cost of 300- 350 dollars each when finished...What would be a ball park figure to charge for each guitar....Any thoughts on this would be very helpfull....Larry
Author:  KenH [ Thu Nov 08, 2007 10:10 am ]
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Surely this is a typo?


It costs me around $300 each for materials alone for my basic EIR guitars with AA Englemann tops, more if it is some special woods. I dont know how you could possibly sell guitars that cheap and make anything at all for your efforts.


If they sound like anything at all, I would put the end price somewhere between $3,000 to $5,000. Then you could cut the music store a deal and still make something.
Author:  peterm [ Thu Nov 08, 2007 10:22 am ]
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wow!! I pay more than that just to get the guitar finished....
Author:  Lab1 [ Thu Nov 08, 2007 10:55 am ]
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Sorry if there is a misunderstanding.....The cost of the material is 300-350 dollars in material to make each guitar....The past guitars have turned out real nice.....I tap tune the tops and backs and have been very pleased with the results....Thanks for the reply....Larry
Author:  JohnAbercrombie [ Thu Nov 08, 2007 11:02 am ]
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[QUOTE=Hodges_Guitars]

Surely this is a typo?


It costs me around $300 each for materials [/QUOTE]

I think the idea is that the materials cost is $350 or so for each guitar, and the question is what to charge for each guitar- at least that's how I read the original post...I may well be wrong.

That said ( and I think the material estimate is probably not including a lot of incidental costs like abrasives, solvents, blades, sharpening, shipping costs on materials etc etc) the materials cost is such a small proportion of the final cost compared to the labor/skill, etc that it really doesn't make a big difference to the final price, unless you are 'upgrading' with expensive b+s woods and such. C.F. Martin IV made that point in a talk which is reprinted in the current GAL mag: "If you're going to put a high-quality guitar together, it doesn't matter much what the materials cost."

If the guitar is good enough to sell, then put your label in it and get 'the going rate' for it. If there are problems with it, it might be smarter to keep it out of circulation, rather than selling it at a discount. Just my two cents worth, as a hobby builder who has yet to sell an instrument.

Cheers
John

Author:  John Mayes [ Thu Nov 08, 2007 11:22 am ]
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Forget Guitar prices... My advice is if you've only been building for a year
don't sell em. You'll be glad later on if you stick with lutherie that you kept
them. Keep improving, and think about selling them another time way down
the road.
Author:  Hesh [ Thu Nov 08, 2007 11:33 am ]
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I have the agree with the Johns here and I am not a prostitute either.....

Your good name is on the line and although it sounds like you are making very nice guitars very early on you have no data of how they will hold up.

Rick said today that he hates warranty work and I think that we all do and would.

To give you something constructive that you might do right now and benefit from get some in to the hands of avid players and have them be beta sites for you.  Mine the data obtained to determine where you do well and where you need improvement.  Maybe even display one, not for sale, in a sympathetic store indicating that orders will be taken in the future and prime your market.

Good luck.
Author:  jack [ Thu Nov 08, 2007 11:37 am ]
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I would say that John Mayes is giving you some very good advice; I would add to that by suggesting if you are going to make guitars for sale it'd be a big plus to be able to repair them.
jack
Author:  Bill Greene [ Thu Nov 08, 2007 12:13 pm ]
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[QUOTE=Hesh]To give you something constructive that you might do right now and benefit from get some in to the hands of avid players and have them be beta sites for you.  Mine the data obtained to determine where you do well and where you need improvement.  Maybe even display one, not for sale, in a sympathetic store indicating that orders will be taken in the future and prime your market.Good luck.
[/QUOTE]

This is good advice, very good advice. And I agree with John Mayes.
Author:  bob J [ Thu Nov 08, 2007 9:52 pm ]
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I could sell them at an earlier time if I put Hesh's logo on top
Author:  Bruce Dickey [ Fri Nov 09, 2007 12:47 am ]
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There was a great thread a while back about prices and percentages needed by music stores. Great reading. My concern too for you is getting good enough building that your work stands up to the competition.

Don't be discouraged by this thread, be educated by it. Prices for handmade guitars are "what the market will bear." Do you have any pictures of your guitars you could throw up into this thread Larry?
Author:  erikbojerik [ Fri Nov 09, 2007 12:54 am ]
Post subject: 
Two separate issues here; even if you've been building only a year, but
you've made a ton of guitars in that time, then you might have your
quality and chops dialed in.



On the other hand, it is still too soon to know how the instruments will hold up over time.



All this talk about hatred of warranty work has me wondering....how
long exactly do you guys warranty your work against defects in
"materials & workmanship"?  A year?  Two?  Ten?
Author:  Lab1 [ Fri Nov 09, 2007 1:50 am ]
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Thanks for the response and the good advice....I totally realize that I am not going to hit the market with high priced guitars given the short time that I have been building. Since I retired two years ago I have been reading and watching everything I can get my hands in reference to instrument building,Don Macrostie,Dan Erlewine,Irving sloane, Graham McDonald and even John Mayes, to name some...I am very familiar with working with woods and have done so all my life ( my grandfather was a master carpenter) When I started to build there were no surprises and I turned out a very nice mandolin, followed by three guitars and an Irish Bouzouki.....I sold my first Guitar and the Irish Bouzouki for two thousand dollars.....The guy saw the instruments and offered me the two thousand dollars and I gave him a warrenty of " if the instruments has any problems I want to know about it and that if it can't be fixed I will make him another one"...Since then I have made six. Giving away some to friends is a nice gesture (which I have done) but it is not a very cheap practice.
I am looking at selling in the range of 1,200.00 to 1,500.00 (Canadian of course LOL) with the same warrenty as above....The bottom line is is, if I can't build and sell at a small profit to purchase more materials then I can't continue to build......Thanks again Larry
Author:  Rick Turner [ Fri Nov 09, 2007 2:31 am ]
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If you can't build at enough profit to buy more materials, pay yourself a decent wage, purchase more tools, pay insurance, pay rent on a shop, and then have a net profit on top of all that, you're not charging enough.   You need to do a very accurate bill of materials (BOM), and then you need to estimate...not optimistically, but rather realistically...how many hours you've got in a build and multiply that by your hourly wage.   That should be about 60% or thereabouts of what you get for the guitar.   Then you should have about 40% gross profit (GP) to cover overhead, cost of sales, etc., etc.   If you can't hit at least 30% GP, you're eventually going to go out of business.   And just because you think you're in a low overhead situation now that you can charge less for your guitars.   That's a classic huge mistake because as soon as you do need to take on real shop overhead, you'll either go broke overnight or you'll have to raise your prices so high and so fast that you lose most of your business.

So the formula above is for your net ex-shop price. Consider that the wholesale price.

Be prepared to...on top of the above figures...give up 25% to 40% of the retail price to dealers.    Dealers then need to make Yes, they'll make more "profit" on a guitar than you will. They have a whole other set of costs... Don't for a minute think that if you choose to sell direct that you can sell for wholesale prices. Selling costs time, and the more instruments you make, the more it will cost because you are having to go outside your comfort zone to sell.   Every minute you're selling or talking guitars is a minute you're not making one.

Hmmm. Gotta go make some guitars...
Author:  Rod True [ Fri Nov 09, 2007 2:54 am ]
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If your going to go into this more seriously Larry, you'll be underselling yourself and everyone else at a price of $1200-$1500.

Your building hand crafted guitars.

When I sell for cost (which is all I do till I get my chops up more) I only sell to friends who are close to home so I can watch and see the guitars for time. This sell for cost is $800. That's what I've figured my total cost is to put the guitar out of my shop (which I own so no rent is required).

It takes me about 120 hours to build one guitar so that would work out to $5.83/hour for my labor if I sold at $1500.
This is really where the conundrum comes in. Most hand builders start around $2300 and all go up from there.

There certainly could be a perception about your guitars if they are priced well below the general starting point of other hand crafted guitars.

So even if you get your build time down to 40 hours (I know there are a few guys here who build that quick) you still would only be paying yourself $12.50/hour selling at $1500.

Don't undersell yourself and the rest of the industry, and don't start selling to those you don't know till your really really sure your up to it.

Oh and my thoughts on warranty. If any problem is an issue of construction you must be able to repair it. Building someone a new guitar instead of repairing the original is not warranty. Repair is vital (I believe) in being able to consider oneself a professional in this industry.
Author:  Hesh [ Fri Nov 09, 2007 3:32 am ]
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I completely agree with Rick here including the part that I too need to get off the puter and back to #15.

I will add something that I believe to be very important:  If you do not do all that you can do in how you manage and promote your business/brand to impart the uniqueness, specialness, quality, and most of all "value" of your guitars how would you ever expect potential customers to see the value that you offer too?

Selling at a low ball price can have a detrimental impact on how your products are perceived.  Ever hear anyone talk about cheap "insert country of choice here" goods?  Public/customer perception of the value that you offer will make or break you.

If a builder sells for a low ball price also indicating that they are new, don't know a great deal yet, and just want to cover materials you are also in a way telling the prospective client that you do not know what you are doing and dealing with you is risky.  With friends and family, although this may be OK and they may be willing to take the risk to help support your dream remember that friends and family are priceless, stinking guitars are not.......  This is why I will not let a dime exchange hands with friends and family.

From what I read it sounds like you may be making some very nice instruments now.  So why not figure out your real costs as Rick said and price accordingly.

And remember that studies have been done that when a product is offered at a low price X number will sell.  When the same product was offered at a higher price X + more X products were sold.......  If you impart value in all that you do and communicate this value successfully you deserve to be compensated accordingly and I believe that you will be.

Good luck.
Author:  Sam Price [ Fri Nov 09, 2007 4:43 am ]
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[QUOTE=Rod True] you still would only be paying yourself $12.50/hour   [/QUOTE]

Sheesh, I'm glad I build guitars for a hobby- I earn more than that in my day job!!

I understand about underselling guitars- giving people the false allusion that they CAN be made for that much, and undermining other's work.

There have been some great threads on this forum lately, it's been a pleasure to lurk.

Author:  Michael Dale Payne [ Fri Nov 09, 2007 4:56 am ]
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Ok here is my take. First you have to determine your value of materials, consumables, utilities, Here is a big one) peripherals like retail or custom cases, shipping and handling and labor rate. This just gets you to the cost not the retail price. Once you have a handle on what the cost is now you need to know what is an acceptable profit margin and if all this added together fits in a competitive range with other builders of equal and or greater skill levels and experience. That is a biggie.

I can tell you from experience that all this is not an easy thing to get right the first several dozen guitars.

I price on the extreme competitive side but I price based on a basic configuration. 3A IRW/3A Sitka basic wood binding no added purfling simple 3 ring rosette, my standard tuners 3 piece laminated neck. My custom built Ameritage case ect. That for me came out to $1800 with the minimum profit margin I I selected.

Now with all that said 90% of the guitars I build run in the $2800 to $3200 range. The difference is in the add on charges for custom woods, features and appointments.

Almost every commissioning client I have had starts with "I want to keep this simple" but before the contract is settled they always add/change woods, features, components and adornments. I quote these addition things at material additional cost + additional labor cost if needed.

I can tell you now that getting you production cost right will take years so leave reasonable leaway there.
Author:  Hesh [ Fri Nov 09, 2007 5:24 am ]
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I have wondered for a while what some of the more well known builders use for the up charge rate for optional woods.

For example, your customer wants BRW and picks out a set that costs you $600.  What percentage up charge do you add and charge to the customer.

Also, say you have had the BRW for 10 years and paid $200 for it back then and believe it to retail, as a set, at $600 now.  What do you charge the customer?

Cases:  You get them for say $180 - what do you ding the client for?

Would not a similar model to what retailers do be appropriate here?  And, BTW, what is the retail markup for guitars and accessories?

And yes I was one of those rotten kids who kept asking "why, why, why" all the time......
Author:  Michael Dale Payne [ Fri Nov 09, 2007 6:00 am ]
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Well my friend I don't have a stash of BRW so I cant answer that. What I do with the common tonewood upgrades is charge the client the cost, and if the wood like Ziricote has some inherent working risk I will add a 10% surcharge to the additional cost to pay for a second order shipping cost in case I have to order a second set. I would of course eat the the cost of the wood if something went wrong.

As far as my custom cases are concerned, I buy in such small quantities that my discount is smaller than many but I have a good handle on my case cost and that cost is in my basic production cost So I do not add a case cost unless the client requests special features that my case does not come with Like a different exterior or interior fabrics. In that case the client pays an additional case cost, no markup.

Same way with tuners if the client specs out custom tuners or any other hardware, outside of my standard product line the client pay for the cost of that hardware. I don't give a variance credit for the standard hardware but I dont mark up the add on or charge the shipping fee either so it is typically a wash.
Author:  Rick Turner [ Fri Nov 09, 2007 6:11 am ]
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You need to charge at least a 50% markup on exotic woods...and that's at wholesale.   100% or more is not out of hand given the risk.   Also, the longer you have it, the more it should be worth because of a) inflation, b) increased inherent value because of seasoning, c) because it's rarer, d) because you should be charging market rates and allowing yourself to make some darned dough on something for a change.   

Then there are other issues...I hate to build with other's wood, for instance.   What if I crack a side?
Author:  KenH [ Sat Nov 10, 2007 4:48 pm ]
Post subject: 

In general, I double my actual costs for everything that I build a guitar with. This covers my time searching for the woods, shipping costs, and some of the incidentals like glue, sandpaper, etc. It also covers power costs and somewhat of my tool costs.


When you figure that a basic guitar with EIR or mahogany runs me around $300, this sets the price to the customer at $600. I include a case (will now be ameritage cases) with each guitar, so you have to add that into the costs. After that, I try to pay myself something for my efforts. I am "offically" retired, but I still need to make something for my time and efforts.


I truely feel like my guitars play and sound equal to or better than any of the factory guitars, so my pricing is in line with theirs. If for some reason my back log should grow to more than the 6 month I have right now, then my pricing will increase accordingly to what ever the market will bear. So far, people think my prices are reasonable.


 
Author:  Dave Rickard [ Mon Nov 19, 2007 2:13 am ]
Post subject: 

I may be way off base here but I think you should take into consideration how much it will cost you to replace the wood not how much it cost you. I'm I out of line here?


 


[QUOTE=Hesh]I have wondered for a while what some of the more well known builders use for the up charge rate for optional woods.

For example, your customer wants BRW and picks out a set that costs you $600.  What percentage up charge do you add and charge to the customer.

Also, say you have had the BRW for 10 years and paid $200 for it back then and believe it to retail, as a set, at $600 now.  What do you charge the customer?

Cases:  You get them for say $180 - what do you ding the client for?

Would not a similar model to what retailers do be appropriate here?  And, BTW, what is the retail markup for guitars and accessories?

And yes I was one of those rotten kids who kept asking "why, why, why" all the time......
[/QUOTE]

Author:  Dave Rickard [ Mon Nov 19, 2007 2:16 am ]
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EDIT; should be "Am I" not "I'm I"
Author:  Hesh [ Mon Nov 19, 2007 2:28 am ]
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I agree Dave - the price should be determined by the replacement cost, plus mark-up.  What I wanted to know was what is the percentage of mark-up that builders use.
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