Official Luthiers Forum!

There is a guy I've done some business with (music gear) for about 10 years now. He recently purchased a music store here locally and I went for a visit today. We talked quite a bit and he wants to have a couple of my guitars in his store. I explained that I'm booked up for a while, but told him I'd try to get him at least one by the end of the year. Truth is I could probably add two more to my schedule. I'm really not building too many each year so it shouldn't be too hard.

So the questions are many. Should I, should I not? He says he will buy them outright and then resell them. I really haven't gone "public" yet so I'm a bit concerned about pricing. I don't want to put myself in a bad spot being either too high or too low. He thinks they should retail for about $2200

My concern is just getting guitars out here. I really don't need to make much from them. Notice I said need not want. The point is I want to present myself to the market stategically to maximize my gain 10 years from now when I will need to get maximum dollar per unit. Of course in the interim it would be nice to make a few bucks off each sale.

Yeah Yeah I'm rambling. I really would like some input from you guys. What are your thoughts?

Ron this would be a tough search, but a good one. I remember some folks that have been at it a while having this conversation, so no doubt it's in the archives.

They discussed percentages, etc.... needed by the builder/ and by the music store.

Truth is, until there is name recognition of a product and demand, exposure is good. It's hard to be objective about your own work. Lay your guitar down beside a 2200 Martin and a 2200 Taylor and tell yourself, "If I didn't know I made this one, which would I chose myself to take home at this price?

You might be surprised by your answer.   

Let me tell you something. Back in May I had the pleasure of visiting Frank and Richard's Gryphon Stringed Instruments. In a locked case resided a jumbo Hoffman Sitka/Cocobolo. After seating myself on a stool, the salesperson assisted me by handing me the guitar.

Oh my goodness, what a thrill. I don't remember the price, it didn't matter. I was in heaven. That was one fine instrument. Strum..... oh my. We took some pics and I handed it back. Buddy, when you and I get to that point, that folks are mesmerized by our work, it'll be a great day, eh?

Search those archives.

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http://www.dickeyguitars.com

I'd say go for it! If he wants to buy them outright... I don't know what you're selling them for now, but if you're happy with what he wants to give you, the prices can always go up afterwards.
   You've got to send your guitars out there. I imagine a lot more people are going to see them at a music store as well... Best of luck.

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I'd like to be able to prove, just for once, that money wouldn't make me happy...

I agree... I say go for it.

I think consignment deals are a bad lot, but if he is going to buy your guitar outright then it is good marketing for you and you know you are going to get fairly decent representation since he has money tied up in your product.

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Brock Poling
Columbus, Ohio
http://www.polingguitars.com

Deciding your price point is always hard to do. There are two basic questions you need to ask yourself: What is the market going to pay, and what are your costs? If you do a little research in the business area (that's my current job), you will find most new companies undercharge what customers are willing to pay. In essence they tend to undervalue the product they're providing. The price you set needs to reflect the true market value of your guitars, as well as allow you to earn enough profit to build and maintain a healthy business, and doesn't leave you vulnerable to competitors. Sounds like a bunch of crap right? Well the bottom line is really figuring out what the true market value of your guitars is. You will most likely need to adjust up or down once you see what the market is like. Don't be afraid to change prices and test the market with your first few sales.

Good luck!

John

I think this is another situation where you need to look at it as mostly a marketing opportunity, not a revenue opportunity.

Considering that most inventory hanging in a music store came in at rougly 60% of list price I think it will be hard to "make money" using music stores as your distribution channel.

I would think it would be a way to get brand awareness and as an opportunity for people to see your guitars before they commission one. You might even incent the store owners to take the order (and deposit) on the spot when they find someone interested. You could give them a nice commission (just build that into the price).

The store may sell a few of the guitars you provide to them, but considering that they are going to expect a big discount I can't think you will find that to be financially lucrative in its own right...

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Brock Poling
Columbus, Ohio
http://www.polingguitars.com

I think there are several factors you need to consider:
1) What is your actual cost of producing the instrument?You need to know what your "break even point" is.
2) How large is the customer geographic base for this little store. How far does it reach?
3) Is there a large chain nearby where most musicians go? This may be where all the potential buyers "hang".
4) Is this store just a little store that caters to other musicians mainly and has a few "kids" guitars for sale? Your buyer mght not frequent this little store.
5) What is your target market? Collectors, players, professional, etc. Will your target market come into this store?
6) What would it cost you to advertise in local trade or newspapers? say you sell two guitars a year thru the store...that's $2200 worth of no longer available funds you could have used for marketing elsewhere.
7) Perhaps the owner would allow you to sell on consignment? You get exposure, maintain price control, and only tie up one instrument at his location, or you can put several different models on consignment...it's up to you then. The owner might want to buy only "dreds" because that's what sells...?
8) Is this the right time for you as a builder to put your guitars "out there"...is the quality where you want it? If so then why offer the instrument at such a discount ($2200)? For marketing purposes only? Will that store really sell for you any better than you could on your own?
9) The market will determine your price but you must determine your market.

This could go on and on... I am sure several people will disagree with me but...many of the same marketing and business principles that apply to every other business also applies to luthiery as well. You can approach it from a "sophisticated" point of view, or from a "traditional" artist point of view. OR BOTH!

People will certainly compare your guitar to Martins and Taylors but are they your target market? If I was in the market place for a CUSTOM,HAND BUILT guitar, I would NOT consider Martin or Taylor...I would be thinking price, but I would also be considering value, and how much I was willing to spend. Of course the well known luthiers command a higher price ( they derserve it) but that doesn't mean their guitars are better. If I had the money ( price was not a factor) Then I would be a different customer from the one who has a limited budget. Perhaps you can build for both...a basic, standard model...and "the works". If my crystal ball hadn't been dropped so many times it would work a lot better. Good Luck!

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Dave Bland

remember...

"If it doesn't play in tune...it's just pretty wood"

I have a deal like this with a cousin of mine that runs a music store in southern Louisiana. He bought one very ornate guitar ( D45 style abalone purfling and my Jap Maple leaf vine) from me at material cost plus labor. He has put it in a locked display case and allowed only known and serious clients to handle it.

Our deal was that the guitar was his personal guitar but that he would display it and advertise my custom guitar building info at his store and distribute my promotional CD in return for the discount. He has had it about four months. I have recieved six inquires related to it. I have yet to make a commission on it but for me it is free advertisement.

No price is set on this guitar as it is his personal guitar. Instead my sales info is given to interested customers. The only thing my cousin gets is the fact that he got his guitar at cost plus. This is a pretty sweet heart deal for me as I have nothing on the line.

I agree with Brock. Consignment deals on hand crafted guitars are not win situations for the luthier most of the time. Most music store customers are not the clients that will fork down $2k+ for an unknown luthiers guitar. That said it is still good exposure.

Now the big question in this scenario is are you willing to stand behind your work. As in defining and providing a set warrantee. This is one of the mistakes that hobby builders make when trying to sell there work. Having a defined warrantee is both a protection for you and the buyer. A warranty is a big selling point. You must understand that you will be held to the wall on this warrantee.

Al this said exposure is what starts the ball rolling.

I have a slightly different view of this from past experience. Yes, if he is going to buy the guitar outright, go for it, it's great exposure.
BUT, if it's a consignment deal, I would strongly advise against it. Here's my reasoning. 1) The music store has no vested interest in your guitar. If someone comes in and says "I've got $2k to spend on a guitar, which one should I buy?" do you think the worker at the music store is going to recomend your guitar that they get ~30% on or the Taylor that they already have $1k invested in? From my experience my guitars never left the wall for this reason.
2) If you put it in a store on consignment, don't ever plan on pulling it out and selling it as new. It will have dings and scratches. I basically lost $1k just by having one of my guitars in a store for a month.
Not worth it to me.

A related question would be, Has anyone had success dealing with Consultant/Dealers who will recommend your guitar to clients in exchange for a cut of the deal?

Bingo!!!

Consignment deals are bad...

They are are also bad for your brand. Because the store owners had to virtuall sell their soul to be allowed to carry some of the big named guitars they have to guarantee to move a certain amount of inventory each year.

I have had a sales guy actually tell me that a Takamine was as good (if not better) than a VERY famous luthier's guitar (not going to tell you who). There was really no comparison in the gutiars. The Tak was "ok" but the hand built was very nicely made and sounded great. The luthier guitar was about $8k and the Tak was about $2k.

I never really told him that I build guitars, but felt around enough to find out the luthier guitar was on consignment.

...

so it is clear what happened, he needed to move the Tak to make his quota and to recoup some of his cash. Therefore he would say or do anything he had to to get me to buy THAT guitar.

What I thought was really damaging though was the fact that he just discounted the luthier's brand by telling a customer that the less expensive, production built guitar was "better"

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Brock Poling
Columbus, Ohio
http://www.polingguitars.com

I agree with Hesh on the fact that you shouldn't price by comparing to brand
instruments. Somebody who will buy an artisan's instrument will not
ncessarily buy a factory made one and vice-versa. In any case I do not think
this person would expect to pay less than $2200 for a handmade guitar.
BTW what kind of guitar is it?
Paul has a valid point, depending on the store it could be a total waste of
time and resources. It depends if it's a fairly big music store where kids hang
out and bang Nirvana's songs on any guitar, or a little "boutique" shop
where you don't have to scream to be heard and where there is a nice
humidity-controled room for high-end instruments. Even as a consignment
it could be good publicity, leave business cards with the guitars and on the
counter.

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Laurent Brondel
West Paris, Maine - USA
http://www.laurentbrondel.com/

If i were to have a guitar displayed in a music store one day, i would want that guitar to be in a locked glass display and have it played by serious buyers only. The locked display would serve to promote the uniqueness of my build and help target my clientele BTSW. I would also want recording sample of how my guitar sounds so not so many hands have to touch it butwould still be able to hear it. My $0.02Can worth

[QUOTE=Serge Poirier] If i were to have a guitar displayed in a music store one day, i would want that guitar to be in a locked glass display and have it played by serious buyers only. [/QUOTE]

Hmmm ... I want my guitars to be played. Sure I don't want someone doing windmills with them, but I want them accessable and to be heard. How do you know if someone is a serious buyer?

I have sold quite a few guitars through a consignment deal too and the experience has been fine. Most times the instruments were sold within a couple of months. Of course you need to choose the right dealers for this to work.

If you have ever gone to Mandolin Brothers in Staten Island, Stan Jay (the owner) actually encourages that you take the guitars off the wall and play them!
They are not behind a counter like most music stores,but hung on hooks with leather thongs.
So basically you walk over to a $40,000. D'aquisto,pick it up,sit down on a comfy couch or stool and play it for a while. Then when you are done with that one you pick up another and so on and so on and before you know it the store is closing.
Unfortunately (or fortunately) people need to play,carress,bond with your guitar before they are going to plunk down there hard earned cash for it.
Nobody likes there instruments getting "shop-worn" but that is the reality if they are going to get sold-I guess that's one reason some people commision a guitar.

Consignments are bad? Yes and no. Some very good and valid points are made against consignment...BUT....if your whole point of putting the guitar there is to get people to see it, and play it, than it is also a viable way to do so. Remember too that it also depends on the relationship you have with the owner of the store. This is a small store in a small town? Is he the only sales person ( true in many small stores)Of course he would rather make 50% than 30% but he also would rather make 30% than see a potential sale walk. He would still be the only guy who has one of your guitars on the shelf ( no wait for build).Yes there are poorly trained sales people. They should all be rounded up and shot.

But my guess is that if you make nice guitars, people will see it hanging and want to play it...regardless what the sales clerk recommends. Especially if yours is the only Hand made guitar. Remember too that you need to define your market...is it going to be to the same person who will be trying the $2000 Martin?...do they even have a $2000 Martin in the small store? Or will your guitar be the one and only "top" end choice?

Also remember that you can actually ask less for the consigned guitar than the out right sell to store "deal". AT $2200 sell price you'll get $1100. At $1600 consignment sell price you'll get $1120 after the consignment fee. Both methods are usable/do-able if you can live with getting $1120. But you might sell more at $1600 than at $2200. You need to figure out which one is best for you. You need to run your numbers.

Don't discount your options until you run all the numbers.

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Dave Bland

remember...

"If it doesn't play in tune...it's just pretty wood"

Dave... I disagree... (but in as nice a way as I can ) Consignment deals are bad.

Even if you look at it wholly as a marketing investment (which I agree with you is not necessary) you still run the risk of someone trash talking your guitar over a lesser quality production guitar simply because of their motivation to "move units"

The only exception I can fathom is one where ALL the guitars in the shop are on consignment -- kind of like a boutique, or one where the instruments are high end / vintage. Basically anywhere where the shop is not under the gun to make quota.

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Brock Poling
Columbus, Ohio
http://www.polingguitars.com

[QUOTE=johno] [QUOTE=Serge Poirier] If i were to have a guitar displayed in a music store one day, i would want that guitar to be in a locked glass display and have it played by serious buyers only. [/QUOTE]

Hmmm ... I want my guitars to be played. Sure I don't want someone doing windmills with them, but I want them accessable and to be heard. How do you know if someone is a serious buyer?

I have sold quite a few guitars through a consignment deal too and the experience has been fine. Most times the instruments were sold within a couple of months. Of course you need to choose the right dealers for this to work.[/QUOTE]

John, you do have a good point there, however, my perspective was from a hobbyist point of view, it's hard for me to imagine my finest baby being shaken by unknown hands so i guess it would not be a suitable thing to do for me and i would have to choose another way to be known, but i can understand that someone making a living out of lutherie would go that extra mile to get that kind of advertising though

Thanks for your perspective friend

Brock,
I agree with a lot of what you said...in general...and perhaps for most of us. But...this is a little town, and a little store no? So perhaps the dynamics are a little different. I/we don't know...I didn't say he Should do consignment. I only said he should consider all options before making up his mind. If he is the only high end guitar in the shop the owner might be making as much or more off the consignment as he is off the direct buy from his other suppliers. For example... on consignment the store owner will make $480 on that $1600. If his next "comparable" ( well it's not really a comparable) guitar is selling a $699 Martin the store owner is actually making more off the $1600 consignment. Plus, if this is his only high end guitar ( we are talking a small store here)there might not be anything like it. That also means the owner doesn't have a lot of money tied up in High end inventory that doesn't move in Small Town. There are a lot of unknown variables/details that we don't know. I do concede that in the regular/real world direct buyouts make more sense...unless your guitars don't sell...that music store won't be re-ordering from you if 8 out of the 10 guitars he bought are still hanging on the wall a year from now. Even if he buys your guitar out right, he still won't push it as hard as the Martins or Taylors because those manufacturers are forcing "x" amount of instruments on him to be a "dealer" right? If that's the case he want's to make his quota before he sells your handmade anyway. There's a lot of variables...don't misunderstand me I am not pro consignment, just stating that for some people, in some instances, it is the way to go. Another option might be as Paul did with his cousin. Some sort of other "deal" between the two parties might work as well or better. As I said my crystal ball isn't working too well these days.

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Dave Bland

remember...

"If it doesn't play in tune...it's just pretty wood"

This has been a great discussion. Very good points pro and con.

After reading all I say go for it, But don't make a long term commitment. Just a one guitar at a time deal. Get him to agree to front for you on custom orders at a fair profit if you like.

Again, no long term deal... Just feel it out. I have a feeling it is going to work for you as a beginning marketing strategy.

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Joe Beaver
Maker of Sawdust

I agree. Great thread. Thanx for all the ideas guys. I think I'll put two into the schedule and see where we end up. That is two, as long as he pays outright for them.

Lots of good info here and lots to think about again thanx to everyone.

FYI One man shop in a metro area of about 200k pop. He is trying to establish himself as being different from Guitar Center and the like. One way is by offering luthier made instruments, Lado Guitars are one example. He also has an agreement with a guy that is producing 20-30 handbuilt amplifiers each year, Don't recall that name. So it seems that my guitars would fit HIS business model.

Anyway again many many thanx