Properly pricing my product

[anthe]

Is there a certain formula to follow/certain method you use in pricing your work? What are you supposed to do to get a price out of your guitars after you add up the cost of everything and you actually build it? I've never sold my own work before and I'm not entirely sure what a reasonable profit would be/how to come to the conclusion of a reasonable profit.

 

[Duane_the_tub]

Good question for @LtDave32 . Good luck, would like to see your work - I really appreciate the craft!

 

[fatdaddypreacher]

i suppose that answer will vary depending on if you are doing it full time as income, or as a hobbyist or part time builder. also depending on where you are, it might simply be whatever the market will bear. i've always felt something is worth whatever someone will be willing to pay for it....the trick is to find the ultimate buyer for that piece at that time. I've had a customer tell me i'm waay to cheap and offered to pay me more when he received his guitar (and i feel a deal is a deal---up or down, so i refused, btw) . i have his name and number scratched in the wall on my shop surrounded by a bunch of dollar signs for next time....and have quoted others that i never hear back from.

 

[Joe Desperado]

We had a pretty good thread on this last year with @pshupe. In general, the value of the guitar is greatly determined by two things. How good your work is and how well you market it. That is the selling price. But in general, most set-neck guitars take about 40 hours to complete. You need to figure out what your time is worth. Time and Materials: Labor plus materials (and overhead) is the break even point. Then you need to decide if you want a business profit on top of that or if getting paid for your time is all you want out of this process.

Most of my guitars have a break even point above $3K + (Labor and overhead plus materials). From there I have to decide if I am just getting paid for my time (Labor) and the materials or if I want to make a business profit so I can invest in more tools, equipment etc. For some of us, hardware cost could be significant as we use top grade parts/hardware as part of the build. IE: some sets of pickups could be $500-1000 a set. That would drive the end price up significantly more than lets say a set of DiMarzios as $150 or $200 a set.

I don't believe that part time/full time or hobby really has much to do with the value of your time or end product. But it may play a role in if you need to make a business profit above T/M.

 

[pshupe]

We had a pretty good thread on this last year with @pshupe

Here is that post - LINK This was a little over 1 1/2 years ago and looking at prices now I would have to up everything by 30 - 50%.

The guys that make a decent living at guitar building have the right amount of marketing, sales, and personality. This is on top of great woodworking skills and knowledge of the instrument. I know quite a few people that do this as a living and always joke with them about me being able to afford all of these cool tools and gadgets because I do not build guitars for a living.

Cheers Peter.

 

[Ripthorn]

Since I'm just a hobbyist and I only really build what I want to build, I try to price my finished products at least double cost of materials (that pays for me to make that particular guitar as well as one more for me to keep ). Since it's a hobby, if it is anywhere near self funding, I'm cool with it. It's like nuclear fusion efforts, though, sometimes you don't quite hit break even, but sometimes it's just the pursuit.

 

[D'tar]

He said "profit" !!! LOL

joking aside, IMO... No less than time and materials+?%. Materials is an easy calculation. Time, well, if you are truly "Luthier" rendering first quality product you deserve a premium wage for your time and experience. If you are on the journey to "Luthier", your time is not as valuable if your product is not made with error free skill and acuracy. Perfection comes with that time and experience. You may find building batches of same model guitars the way to go to increase your experience and profitability. This may all be elementary in thought to most here. I truly hope all of us may know the feeling of having a desireable product worth every penny in return! Best of luck to you! Lets see some work!!!

 

[LtDave32]

Actually Joe, last year's discussinon was me..

Builds and pricing; a discussion..

Okay boys (and girl ); ), first off I'm doing fine, and have no complaints, other than I'm busier than I ought to be, and I'm in the shop every dang day. Exhausted. Gotta catch up. But, the pricing of builds.. This is purely hypothetical, I'm not raising my prices any time soon at all. I'm...

www.mylespaul.com

 

[Joe Desperado]

Actually Joe, last year's discussinon was me..

Builds and pricing; a discussion..

Okay boys (and girl ); ), first off I'm doing fine, and have no complaints, other than I'm busier than I ought to be, and I'm in the shop every dang day. Exhausted. Gotta catch up. But, the pricing of builds.. This is purely hypothetical, I'm not raising my prices any time soon at all. I'm...

www.mylespaul.com

Another great discussion as linked by Dave.

 

[tabascom16]

After getting into side business work you quickly learn that the market dictates the price. I tried selling oversized cutting boards at a big discount over what online places were selling them, and it turned out to be a huge failure. Everyone LOVED them, but no one BOUGHT them.

I do some guitar parts as side work as well, and I also misjudged the market there. I get some level of sales, but not to the level I would have expected by a large factor.

If you do quality work, people will pay more, even though it may cost you more time to be more thorough. If you seem to sell stuff rather quickly your price is low to fair. It you can't sell anything at all, then the market has put your price as too high.

 

[LtDave32]

I cannot do business in large volume. Not for what I do.

We've talked about it, the wife and I.

It would require a large investment and overhead, start-up money, staff, etc.

And I *could* do it. That is I'm able, competent in the trade and I can run a crew.

But to go from this to that, It would break my heart to cheapen and mass-produce product. And it would worry me every day to crunch numbers, worry about employee issues, etc. I'm 64, and I'd rather enjoy my pastime for whatever years I have left in the game.

My heart's in it, what I do now. And we plan to go into acoustic guitars, all hand made, tap-tuned etc and leave electrics behind. It makes sense to me if one is going for the small-shop, independent luthier thing, it's best done with great acoustic guitars, mandolins, mandolas etc. Now, there are jigs, setups and eqipment pieces we will have to buy, but nothing on the scale of what it would cost to gear-up for fast-produced electrics. Neck jigs, bending jigs and equipment, dovetailng jigs, etc. Not really that bad.

 

[sondich]

Definitely take your opportunity cost into consideration.

For example, say 2 garage builders want to ditch their day job & make a full time go of it. Each has the same skill set, equipment and each can make 10 guitars/month or 120/year.

One is a surgeon making $250k/year.
The other is unemployed

Before, adding for wood, hardware, finishing, marketing, shop help, profit margin, marketing, etc. (the usual costs luthiers have) the surgeon needs to start at a baseline cost of $2083/gtr (250,000 dr salary/ 120 guitars year) just to make up for the job he's giving up.

The unemployed person has no such income loss & can just figure based on materials,etc.

The Dr probably needs to price around $4500-5k AND sell 120 builds/year. For a new builder, that's insanely optimistic. If the market won't bite & he has to sell them at $1500 to move 120 of them - he may appear busy & successful but this full-time hobby is costing him a boatload of $.

Financially, he has no business making guitars unless he can actually sell them at the higher pricepoint. BUT, if it's his dream to be a builder and doesn't need the money, the lost income may not be a problem.

 

[Jay4321]

Here's what I would do if I wanted to turn guitar building into an enterprise myself: get on YouTube and other media demo a couple of builds a la Fletcher Handcrafted Guitars. Let people see your work and (hopefully) your awesome attention to detail and amazing results. Many people find watching someone very skilled at their craft to be extremely satisfying and, in time, some of those folks might actually become customers.

I'm NOT saying this is the best or only idea, but since I don't have any background with any well-known shops or really any reputation, I would be looking to start somewhere.

 

[cmjohnson]

Look at your guitar as a BUYER. What would YOU pay for it? Knowing that it's made by (this guy) and not (this brand name), and it has these features and is made of these woods and the workmanship is of this quality and it plays this well and the action is this good and the finish is this nice.....just review the whole guitar and figure out for yourself, what would you expect to pay for it?

In my case, if I'm taking an order it's going to start at 1750 dollars for something fairly basic like a flat top, solid mahogany bodied LP doublecutaway category instrument with a set neck. For something more elaborate like a carved top, highly figured maple top, set neck, nicely inlaid alternative to a Les Paul Standard or USA PRS, that's going to be generally somewhere between 3 and 4 thousand or it could go higher depending on options. (Not taking orders...but that's my price range if I did.)

 

[pshupe]

Find something unique that others are not doing. Make yourself stand out. You cannot compete with a offshore factory made guitar. So offer something they do not. That pretty much applies to any business.

Cheers Peter.

 

[Daniels Guitars]

I'm not a batch builder so I concentrate on making fewer guitars say 12 to 15 per year at the most but getting enough people to try them is one of the biggest hurdles for us small makers.

I use Facebook and Instagram plus you tube to get my stuff shown, next year I'll see about getting something into a shop, it's a tough business to make good money considering a proper trade guy is making around £200 plus a day in the UK.

I also specialise in aged vintage finishes which is good for standing out a bit more, I'll be doing a bit more vintage repairs next year too.

 

[cmjohnson]

There are those who want a custom built hand made guitar. Not a "budget" guitar made in an offshore factory. Those people expect to pay a higher price but for that price you've got to stand and deliver the quality they expect. There have to be real reasons why your guitar is better than the Harley Benton or Jay Turser or whatever's the student grade popular brand of the month.


To be very honest about it, that's getting harder and harder to do with every passing year. These overseas factories have really upped their game. The parts are mostly CNC cut, the finishes are mostly robotically applied, and are generally excellent. You've got to make a guitar that has the feel of a great one, use top quality hardware and electronics, your fretwork, nut work, and setup need to be above criticism, and most importantly of all, I think, you need to customize the guitar to the buyer's personal preferences. Neck shaped to his comfort. Action set where he likes it. The right fret size for him. A finish he loves.


As long as there are those who want something better than a 400 dollar guitar made in Indonesia, and want something custom made, there will be a niche for small luthier shops. If you can deliver the quality and deliver on an agreed upon schedule.

For me the first part is easy, but the second part....I'm in full guitar building stasis for now. I've got no workshop, too much stuff to get rid of that came out of my last workshop, and I even sold my precious milling machine which was my preferred method of doing all the body cavity routs. Fortunately when the time comes where I need to do that again, I can use a machine at a local machine shop for a nominal rental fee.

 

[Proliferant]

There's a lot of great suggestions in this thread. My 2c is that there are two alternative ways to answer the question of "what price"? The first is cost-based, i.e. you figure out the costs of everything attributable to the guitar, including your labour, materials, etc., add a margin to keep things going, include opportunity cost if it makes sense, and take it from there.

The second, more lightly touched on above, is market-based. What are other comparable producers charging for a similar product? If you check a bunch out in a shop, how does yours compare and where should the price be relatively (i.e. how much of a premium can you charge, do you intend to offer a cheaper product, etc.)?

As I see things you should do both exercises and see how the two different prices compare. This might well have you asking questions about the market generally, what you offer that the competition doesn't, how much extra that's worth to the market, etc., maybe going out and doing some research, but this is all starting to stray from the topic so I'll end my post here.