It's the difference between cost-plus and value pricing. In this case,
the build cost is marginally higher for the carved tops for obvious reasons, but nowhere near the bump in sell price because the
perceived value is dramatically higher.
Two things to note - Warmoth recently bought a 4 head CNC machine, which quadruples production. Have we seen any adjustment in price? Of course not. They ate the savings as profit, less amortization. Not that that's a Bad Thing - they may have reinvested that reduced production cost in other areas, rather than just take the savings as profit. Hire more people (more jobs), improve response times and consistency, etc.
Gotta be careful, though. Customers aren't always stupid. Nobody sees physical flaws in the carved bodies or the finishes on them from the competition who are offering those things at
dramatically lower prices. Good wood only takes you so far, and Warmoth doesn't have a corner on that market. I can buy an Agile LP that will embarrass Gibson for $400-$600, and I can't even buy an LP body at that price from Warmoth, let alone the the other $600-$1,200 I need to spend to complete it.
There's such a thing as the
Laffer Curve, which is most often used to talk about taxation and revenues, but also applies to commerce. Raising prices does not always result in increased income. There comes a point where the price is too high, so sales drop off and revenues decrease. Warmoth may be at the crossing point or beyond when it comes to carved tops.
Maybe they'd rather not build them? Pricing them at the point of pain for the customer may relieve some pain for themselves.
ccasion14:
