What do you consider a fair profit margin?

[Graffiti62]

Someone recently posted an eBay link on the board (http://www.unofficialwarmoth.com/index.php?topic=15544.0) where someone posted the price of $6,999.99 for a "Buy It Now" offer. It made me think - what do you guys feel is fair for a price for a guitar you put together?

 

[swarfrat]

Crazy BIN doesn't really bother me. I suppose that might just be his way of saying 'I'm not doing BIN unless you're stupid crazy'. It is an auction after all. Ridiculous minimum bids are what gets me - that's what says you've got to be smoking something. For all the stuff ebay has done wrong, the auction method itself is actually a great thing - since your price is determined by what you and one other person are willing to pay.

 

[Alfang]

I'd like to get $200 profit per build. I'd build 5-10 a day if I could sell em

I've done several builds for friends for free, theres something fun about put'n them together and playen em for the fisrt time. ( And by free, i mean they bought the parts and I assembled)

 

[elfro89]

I'd like to get $200 profit per build. I'd build 5-10 a day if I could sell em

I've done several builds for friends for free, theres something fun about put'n them together and playen em for the fisrt time. ( And by free, i mean they bought the parts and I assembled)

Damn it you had me going there  :icon_jokercolor:

 

[mayfly]

For custom stuff for enthusiasts, cost plus is usually the only thing that works.... unless you have a special spring that goes into a special handgun or something 

When I was making amps, I generally charged double the parts cost.  However, this really didn't cover all of the labour I put into them.

 

[Cagey]

what do you guys feel is fair for a price for a guitar you put together?

((parts and material * 1.15) + (labor * rate)) * 1.15 = sell price

That'll get you roughly 15% on your investment plus whatever you figure your time is worth. You'll never get that, though. A Warmoth guitar is considered "used" the instant you put strings on it. So, take whatever number you got above and subtract 50% to 70%. That should end up being roughly what you'll get for it.

 

[SustainerPlayer]

I won't sell.

 

[stubhead]

Really - I can make $25/hr. on my "day job", and it's hard to imagine getting half that for the labor for a Warmoth on Ebay. You see these guys come and go, year after year after year. They see Fender custom shop guitars and Suhrs and Tom Andersons and Hahns and Kirns and all going for $2,500, $3,000, $4,000 and say "Whoopie! I can make a fortune!" And a year later they're gone, and somebody else comes along. I do think that you can buy wood just as good as Fender's best from Warmoth and USA Custom, and of course the parts are all the same. And if you really, really  know what you're doing in terms of finishing (I don't) and fretwork and setup (I do) you can make a guitar that looks just as good and plays as good - there really is no "better than perfect", after all.  (BLASPHEMY!) 

But, the market just doesn't bear this out in terms of pricing. DeTemple and D'Pergo can sell Fender copy guitars for $5,000, and you can't. And, the reason I don't do fretwork for friends and students is they see it somewhere in the vicinity of "free" and I see it somewhere in the vicinity of "$25/hr." and never the twain shall meet. :laughing3:

http://www.detempleguitars.com/temp/CATALOG_ITEMS/DeTemple_Jazz_Pricing.php

http://www.dpergoguitars.com/index.html

 

[Jusatele]

If I were buying all the parts and assembling it, no finish work, I think between 300 and 700 depending on the quality of the parts, and after a good fret job would be fair. It all depends though on what you want to call parts

ok, if you were to do uber finishes, then get that time back as a part cost and charge a premium for the item
solid colors are just bottom line
then neck woods, an exotic gets extra just because
so as said. for a base finish with good hardware and common neck, 300 for a one off build
for a Uber finish with quality hardware and exotic neck, 700
and then there are those builds in between
Now start doing artwork and carved bodies and you just charge what the market can bear.

after all you have to look at it like a business, you need so much a day to cover expenses, and the price per can go down when production numbers go up
you see that in PRS, the guitars actually have gone down in price, it is just that with inflation they look like they stayed the same, but a axe selling for $3200 10 years ago is around $3200 today
and Basically he is selling a parts guitar he makes the parts, uber finish or not, to quality hardware and better than average pickups

 

[elfro89]

the problem with auctions is the god damn ebay snipers, it pisses me off when everyone waits till the last 30 seconds. What they should do is extent the time by 5/10 minutes if someone puts in a bid that late. Ebay suck ass, I never used the auction system only the BIN. And even then I prefer to just buy from a proper retailer and not some shitey ebaybiz

 

[Dan025]

depends on the guitar. if you build something that can appeal to a large number of people and is traditional enough that the user understands everything but exotic enough that it stands out from the production guitars and still not so custom that it only appeals to the taste of a few people you may make a 10+ % profit or atleast set the bin up there, but make sure the setup work is pro quality and the guitar actually sounds great and the hardware is of equal quality to the rest of the parts. if you have gaudy paint or gold looking plastic pickup covers or your nick name painted on it then expect 50% of the investment.

 

[OzziePete]

For custom stuff for enthusiasts, cost plus is usually the only thing that works.... unless you have a special spring that goes into a special handgun or something 

When I was making amps, I generally charged double the parts cost.  However, this really didn't cover all of the labour I put into them.

You talkin to ME? 

 

[TonyFlyingSquirrel]

Instrument manufacturing is a fairly low profit margin industry anyway, mainly due to labor costs.  This is where CNC benefits the bottom line.  It's a major cost up front, but down the line in increases efficiency in manufacturing with minimized (to a degree) labor.

 

[Dan025]

Instrument manufacturing is a fairly low profit margin industry anyway, mainly due to labor costs.  This is where CNC benefits the bottom line.  It's a major cost up front, but down the line in increases efficiency in manufacturing with minimized (to a degree) labor.

it all depends on who programs the cnc and who runs it. cnc machines are really versitile robotics and though may not be the best for every job may be less costly than customized robotics. with custom tooling and a rotary table a cnc could feasibly cut a neck from all sides and slot it for frets without operator interference. macros can be written to choose options with a simple numeric input in the offsets table that can be fed to the machine remotely. tool lengths can be measured automatically and broken tools can be detected with tool load monitors or lasers, extra tools can be preloaded in the machine and macros can substitute them upon wear or breakage detection or on a schedule. pallets can be pre loaded while a previous part is running and changed in seconds. the programmer can make or break the profitability of the machine. ive seen shops that can be run by a 2-3 man crew at peak productivity and shops where one operator runs 1-3 machines and labors all day to keep up with the machines.

 

[-CB-]

what do you guys feel is fair for a price for a guitar you put together?

Whatever the market will bear, based on the materials, features, and quality... and to a point, the reputation of the builder.

Whatever you can get is what the market will bear.  That's where your market research comes into importance.  Then its your job to create the product for the absolute minimum cost, while keeping the materials, features and quality uniform, and up to the standards of the market for that product.

Lets say a a certain solid body guitar with X and Y pickups and G and Z wood, made impeccably well, would sell for $2000 in the market, but you could build them for $1500 each.  What if you could build them for $500 each?  Would you drop your price because your costs were lower?  What if your cost was $50?  What if the magic guitar elf came and gave you the guitars for free, and paid you $500 to sell each one.... wouldn't you STILL sell them for $2000 since that's what the market would support? 

That's the way it works in real manufacturing business.  You develop products based on what they'll sell for, and produce them for the least you can.

 

[swarfrat]

I'm with CB - he may be deluded, but unless he's deceptive or uses shill bids, or its stolen... separating fools from their money is a time honored tradition. Even "materials" cost is paying what the market will bear for stuff people did. Gold is free, you just got to dig it out. And convince someone to sell you the land it sits on. So what you might call "materials" cost is labor for warmoth + Fanuc + lumber mills etc... The trees are free too (you just got to pay your equipment operators)

Now, he may piss people off with his delusion, but it's not "wrong"...

I've considered once in a great while just keeping a running ebay ad on all my guitars at about 3x the market price. And on the off chance someone buys it, they can have it for THAT price. Even though I really didn't care to sell it. I'll just go get another one (or two)

 

[Jusatele]

CB does have a good point, I mean what makes one guitar worth 500, one worth 1200 and another worth 3200?
a lot of it is market value

 

[TonyFlyingSquirrel]

Supply and Demand.