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Pros and cons, pitfalls and cautions of consignment sales
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Author:  Lincoln Goertzen [ Fri Jan 01, 2016 1:06 am ]
Post subject:  Pros and cons, pitfalls and cautions of consignment sales
I have an opportunity to hang some of my work in a local music store, and before I do that, I wanted to make sure I know what I'm getting into. I have searched this topic here already, using a variety of search terms, but nothing to answer a couple of the more specific questions I still have.

Here is what I have gathered so far:
Pros:
-I could gain exposure, and useful reviews of my work, as well as comparisons by other players with established brands.
-I could sell spec instruments, and not have to build commissions

Cons:
-I would "lose" about 20% of my selling price.
-I would own all the wear and tear on the guitar until it sold, if it did.

I'm not sure I want to turn my hobby into a business, although I would like very much to understand business better. I don't need lots of extra work, or money either for that matter; my day job pays the bills and if there's something left to have fun with, then that's quite a bit to be thankful for.
Have I missed anything? Are consignment sales generally positive experiences?
Author:  doncaparker [ Fri Jan 01, 2016 7:49 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
I'll jump in, not because of experience, but because I have thought about this, too, and I think my life situation is similar to yours. The punch line is that I think your life situation should drive this decision. Here is what I mean:

You and I have day jobs that support us, and neither of us is trying to change our means of supporting ourselves from those jobs to lutherie. We enjoy building, and we would like to sell some of what we make, but it is unlikely we will ever use income from selling guitars as a means of true financial support.

With that assumption, I think it is a good idea to avoid commissioned work. A client who wants their dream guitar ASAP and who has put down a substantial deposit on a very expensive guitar is going to pressure you to put time into this hobby when you need to spend that time on your real job. Building won't be as fun with that added pressure. I go long periods of needing to focus on things other than building guitars, due to the pressures of my real job and life in general. I don't need more people breathing down my neck about stuff I am obligated to do.

So, if commissioned work is to be avoided, and we want to sell what we make, I figure a music store is not a bad way to go, at least for a few instruments. See how it goes. I think you are fortunate to have wall space in a brick and mortar music store, frankly. That's worth the cut the store owner will take.

The wear and tear thing is scary, but at some point you have to let these things out into the world. Do you trust the store owner to police the situation? Does the store have decent humidity control?

I say it is worth it just to see how it goes.
Author:  DennisK [ Fri Jan 01, 2016 8:00 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
Good thread :) I'll be looking forward to the answers as well, since I've also been thinking of going the consignment route.

The loss of 20% isn't even that bad, since it would be going to support a store that I like, and selling online still has losses to paypal and shipping anyway. Not that paypal and shipping aren't valuable services as well, but music stores are in much more danger of going extinct. And I personally like to try out guitars side by side with others rather than buying online, so I'd like to extend that opportunity to my own customers.
Author:  ernie [ Fri Jan 01, 2016 8:37 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
It all depends on the ethics and liability /insurance that the store owner carries. I never had 1 complaint on consignment sales .Watched folks instruments as my own. Lots of happy customers . Depends a lot on who, what when where, and why, .I am speaking from the store owners perspective.This could be a win win for both parties but caveat emptor. Buyer beware , before you sign any agreement.
Author:  B. Howard [ Fri Jan 01, 2016 9:04 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
I tried that route.....Here is what I learned.

Pick the shops you will hang in very very carefully! I hung in 4 local shops, all of whom I trusted. Two of these shops returned unsold, damaged guitars. One so severely it could not be sold and was almost a total loss.That one was damaged by low RH, and I had even warned the owner a few weeks prior to get his humidifier working......Another shop hung one of my fancier guitars and when I dropped it off it was put up high in the ask to play section, fitting for a $3K instrument. When I stopped back in to check on it....well it was beside the couch hanging amongst the $200 guitars.....It was a beautiful hand rubbed sunburst that was now full of dings and pick scratches.

Then there is pricing and payment.......One shop never called to tell me they sold the guitar, instead they waited for me to stop in and find out, kinda rude! This was the same low RH shop....Oh and when I picked up the one that split like firewood I noticed the pricetag on the instrument was a full $1000 higher than stated on my commission agreement!!!! So did he sell the first one for more and pocket the extra for himself?? The only shop that actually sold any number of my guitars and cared for them also charged me a 35% commission, ouch!

All of the shop owners said basically the same thing about selling my guitars, they were too expensive for the market. Selling $3K + guitrars doesn't happen that regularly. But if I could build something that could retail out at a max of $2250 they could sell them. So I built a run of basic guitars which wasn't really what I wanted to do and sent them out. They were still nice guitars but not really what I wanted to build. So my cut would have been $1800 per at 20%, less at the one shop. Take out for materials and well Burger Queen pays better.......Only one shop manged to sell one. IMO they just looked to much like a $500 guitar without any gingerbread......

So in my two years of trying the commission thing I sold 3 guitars, had 3 badly damaged (enough that selling them was out of the question even after repair) and got stuck with 3 guitars built to lower specs that I didn't like anyway.....

So here are my overall thoughts. A store that will sell FOR you is rare! Most will sell OFF of you, meaning the pitch is "yes, this custom guitar is nice but you can buy this one for a grand less and it's just as good " and they make more than the 20% they would have from you (The reason that Billy Wray charged me 35% so his markup was even, and he did sell for me at that). I will not be hanging anymore guitars on commission. Not worth the time, aggravation and expense. I lost a few grand on this adventure......expensive lesson but one well learned. I only sell spec built guitars here at my shop and only build them when I do not have any commisioned builds in progress. I am much happier, I sell the same number of guitars as I did overall and make more money.
Author:  kencierp [ Fri Jan 01, 2016 9:50 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
I've lost count of how many times I have heard horror stories similar to Brian's. The reality -- the store owner has no skin in the game, no care, no worries. Plus they get to compare your high priced hand made guitar to an easy sell well made $750 import (don't forget the owner has an inventory investment to recover) -- which one is likely to sell?
Author:  Hesh [ Fri Jan 01, 2016 10:11 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
Lincoln I did a quick search on the word "consignment" and came up with lots of past threads for you as well and you can find them here: http://www.luthiersforum.com/forum/search.php?keywords=consignment&terms=all&author=&sc=1&sf=all&sk=t&sd=d&sr=posts&st=0&ch=300&t=0&submit=Search

Terry Kennedy is a good one to ask and IIRC correctly he may be busy for a while so perhaps PM him?

I did consignment sales with mixed results and here is what I learned.

First store selection is absolutely key and so too is that double edged sword of what the store percentage will be. If what's in it for the store is not a motivator your stuff may be used to illustrate the greater value of buying perhaps a major brand instrument hanging next to yours. OTOH if the percentage that the store and you agree to is fair enough to the store and they are motivated it can be a good situation provided that the store management understands the concept of a "bailment" and the use of ordinary care in safeguarding your instruments.

I never did commission sales regardless of many offers and never will either viewing them as a long walk on a short pier fraught with opportunities for misunderstandings and someone if not everyone to get wounded..... Commissions are selling "futures" something that does not currently exist and as such cannot be properly evaluated in any respect. During the time that it takes to complete that commission s*** happens as well, life's events, divorces, deaths, loss of jobs, great recessions, etc. all of which can make a commission deal go south quickly.

OTOH a consignment sale is what it is and can be evaluated properly with the prospective purchaser having every opportunity to be well informed. The time line of the transaction can only be an hour too which is far less risky than commission sales contracting to suck up your opportunity cost time... for a year perhaps and then getting nothing but an ax that was not sold and has someone's first girlfriends name on it inlaid in the fretboard....:)

Keep in mind again that the store that may offer the most favorable terms may do the least to promote your stuff because there is less in it for them than say selling that D-28 hanging next to yours. Also keep in mind that some stores will prey.... on new builders seeing them as a "mark" that since they have no established name yet.... can be offered terms that should result in some rather colorful descriptives and perhaps a reference to the store owner's mother as well..... Not that I would ever speak like this mind you.....:) :roll:

It's also, and you should expect this from me as well.... an opportunity for you to take a deep breath and be very proud of yourself for getting to the point where your creations are truly desirable to other people - congratulations!
Author:  doncaparker [ Fri Jan 01, 2016 11:52 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
I definitely hear the bad side of consignment. If I were trying to make real money in this endeavor, I would not want to do it. But I come back to the question: what about somebody with a demanding day job, the one that pays the bills? Is it a good idea for that person to get into commission work? It feels like too much hassle to me. So that leaves consignment, selling through eBay, stuff like that. Yeah, some store owners are going to be bad people. I would definitely let the guitars pile up at home rather than deal with bad people. None of this, remember, is meant to be a serious money-making endeavor, as compared to the day job.

Maybe my question is: if I would not want to do commissioned work, and I can't find decent store owners to deal with, how would I go about selling the guitars I make?
Author:  Chris Pile [ Fri Jan 01, 2016 11:58 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
I've done both spec stuff on consignment, and commissions. Thank God I've never had a bad experience. In fact, in 35 years - only one bounced check, for less than $20.
Author:  Terence Kennedy [ Fri Jan 01, 2016 1:23 pm ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
I was lucky enough to develop a great relationship with The Podium in Minneapolis 12 years ago. They promoted my work and since the staff and much of clientele were top notch pros both in playing and marketing I had a captive audience of critics that were a major factor in the evolution of my stuff.

Their repair guy who was a 30 year pro became a good friend and objective critic. I continue to learn so much from him.

A high end store with a strong regional and national presence that promotes your stuff on their website can give you huge credibility and if you listen to their suggestions improve your craft as well as open doors to a world many of us budding builders don't understand very well.

A local store is probably a lot more iffy. I tried that too and although they took good care of my stuff it didn't work out very well as far as sales. I suspect they sold $300 guitars off my stuff. "Almost as good and eight times cheaper".
Author:  DannyV [ Fri Jan 01, 2016 1:35 pm ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
doncaparker wrote:
I'll jump in, not because of experience, but because I have thought about this, too, and I think my life situation is similar to yours. The punch line is that I think your life situation should drive this decision. Here is what I mean:

You and I have day jobs that support us, and neither of us is trying to change our means of supporting ourselves from those jobs to lutherie. We enjoy building, and we would like to sell some of what we make, but it is unlikely we will ever use income from selling guitars as a means of true financial support.

With that assumption, I think it is a good idea to avoid commissioned work. A client who wants their dream guitar ASAP and who has put down a substantial deposit on a very expensive guitar is going to pressure you to put time into this hobby when you need to spend that time on your real job. Building won't be as fun with that added pressure. I go long periods of needing to focus on things other than building guitars, due to the pressures of my real job and life in general. I don't need more people breathing down my neck about stuff I am obligated to do.

So, if commissioned work is to be avoided, and we want to sell what we make, I figure a music store is not a bad way to go, at least for a few instruments. See how it goes. I think you are fortunate to have wall space in a brick and mortar music store, frankly. That's worth the cut the store owner will take.

The wear and tear thing is scary, but at some point you have to let these things out into the world. Do you trust the store owner to police the situation? Does the store have decent humidity control?

I say it is worth it just to see how it goes.

Well put Don. There are probably many of use in the similar situation. A lot will come down to the relationship you have with the store. I have one in our little shop and they are treating it well and gets me good exposure. There's probably a few camp people living FSJ. What better friend to take to camp with you than a guitar that might well be the best sounding one in the store? Even with the downturn in the economy there are still people up there making good $$$. Would seem to me to be a good market.

Weren't you in the wood biz Lincoln? Having a good stash of next to free, great wood ,can only help put you at an advantage in the marketplace.

I agree with what Don said on the commissions but doing the odd one for a friend doesn't have to be horrible. Building spec is far more enjoyable but you do need an outlet.

Happy New Year! Hope the move up there has been good to you.
Author:  David Wren [ Fri Jan 01, 2016 9:51 pm ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
My two cents worth.

Finding the right store is key ... they should be representing several if not dozens of makers / brands in a similar price bracket as your instruments i.e. their customer base looks for and expects this level of instrument and they are a destination for in-store players looking to buy at this level. Yes these other brands will be your competition, but they already are anyway ... and for a relatively new luthier, being represented by a store who carries other quality instruments gives you credibility through association. Don't underestimate this aspect.

They should represent you on-line in a professional and comprehensive way (giving you exposure and credibility in exchange for their commission). If the on-line presentation is done well enough, don't be afraid to ask that the instrument be kept in its case until asked for by a customer ... to minimize damage to the guitar by less committed customers.

They should obviously have a climate controlled environment.

Their staff should be knowledgeable about the instruments and their pricing structures. They should have a repair person(s) who is comfortable working on instruments of this level.

Consignment instruments were always a VERY important part of why a customer would frequent my store rather than a larger chain store. Everybody and their brother carries the household brand names, but not everyone has the handmades ... making the store a unique destination. Build a relationship with not only the owner of the store, but its staff as well ... they are your front line ambassadors and the folks who will educate their customers about your guitars.

Just my two cents worth.

.

.
Author:  mhammond [ Sat Jan 02, 2016 12:11 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
When I was selling in the local store my stuff did not sell very well. I took the salesman aside and offered him a $50 cash "bonus" for each instrument sold. They started selling right after that...
Author:  Goat Rock Ukulele [ Sat Jan 02, 2016 12:27 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
If you are starting out and producing more than you yourself are selling music stores are a necessary evil. The right store can get you well known in your local. Make friends with the music store owners. If you grow tomatoes bring them some. If these folks like you they will push your instruments and revel in your success. Make sure you get all the terms in writing. Confirm that they will call you when an instrument sells. I had a store sell one of my instruments during a period when they were selling the business. It took me a while to get paid while they figured out who owed me the money. It freaked me out for a while but that store did a lot for my business. Check in regularly to make sure the instrument is being protected. Make your own sales label with your website address plainly visible. Consider your instrument as advertisement and get as much advertising in there as you can. You can even make a little one page blurb about you building and business cards. If the local store doesn't want to support you by letting you do this I would thank them and go down the road to the next good music store.
Author:  Lincoln Goertzen [ Tue Jan 05, 2016 11:34 pm ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
Thank you all for your thoughts, and for taking the time to write them out. I'm sorry to be so long in responding- I had a crazy couple of weeks of work, then started another round of trade school, so this is my first real chance to check in here again.

A couple of points of clarification-

-I've known this store and the owner for a long time, even before I worked there nearly 10 years ago.

-There is a climate-controlled room for the acoustics and the high-end guitars.

-The store carries a number of the "biggest names" in the acoustic and electric guitar field.

-The guitar(s) I plan to place there would be electrics, and this opportunity came about through a sort of invitation from the owner himself. We were talking about a customer who wanted something no one was building, and so would have to order one from the custom shop, "unless I wanted to do it." It seems like a really good opportunity, but I wanted to make sure I wasn't diving into something that was too good to be real.

Does anyone happen to have a written agreement that I might see? I was thinking we'd do this with a handshake, but maybe I'm being too naive...
Author:  meddlingfool [ Wed Jan 06, 2016 12:36 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
- you have history, that counts for a lot.

- climate control means a good shot of 'knowledge and care'...

- well, you'll know where you stand at least.

- could go either way. Are you being given an opportunity to do a cool thing that you want to do, or are you having a task that no one else wants to do dumped on you, hoping that you'll take it at no cost to anyone but you? "Something no ones building" sounds more like a commission to me.
Author:  meddlingfool [ Wed Jan 06, 2016 12:45 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
I'll expand a bit...

If you build a strange thing in the hopes that a dangled carrot might purchase it, if the carrot doesn't choose to buy it, you're stuck holding a strange thing, whereas the store owner and dangled carrot can walk with no consequence, it's all on you.
Author:  kencierp [ Wed Jan 06, 2016 8:45 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
That is not a consignment -- its a brokered deal, there should be a contract and moneys exchanged. It makes no sense for you to build a "freak" guitar in hopes that this dealer and his potential buyer will come to an agreement sometime down the road -- run, don't walk from this proposed arrangement. $.02
Author:  Lincoln Goertzen [ Wed Jan 06, 2016 11:38 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
Right, I probably made this sound worse than it is. Fender made a Strat similar to what this individual wants in a Telecaster, but it was a limited edition, and they're not making the Strat anymore, either. It's a guitar I wouldn't mind having myself if it doesn't end up selling. It's not that nobody else *would* make it, just that it would be a custom order.

The other guitars in question would be completely spec guitars.
Author:  Hesh [ Wed Jan 06, 2016 11:54 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
Get the money up front..... seriously for the custom gig. Use paper (contract) define set beginnings, endings, definitions of success, payment(s) perhaps including milestones, make it crystal clear. If a crystal clear agreement is not satisfactory for the prospective client...... good..... better to abort the effort before anyone has been damaged in any manner.

You are very exposed with no contract AND monetary skin in the game from the client.
Author:  Hesh [ Wed Jan 06, 2016 11:55 am ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
Shame on me I almost forgot - congrats too because to get this level of attention your stuff must be pretty cool!

Good going!!!
Author:  Clay S. [ Wed Jan 06, 2016 6:45 pm ]
Post subject:  Re: Pros and cons, pitfalls and cautions of consignment sale
" It's a guitar I wouldn't mind having myself if it doesn't end up selling."

It doesn't sound like it's something too strange or too risky, if in the end you would be happy to own it.
I've built instruments on the basis of giving someone "first refusal". I'll build it, if it's something I am interested in building, and when it's done I'll let them decide if they want to buy it. They have first refusal. So far no one has refused. It is a low pressure way for a hobby builder to enjoy the hobby without too much clutter building up.
If you have a good rapport with the store owner you might consider a less formal arrangement, but still have a thorough conversation with the prospective buyer to make sure of what he wants and that he isn't a flake.
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