Official Luthiers Forum!

Solely owned and operated by Lance Kragenbrink
It is currently Mon Nov 20, 2017 11:40 pm


All times are UTC - 5 hours





Post new topic Reply to topic  [ 10 posts ] 
Author Message
 Post subject: Mark up on components
PostPosted: Sun Sep 24, 2017 8:11 pm 
Offline
Mahogany
Mahogany

Joined: Fri Feb 10, 2017 11:09 pm
Posts: 46
First name: Conor
Last Name: Searl
City: Duncan
State: British Columbia
Zip/Postal Code: V9L 2E5
Country: Canada
Status: Amateur
Hi everyone, I've begun building electric guitars, and have had a few people ask about the cost for a custom built guitar. I'm not big enough at this point for any suppliers to consider me for wholesale pricing, and so I was wondering what is typical for marking up components, (ie hardware and pickups) purchased from retailers?

I worked at a music store, and the owner was old school, he always wanted to get at least a 40% mark up on things, but the big box stores were charging 20-25% markup. Granted that was on big ticket items, parts and small things was a much higher markup.

Sorry in advance if this is a rude question...

Conor


Top
 Profile  
 
PostPosted: Mon Sep 25, 2017 8:30 am 
Offline
Koa
Koa

Joined: Thu Feb 12, 2009 10:27 pm
Posts: 1908
Location: South Carolina
First name: John
Last Name: Cox
Focus: Build
Status: Amateur
Your profit = market price - your cost.

Market price is what it is... You live with that. Its going to be hard to ask for more than retail for the parts.... Your customers will treat you like you are ripping them off - because you are...

So you see the main "knob" you can turn is really your cost. That means if you want to pursue this - you have to hook up with the trades distributors and get wholesale/trade pricing - not retail.

As for professional discounts... It may not matter how big you are - what matters is that you have a registered business, tax exempt form, etc. Then - a distributor will sell to you as if you were part of the trade rather than as if you were retail paying general public.

You won't get much discount out of Stew Mac. Since you worked at a music store - you probably know the names of the distributors. Check there...



These users thanked the author truckjohn for the post: dpetrzelka (Mon Sep 25, 2017 9:27 am)
Top
 Profile  
 
PostPosted: Mon Sep 25, 2017 9:48 am 
Offline
Contributing Member
Contributing Member
User avatar

Joined: Sat Jan 31, 2009 8:50 pm
Posts: 1236
Location: Seattle WA
Focus: Build
Status: Semi-pro
Yeah, you can't really mark up the parts if you already paid retail for them. But, you can mark up your labor!


Top
 Profile  
 
PostPosted: Mon Sep 25, 2017 10:53 am 
Offline
Koa
Koa
User avatar

Joined: Mon Nov 24, 2008 12:17 pm
Posts: 650
City: Escondido
State: CA
Zip/Postal Code: 92029
Country: USA
Focus: Build
Status: Semi-pro
It sounds like you want to itemize the hardware on your build. I am not sure I would recommend that. You charge what you can for the instrument you build. You will never be competitive in price with what your potential clients can get at Guitar Center. People will have to pay a premium to get something from you they can't get from Musicians Friend. Exotic woods, unique design features, spectacular inlay. It won't be because of the Seymour Duncan Seth Lovers you put in.

For that matter, i think you will find that, in the US market at least, the question will be how much can you afford to loose on each instrument and keep your passion for building alive. If you do a real business plan that factors in the cost of the tools, equipment, workshop space, your time taken away from earning a living for the build, the marketing, the client management, etc., you will probably find your five or six guitars a year need to sell for $8-$10k a piece to pencil out. Either that or find a market for a half dozen guitars a month.

So the cost of the pickups and tuners is really not overly relevant in my opinion unless you already have high volume. Whether you get them for $120 or $100 won't have much bearing on what you can charge or whether it is a viable business.

I hope that doesn't come across as too much of a downer, but your question seemed to indicate an approach to building for money that perhaps would not serve you economically.


Sent from my iPhone using Tapatalk


Top
 Profile  
 
PostPosted: Mon Sep 25, 2017 12:11 pm 
Offline
Koa
Koa

Joined: Thu Feb 12, 2009 10:27 pm
Posts: 1908
Location: South Carolina
First name: John
Last Name: Cox
Focus: Build
Status: Amateur
pat macaluso wrote:
Yeah, you can't really mark up the parts if you already paid retail for them. But, you can mark up your labor!


Not so much.... At least not if you want repeat business and to have good/excellent ratings online.. Once again - nobody is going to pay you more to do a job than they would pay a seasoned pro... They really don't care that you are fairly new and it takes 3x as long for you to fit a neck or rout a pickup than it does for a crusty old pro who has done it a million times.

More likely - because you are not an established/reputed pro - you will get paid less than market for jobs until you have a proven and established track record... You will have to deliver at least market expectations for quality...


Top
 Profile  
 
PostPosted: Mon Sep 25, 2017 3:59 pm 
Offline
Koa
Koa

Joined: Thu Nov 04, 2010 1:46 pm
Posts: 867
First name: Freeman
Last Name: Keller
Focus: Build
Status: Amateur
Conor, here is how I do it. First the qualifier, I am a hobby builder, have built 22 instruments so far, 7 of the "commissions" (meaning that someone asked me to build them a guitar, at least partially dictated the specifications and paid me some amount of money). I am not professional, still consider my worksmanship a work in progress and do not intend for this ever to be financially viable. (I'm retired and the limited building and repairs that I do actually screws up my yearly income statements). I have given my little operation a name and printed some business cards but I in no way consider it a business.

So, if someone request an instrument here is how I proceed. I make a spreadsheet of every component that I know will go into, usually with a manufacturer's part number that the price I expect to pay. I list the woods I will use, all of the little bits and pieces and may or may not list the costs of finishing materials (more about this in a minute). I include a fitted case with every guitar I build (and I do get a small "luthiers discount" from a case manufacturer when I buy directly from them). Obviously I am discussing this with the customer - what tuners does she want, what pickups, what kind of wood, what kind of finish. I don't necessarily show her the spreadsheet, but when I am done I know pretty much what the guitar is going to cost ME to build (just like I was building it for myself).

Next I make a wild guess as to the number of hours of labor that will go into this. I've built enough different instruments that I have a pretty good idea of what a slab body screwed neck will be compared to a carved body set neck compared to a semi-hollow body compared to an acoustic. No matter what I guess, however, it always seems to be low.

Now the fun part - what is my time worth? Minimum wage? Twenty bucks an hour? Fifty? Why has my customer requested this guitar? What makes it unique? In fact, what makes it any different from a nice instrument from Guitars r Us?

I take into consideration anything that is new about this build - do I have to make special tooling or buy something? If so, is it one off or will I use it on a future build? I usually won't include that in the price but its obviously much easier to use jigs and fixtures that I already have.

I mentioned finishing - I listen very carefully to my customer about what finish they want - both materials and the overall effect. My finishes are getting better with each instrument I build, but I am still limited to a couple of products and a few effects - I can do a pretty good sunburst in almost any color, but I only shoot lacquer. I know about what it will cost me for materials for a typical lacquer finish and I have a pretty good idea of the time involved so I can estimate that. If the customer wants a solid paint job or some special graphics, I tell them I can't do that but I have a friend who is one of the best custom motorcycle painters in the world and he can. Unfortunately, he is pretty darn spendy - simple one color paint jobs can start at 500 and easily go over a grand for some pretty cool graphics. If we do that, I simply pass the work to him with no mark up.

This has been working pretty well for me - my prices seem reasonable compared to commercial made in the US instruments. I value the trust that my customers put in me when they ask for an instrument - they have no idea what they are getting until its in their hands. I also value their willingness to pay me for what I am doing as a hobby - sometimes I think I should be paying them.



These users thanked the author Freeman for the post: Conor_Searl (Tue Sep 26, 2017 12:53 pm)
Top
 Profile  
 
PostPosted: Mon Sep 25, 2017 4:06 pm 
Offline
Koa
Koa

Joined: Thu Nov 04, 2010 1:46 pm
Posts: 867
First name: Freeman
Last Name: Keller
Focus: Build
Status: Amateur
I'm going to add one comment to my above post - when I do repairs that involve purchased materials I usually include a copy of my invoice with the bill for the repair. For example, if I make a nut and use a bone blank, I will charge the owner the price of the blank plus my labor to make the nut. If I install a pickup in an acoustic guitar I will price the pickup at list cost, plus my labor for installation. I do work with a local music store and often they will sell someone a pickup and then contact me to install it.

I have a funny little quirk here - sometimes someone will buy a part off the internet and bring it to my store for installation even tho the store sells the same part (again, pickups seem common here). If thats the case and I know the store isn't making any money on the pup I'll often round my time up (I usually round down to the nearest half hour, in this case I might round up).


Top
 Profile  
 
PostPosted: Mon Sep 25, 2017 7:12 pm 
Offline
Contributing Member
Contributing Member
User avatar

Joined: Sat Jan 31, 2009 8:50 pm
Posts: 1236
Location: Seattle WA
Focus: Build
Status: Semi-pro
truckjohn wrote:
pat macaluso wrote:
Yeah, you can't really mark up the parts if you already paid retail for them. But, you can mark up your labor!


Not so much.... At least not if you want repeat business and to have good/excellent ratings online.. Once again - nobody is going to pay you more to do a job than they would pay a seasoned pro... They really don't care that you are fairly new and it takes 3x as long for you to fit a neck or rout a pickup than it does for a crusty old pro who has done it a million times.

More likely - because you are not an established/reputed pro - you will get paid less than market for jobs until you have a proven and established track record... You will have to deliver at least market expectations for quality...
I assumed he was probably charging too little for his time, however I always encourage people to ask for whatever they think they can get. The free market is quickly sobering.


Top
 Profile  
 
PostPosted: Mon Sep 25, 2017 7:59 pm 
Offline
Koa
Koa

Joined: Thu Feb 12, 2009 10:27 pm
Posts: 1908
Location: South Carolina
First name: John
Last Name: Cox
Focus: Build
Status: Amateur
Now - the places I do feel its perfectly acceptable/standard to "Mark up" on top of retail is when you have to shop stuff out at the customer's request or when you make it known to the customer that you don't do some sort of work but can contract it through another pro at their convenience... The typical thing in this situation is your actual cost + 10%-20%...

In this case - you are being paid to do all the legwork and you handle all warranty obligation... The customer pays for the convenience of "one stop shopping".... You don't do this sort of thing lightly because your professional reputation gets tied in with the subcontractor's....

As you can see with all this - its not a market that is forgiving to beginners swooping in out of nowhere.... Often the most profitable course of action is to work for someone else - establish your chops, reputation, relationships with the suppliers and customers... THEN strike out on your own as a vetted/known professional who can charge full price....


Top
 Profile  
 
PostPosted: Tue Sep 26, 2017 11:27 am 
Offline
Koa
Koa

Joined: Thu Nov 04, 2010 1:46 pm
Posts: 867
First name: Freeman
Last Name: Keller
Focus: Build
Status: Amateur
truckjohn wrote:
Now - the places I do feel its perfectly acceptable/standard to "Mark up" on top of retail is when you have to shop stuff out at the customer's request or when you make it known to the customer that you don't do some sort of work but can contract it through another pro at their convenience... The typical thing in this situation is your actual cost + 10%-20%...



John, I don't do this. On an electric guitar the only things I can think of that I might want to "shop out" might be special pickups, some inlay work or paint. When the customer specifies the pickups that she wants I get a quote from the supplier and include that in my costs just like any other component. I haven't yet had a guitar where I was asked to do inlay on the level of Grit Laskin or Kathy Wingert but if I did that would be negotiated with my customer separately. I'm able to do basic inlay - here is a customer's band's logo (Raining Sunshine) on a lefty

Image

or the owner's stage name

Image

I do buy my pearl for something like this from a supplier, but again, the price just goes into the material list and I charge for my labor.

The one area that I can and do shop out is finish. I can do basic lacquer finishes (both of those 335's) including color and 'bursts, but when it come to solid colors I simply have no experience. However I do have a source and I put my customer in touch with him to decide on the finish and cost. I take the guitar to him in white (we agree on the level of prep) and he returns it to me when the finish is buffed. I do the assembly at that point.

He is totally professional about this and warrants his work, I see no reason to add any markup to this

Image

Image


Top
 Profile  
 
Display posts from previous:  Sort by  
Post new topic Reply to topic  [ 10 posts ] 

All times are UTC - 5 hours


Who is online

Users browsing this forum: No registered users and 3 guests


You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot post attachments in this forum

Jump to:  
Powered by phpBB® Forum Software © phpBB Group
phpBB customization services by 2by2host.com