Official Luthiers Forum!

Two posts this week on TLB about offering "Artis rates"

http://www.theluthierblog.com/articles/offering-discounts-artists/

http://www.theluthierblog.com/articles/artist-rates/

What's your take on the subject?

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nigel

http://www.theluthierblog.com

Apart from my early days of making, only once and it certainly was not a one way street. If someone wanted a discount I would point them to an instrument that was simpler in decoration. Very simple rosette, purfling, head design, no Back bindings. Just concentrate on what makes it play and sound good.
I figure that many pro players can offset some of the cost against their tax, kind of a discount in a sense. Offering discounts to some clients but not to others somehow doesn't sit comfortably with me. Then again perhaps my commercial marketing policy is bankrupt.

Above all the custom builder who successfully separates themselves from the commodification of guitars won't be discounting much or at all....

More specifically what are you guys selling? If you are of the belief that what you sell is somewhere in the spectrum of being compared to a commercially available guitar, say a Martin for discussion sake, then you will likely be viewed this way by the market and your prospective clients may want a discount as they have been conditioned to expect from big box commodity guitar resellers. Discounts can be for working musicians, Labor day, put your dog in a cage on the roof of the family station wagon day, or Tuesday....

What I am trying to say here is your approach to discounting should be consistent with your approach to the market and what, exactly.... you perceive your value proposition to be. If you present yourself to the market as just another builder of something that is easy to measure and well understood such as say a D-28 copy be prepared to play in that space as the retailers do, discounts, sales, lots of tire kickers with belt buckles.... but not that many takers.

If instead your value proposition is one-of-a-kind instruments that are "special" in some sense that does not place you firmly in the spectrum of commodity instruments your value proposition in being different can also command business terms that are also different.

What I speak of is how you position yourself in respect to the market, your branding, the space in the market that you occupy i.e. high-end expensive or low-end inexpensive or something in the middle. There are no Lutherie police that will break down your door at 3:00 AM because you gave a wedding player a discount... you can do what ever you wish....

But do you really want to have given this discount and is there anything in it for you?

I shoot from the hip frequently and prefer it that way... I enjoy the flexibility of being able to not let a rigid approach to anything take my own choices away. I also enjoy being able to do what it takes to get the deal done, make everyone happy and then........next.

If the question is does discounting to artists your brand make my answer would be generally no..... Although we all know what can happen when someone famous embraces your chops and plays in public with one of your creations.... Unfortunately what is usually the case for most of us is the local musicians who don't have money and fame and likely statistically speaking will never find it either may play one of ours. No offense intended to these folks ever either.

As a businessman I'm keen to protect the bottom line and have a responsibility to do so too. If you believe that you provide real value the fastest way to convince others that you don't provide real value is to not value your own stuff all that much yourself.... If you present a front that thinks nothing of knocking a grand off your price you are also presenting an Image of someone who has lots of headroom built into your price.... not good...

As such my belief on special pricing to musicians is as follows:

1) Evaluated on a case by case basis with no hard program to solicit this kind of business.... and I don't even want this kind of business....

2) Any deal structure should meet everyone's requirements at the moment the instrument goes out the door with it's new steward. Any reliance on future payments, fame, endorsements, referrals will likely leave you empty handed and pissed off.... YMMV and this has never happened to me either because I won't enter any deal that does not leave me whole at the moment the money changes hands and the instrument has a new home.

3) Discounting can also send a negative message that your stuff is not exactly in so very much demand that you will grovel for business and take what you can get.... also not good.

With all of this in mind my suggestion to everyone here is to first determine what space in the market you wish to play in first. By space I mean are you making inexpensive offerings (and likely losing your shirts too...) that could be spec guitars? Do you direct market or have resellers? Are you keen to do commissions? Do you have an established name in the trade and a waiting list? There are lots of models but your approach should be inline with what your model is and reinforce that model.

I know of lots of stories where deals with practicing musicians did not work out for one reason or another and remember too we all have to be absolutely nuts to go to all of this trouble to sell to a market, musicians, who traditionally have no money....

So.... if you can make any sense out of my madness here the real message is go your own way but first determine and know what this way is and have all that you do including "if" you even offer a discount under special circumstances remain in line with how you wish to market yourself and your wares. I also strongly suggest that you never, never, never get into any deal that requires futures or more specifically something that is supposed to happen in the future, payment, endorsement, promotion, referrals, etc.

And then there are the three rules of being an attorney and no offense to our OLF attorneys intended:

1) Get the money up front!

2) Get the money up front!

3) Get the money up front!

As for me I have sold to a number of gigging musicians and every deal that I ever did had no reliance on futures be it payment, endorsement, promotion, referrals, etc. I'm two old a dog here to believe the three great lies with one of them being the check is in the mail and the other two not suitable for a G rated forum....

Or, in other words - if you don't highly value and prize your own stuff how would you expect that anyone else would ever either?

Value and the notion of value has to be well supported in all and everything that one does.... always!

Set realistic and fair prices (for any product), research will reveal what "your" market will support. Discounting is a slippery slope and in my view results in nothing more than a loss and an on going hassle.

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Ken Cierp

http://www.kennethmichaelguitars.com/

Has anyone noticed that the client that gushes the heaviest about your superhuman qualities as a luthier and follows that with forum and facebook posts about the grandeur of his new instrument and it's builder is usually trying to sell it a couple of years later, often in virtually unplayed condition?

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It's not what you don't know that hurts you, it's what you do know that's wrong.

Too many bs- ers, lookey loos and tire kickers will boost your ego at the expense of your pocketbook, and waste your valuebal time .Figure out what you need to get for your work, the honest and sincere customer will gladly pay you for a job well done.If they insist on low - balling you, just walk away and let them go to guitar center or wherever

No discounts , I have a number of local musicians , the only special treatment would be emergency repairs and loaners if needed for a gig. A man is worth his hire.
Ask them do you want it Cheap or do you want right you can't get it done right and cheap. I agree that you need to be fair but if you are doing this as a business you have to be fair to your self. If you can't make a living you can not continue as a business.

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John Hall
blues creek guitars
Authorized CF Martin Repair
Co President of ASIA
You Don't know what you don't know until you know it

Yeah there is that too.... In my experience most folks.... look down their nose at the "art" of sales and marketing until, of course, they find themselves in need of knowing how to sell and market.... Go figure...

In reality... we are all selling much of our waking lives like it or not. From convincing your significant other where to go for dinner to getting your kid to do better in school - you are selling.....

I'll add that regardless of politicians or used car sales people persuading folks that what you have represents real value "selling..." need never be a dishonorable thing. Instead an approach that is rich in honesty, always... and includes being fair to yourself and your organization if applicable is actually providing value in my view. Solution oriented, honest representation that takes into account (really, not just with lip service) what is critical to quality (CTQ from Six Sigma Speak...) for the prospective client is also part of one's value add and value proposition. If you're good you can get more for this as well...... while still providing real value to your client.

Backing up though and the primary reason for this post is before one even ever considers discounting and why we might want to even do this discount thing step one has to be understanding your TRUE costs. In the past year or so I have had this conversation off the forum with three of you that I can recall who wanted to learn more about how to price their wares. These smart folks understood that selling a product was a bit foreign to them and contacted me based on my mindless rants on forum to hopefully gain more understanding into how stuff should be priced and why.

Here we are (again) talking about discounting when it's very likely that if I went over some of the things that are very much part of your true costs some of you would be surprised to learn that it's very OK to have an expectation that if you provide real value you are entitled to receive proper compensation for this value provided that your expectation for compensation syncs with the perception of the value that you provide.

Earlier today I was looking at some killer BRW and Coco that Tounces has for sale. Tounces makes a point to a prospective buyer that this set should bring a nice up charge from the client. Bravo Tounces!!!! Tounces understands that he is not obligated to pass on material costs as exactly paid by Tounces to his clients. Instead Tounces understands that his "expertise" and resourcefulness in sourcing materials is also very much a value add and as such part of Tounces's unique value proposition. I also hope Tounces does not mind me bringing him up and his excellent thinking in respect to his approach to the market.

It's easy to think to ourselves that let's see we paid $100 for the back and side set, $100 for the top, another $60 for a neck blank, $10.95 for fret wire and so on and so forth including that case for $275 so we have $534.97 of costs here.

Wrong.... True costs include everything from mouse nut stuff like glues and finish (finish can be pricey....) to the most commonly overlooked cost in figuring out one's true costs and that is the reality of "opportunity costs." More specifically the opportunity cost of building a guitar if say it takes you 100 hours to complete and deliver should include what it cost you to not be making money doing something else such as your day job.... If by chance you had worked an extra 100 hours at the day job and you are hourly and not salary how much would you have made? That's an opportunity cost of instead building another stinkin guitar....

These days guitar shows are suffering because builders are suffering. The price of attending shows may be too much to bear and in my view it was always too much to bear unless one is in the top tier of builders.... Shows, marketing, web sites, any time you take to talk with a prospect or suspect is all part of your true costs too... Should your phone have a meter on it - perhaps.....

If you wonder why there seems to be a sweet spot in the custom guitar market with folks who have been doing this for a while pricing starting at above $6K it's because they have to price at this level to even begin to cover their true costs including their own labor. Even at this level they are likely not making much at all.

If you sell to resellers and they have to make a profit too you are in even a tighter bind in respect to how important it will be to know your true costs including the wear and tear no tools, blades, expendables, heating and lighting your space, the cost of the space itself, etc. It goes on and on and on and on and that's one of the reasons why folks don't like to talk about true costs because it often... results in the realization that they are losing their arses....

Folks who build and sell at say $1K IME are likely losing money and simply don't know it yet. It won't be sustainable over the long haul and something will have to give. It also sets an expectation in the market that this is possible when in reality if one had to make their entire living off from only building to sell at the $1K level they would starve. I'll add that this impression that the low-ball-builder can leave in the market place is a disservice to everyone else as well and does do harm to the industry.

So before we even consider if one is keen to discount to say musicians one had better do some honest soul searching as to what their true costs really are or they may find that when the house comes crashing down it does so quite quickly and with little warning.

For hobby builders I am not talking about you guys including selling to friends and family or selling early instruments for what you consider, but are likely wrong about... your costs. You accept in advance that what you want out of this is different, less, and you have day jobs so Lutherie is a hobby and not how you must make your living.

For those of us who work in the trade fail to determine your true costs and it very well may lead to failing in the marketplace.

Discounts you say....

I used to have a minimum charge of $10 in my shop, but that was kinda stout to put on a strap button... I'd only charge a buck for that. Hesh is absolutely on the money about one thing - get the money up front! I was too nice sometimes, and would order something for a client, and then it would hang on the pegboard when they changed their minds. Gotta have discipline when you're in business.

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"Act your age, not your shoe size" - Prince

I was going to do a "shorter Hesh"--If you don't value your work, why should anyone else?

Displaying my wit and wisdom for everyone to see.

And then he goes and does it himself.

"I used to have a minimum charge of $10 in my shop, but that was kinda stout to put on a strap button."

Actually it's not, if you are doing it for a living. Just taking the instrument in, installing the strap button, and dealing with the person when they pick it up is going to eat up ten dollars worth of time. Oh yeah!- there is the cost of the strap button and shipping. Being a hobby builder I can eat a lot of the "true costs" and also not do what I don't want to do.

Before we took over the repair side of an iconic local music store that had served John Lennon, Clapton and a host of others including the Stooges, etc. we were doing the repair work for the store (and hating every minute of it too....) as contractors.

One day the owner who is our friend by the way came up with a new Seagull parlor that he has attempted to install a strap button on and neglected to check with magnets for the location of the bolt-on neck bolts.... Yep you guessed it, he hit a bolt with the drill and that made the drill wander and cosmetic damage occurred.... He wanted us to fix it but we were reluctant because he had already attempted to fix it and messed it up even more....

So that $25 strap button (part and installation) became an exercise in replacing the entire guitar....

Strap buttons can bite ya I'll tell ya.....

Anyway when you do good, good for you, when you mess up, it's on you and it is this 100% responsibility with a 100% guarantee too that forces us to have a pretty good understanding of our true costs, insurance...., rent, all other things that we pay, etc.

Soon it can emerge that the "house" with all of it's costs eats close to 40% of revenue.... that's overhead by the way. Fail to charge appropriately for your very fine efforts AND your overhead and at some point you won't live to play another day....

That's the beauty of being a hobby builder and that's also why I build when and what I want to keep it fun as well. But as a hard, make your living biz building guitars determining your true costs, all of them.... is absolutely key to living to build another day as well.

I still get a lot of satisfaction out of building a guitar but if I was doing it to pay the bills it would likely kill me..... worrying about the market, the economy, promotional costs, bad deals, folks who want some weird arse thing and may have been turned down by others already, and if my prospects are true prospects or simply suspects who talk the talk but won't walk the walk...

I much prefer repair work with a defined beginning and a defined end with set expectations that are not "subjective" such as how something yet to be created may sound to someone else... It's pretty easy to define the scope of work for say fixing a crack or setting up some POS with a Floyd &*&^%$ on it.... Now setting expectations for what something will "sound" like that at this point is only a vision in the maker's and client's mind that's a pretty good trick but one that sadly I would never even attempt to figure out....

I'd love to see more folks charging more because I know personally what it takes to really cover costs and as such my belief is that you guys are entitled to charge more, much more.... But I'm also a capitalist when I'm not being accused of being a socialist... and as such I will always believe that folks are entitled to be compensated to the highest degree possible provided that they provide the value to justify this.

Anyone wanna talk about differentiation?

"Now setting expectations for what something will "sound" like that at this point is only a vision in the maker's and client's mind that's a pretty good trick but one that sadly I would never even attempt to figure out...."

There is a revealing article in a recent "Acoustic Guitar" magazine, its one of Dana Bourgeois' regular series. Anyway, this was sort of a surprise to me. He states that when discussing a steel string commission or off the shelf selection almost "never" are the nuances of the expected sound quality and characteristics a main concern. Wood choices, trim and decor -- and of course craftsmanship are at the forefront.

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Ken Cierp

http://www.kennethmichaelguitars.com/