Thinking of making one for sale, considerations?

[Bryan Bear]

I have been at this for a while now but only (very) part time. I don’t really plan to try to make a living at this or to try to make it feel like work. I have a lot to learn and don’t feel like I am at the point where I have any business taking on commissions (though if it is like most things, I’ll never FEEL ready). All that said, more and more, I have been hearing people ask what I charge for my instruments. The answer is always that I don’t know because I don’t sell them. It would be nice if I could bring some money into my hobby instead of just spending and giving away. The occasional sale would be welcome but I am not interested in adding deadlines to my already complicated life.
I have been thinking about making something and just putting it on consignment and forgetting about it until it sells (if it ever does). There is a nice music store that caters to lots of different type of musicians (a lot of folk instruments). I recently did a prototype of a flat top mando that may be interesting enough to end up as someone’s “something a little different” instrument. The store takes consignments and can help you decide what the sale price should be (they then take 20%). I figure, if it sells, I can recoup my costs and any extra money could buy some workshop supplies.
If I go this route, it will be about a year before I start the project so I have plenty of time to consider options. I know many of you have been in similar situations during your evolution as makers. Rather than ask questions, I’d like to just open this up for input. What should I be thinking about that I have not considered? Am I ready? . . .?

[Rodger Knox]

This is an interesting topic, both practically and ethically. Being in a similiar situation, i.e. building instruments that are probably good enough to sell but not having to make any return on them, I've thought about this quite a bit. I've sold several instruments, one through consignment to a local music shop. The rest were comissions from a local musician that I've done some repair and rehabilitation work on some of his guitars. Only one was an acoustic, and that's the only one I would really consider a comission. The others were novelty, I made Cereal Box guitars & Bass for his band.

Comissions are for professionals, because they have deadlines, and that can take all the fun out of it. The few that I've done were a bit different, I started out working for this guy with budget prices, but he understood it was a spare time thing, so things usually took a while and he was fine with that.

Which brings me to the ethics question, which is what is a "fair" price? There's lots of ways to arrive at a number, 2x material cost, material cost +$/hr x time spent, etc. The Canons of Ethics for engineers basicly says that taking unfair advantage is a breach of ethics. If an amateur is selling an instrument in competetion with a professional, he obviously has an unfair advantage when it comes to pricing.

The one consignment turned out to be a good experience, I told him how much I wanted & he added 25%. After about 8 weeks, I went by to pick it up and it had sold the day before. I got a check that the bank initally wouldn't cash, but the next day everything went through just fine.

Build what you want, and if it comes out good enough to sell, go for it!

[Charlie Schultz]

A couple of tidbits here: http://www.mimf.com/library/Mechanics_o ... -2009.html

[Bryan Bear]

Thanks for the link Charlie, I remember reading that the first time around and thinking, I'll never have to worry about that. . .

Rodger, good points on determining value. I can see how someone could end up undercutting the market and making it tough for people trying to make a living at this game. Part of the reason that I am considering this is because the store offers consultation on what the market value is. The nice thing is that they are concerned with market value in the purest sense; what can they sell it for as opposed to what it is "worth." That could end up being a very humbling conversation even though I don't have high expectations. . .

[Rodger Knox]

Rodger, good points on determining value. I can see how someone could end up undercutting the market and making it tough for people trying to make a living at this game.

Actually, undercutting the market may be a way to avoid competing with professionals, unless of course your instruments are just as good as theirs. Even then, there's the perception that more expensive is better, so there's little chance of actually taking a sale away from a pro. A lower price point puts you in competetion with factory guitars, not professional builders, which has the disadvantage of a much less educated clientel, where fit and finish are more important than modal mobility.

Ethics probably doesn't really belong in this discussion, especially an engineer's concept of ethics. That wouldn't allow any kind of marketing hype, and how can anyone sell anything without a boatload of BS marketing hype.

[Jason Rodgers]

Wow, in all the years I've considered wanting to get good enough to sell something, not believing that I'd ever be good enough to sell something, and finally thinking I might just end up making things to give away to friends and family, I've never even imagined that my instruments could be competitive in my local market (Portland, OR... think about it) and that I would UNDERCUT and take food off the table of a professional. This is a level of economics that has never entered my mind.

[Bryan Bear]

To be clear, I'm not deluded enough to think I am taking money out of the mouths of luthiers! That said, people not looking to make a living (and just trying to keep them from piling up in the house) could sell for a much lower price and end up making the price of handmade guitars in general really confusing for customers.

[Rodger Knox]

My opinion, for what it's worth, is that if my instruments are up to the standards of professional builders, they should be priced accordingly. I do not yet work to those standards of fit and finish, I'm only good in a world of excellence. A lower price point is appropriate for the instruments I'm building, but I do have several that I've built that are not good enough to sell, simply because I don't want my name associated with that (lack of) quality in workmanship.
Some flaws are clearly visible to anyone, some require a trained eye to detect, and some require knowledge of their existence and location as well as a trained eye to detect.
The flaws in "professional grade" instruments are in the latter category, and I'm not there yet. I have produced at least one acoustic in the middle catagory, the comission to which I refered to in a previous post. My most recent acoustic, from the 2012 Challange 2, is almost in the middle category. There's a spot on the back where I sanded through the binding. I could have fixed it pretty easily, but if I'd fixed it I would have had to sell it sooner or later. It sounds and plays great, the flaw is there so I can keep it as long as I want!

[Jason Rodgers]

... the flaw is there so I can keep it as long as I want!

Great way to spin it! That means I'll have no choice but to keep everything I build! Win-win!

[Michael Lewis]

One point to remember is ANYTHING you put out on the market will become your reputation. think about that.

[G.S. Monroe]

I've found myself relying upon selling my instruments because of long term unemployment. It has been a hard pill to swallow, but the market is very suppressed out there. I don't have such luxuries as waiting for months till it sells, I have to accept that "It's only worth what someone is willing to pay for it". This ends up often barely covering material costs, and my "paycheck" over the last quarter (3 months) works out to less than $1.00 an hour BEFORE taxes. I'm well on the way to making an income of $3,500 this year, unless I can find somebody willing to hire me (I've been deemed Overqualified for everything I've applied for) ; Moral of the story, don't lose your job if you are over 50 years old.

[Michael Lewis]

Cheer up, there are hundreds of dollars to be made in this business.

[Simon Magennis]

One point to remember is ANYTHING you put out on the market will become your reputation. think about that.

Very aware of this.

I gave one to a friend about a year ago. It's one that I build maybe 6 years ago. His music teacher liked it enough to suggest selling it on to one of her better students who needed an upgrade. That never happened. Maybe just as well. About two weeks ago, the bridge popped. I don't know why yet as I haven't got the instrument back. However, that would definitely not be good advertising. My bridge glueing technique has improved since then. Unfortunately on that guitar the glue is a pva glue. Now I used hhg for that job.

[Nate Scott]

Great discussion. I'm in a similar position, contemplating my first commission for an old friend. This has given me lots to think about.

[Warren May]

I think it must be difficult getting your name established, as with almost any business. There seem to be too many people out there building and selling and with the advent of CNC and 3d printing, hand built instruments and other woodworking is a real niche market. I really think it isn't enough to get good at your craft. You have to have the right business sense to make a living at anything entrepreneurial.

[Micah Covington]

In the last 2 years I purchased two LP Jr style guitars from 2 different companies. The first was a xaviere. It arrived scratched up, the frets were uneven, and unplugged it just doesnt sound right. The second was a epiphone SG. It cost about half the cost of the xaviere. I bought it without playing it through an amp, because I strummed the strings and it just sounded good. It resonated well. It felt right. I have put a lot of work into the xaviere to try to make it playable, but even with all the work, the SG just plays better and sounds better.

If I were to enter into a production market with guitars, I would try to design something that I could make and sell inexpensively, that still played as well as something that costed a lot more. Most guitars sold are to beginners. I think designing a guitar that was inexpensive and yet still very playable and gigable would be a good way to go. But I imagine it is hard to beat the quality for the cost of that SG Jr without the tooling and machining that epiphone has available. It may have just been that one guitar, and this is the advantage a private builder has. You can have more consistent quality over the megashop brand.

Economies of scale kill the self-employed luthier more than anything else. How many self-employed luthiers can afford to sell a good quality guitar for $125?

[Barry Daniels]

A single builder can't compete on the low end (period)

[Perry Ormsby]

I can sell 'the idea' of a run of ten guitars in two days. Ive done it twice this year, one being an average price per instrument of $7500, the other $4000. Each run is 6-8 weeks work.

However, I've just pulled the last instrument out of a store that was under consignment, since September 2009. They didnt sell any of the seven instruments I gave them (although it did create a bit of buzz).

You don't sell instruments via jam sessions, you create interest.

You don't sell instruments at trade shows, you create interest. Of course, as time goes by, people search you out at trade shows to buy...

Endorsee's have never sold guitars for me, they have created brand awareness.

Guitars on consignment, haven't cost the store anything. Would they rather sell yours, for 25% markup, or a brand they paid for a month ago, offering 35-50% markup? Be honest, would you rather sell an item you've paid for, which has a higher profit, or one you'll have to issue a cheque for? Im sure in your head, you'll be thinking "I'd sell the best one for the client". But in reality, the store has financial commitments and payroll to consider (and lets face it, that client is walking out with either of those two guitars today...).

You cannot compete against the lower priced instruments, so dont. Not in pricing, or level of quality. People buying EXTREMELY cheap guitars, dont often care about the brand, it's all dollars to them. People buying mid range guitars are more brand focused... you'll be competing against big brands with years of recognition. Higher end guitars are generally one of two things: People lusting after something that they have wanted for a long time (eg: grew up with a poster of a Les Paul on their wall as a kid), or they want something beautiful/unique/outstanding quality.

There is a movement away from the "Ikea" model. People want quality, and they want to know a human made it.

I see a lot of "the market isnt there right now" commentary on luthier forums. They blame the 5 year long GFC. Prior to that they blamed something else. People with money, always have money. If your product is unbeatable, people will find a way of being able to afford it. If it's 'pretty similar to many others on the market', well, you've just given people a choice not to buy from you.

If you discount to get a sale, you've just shot yourself in the foot. Im not saying you need to come in at a high end price, but you need to be priced so that people who appreciate hand work, will see the value. Those clients know the effort that goes into it. Of course you also need to back this up with good quality work.

If you make excuses for your work, you'll never sell anything. If you sanded through a binding, rebind it. If the neck wasnt perfect, chop it in half and start again. Which is better: discount a guitar to $1100 because of a small imperfection, or spend more time on it and get $2500?

How many guitars at $2500-3500+ would you need to sell to make a living? How many at $1500? How many at $900?

[Clay Schaeffer]

Hi Bryan,
If you want to build an instrument to sell, but not at a premium price point, I would suggest you not build a guitar. It is hard to compete at the low and middle level for a readily available instrument.
I know you have built a few unique instruments and I would suggest that that is a viable option for building for sale at the middle level of quality (good sound, sound construction, but maybe a less than perfect finish). Dulcimers, small harps, psalteries, and strum sticks are instruments, where for the most part, you will be competing against other hand builders, rather than brand name well established factories. I find building a mix of instruments more fun than building the same thing over and over.
You could also see if a local art gallery would hang a few "unique" instruments. In an art gallery everything is "commission sales" and the instruments are likely to be treated a little better.
If you are looking to build instruments for a living, this is probably not the path to take, but if you just want to sell a few to pay for your addiction, it might be workable.

[Jason Rodgers]

If you are looking to build instruments for a living, this is probably not the path to take, but if you just want to sell a few to pay for your addiction, it might be workable.

Back about 15 years ago, when I first bought Benedetto's book, I thought, "I can do this! I'll teach September to June, build in the summer, and be a luthier!" I've looooong since given up that wee pipe dream, though that is my workshop schedule, and I name myself dabbler in sawdust.

However, I have on several occasions considered Clay's suggestion. In many instrument stores, there's a wall of ukuleles and other novelty instruments. There's also a lot of stuff on Etsy that falls into the category of novelty/folk craft instruments. Much of this stuff sells for under $200. Aha, an emerging market! Right?...

A long time ago, I read an interview with Rick Turner in which he talked about pricing in a production setting. IIRC, (no quotes here) he suggested a sort of rule of 1/3rds: the final cost of your product should be approximately 1/3 materials and production time, 1/3 shop overhead, and 1/3 paying yourself by the hour. The trick is to get the first 1/3 down enough to make the final price of your product fit the market and result in sales, but still be worth your $/hr. Or something like that.

Using this simple formula, I've tried to come up with something for the Etsy market that would help pay for the hobby, and maybe even hone my woodworking skills. When you're trying to hit an end price of $200 or less, or even $300, that's really, REALLY hard. I considered reclaimed woods, cheap or free, but there is the time involved in cleaning up and resawing. I considered inexpensive materials, like hardware store woods that could be used close to purchased dimensions, but then I might need to use an opaque finish or paint. I thought up all manner of jigs and templates to speed up production, but then I'm dumping a lot of initial capital into tooling-up for a venture that might not pay off. No matter how I figured it, even a simple instrument took a week to 10 days to build and finish, I'd be paying myself less than $3 per hour, and I might end up HATING the whole process in short time!

At the end of it all, I realized there was a pretty big factor that I hadn't considered. The folks that are out there building and selling all of these things successfully have something that I don't. It's not necessarily creativity or craftiness or business sense, though those qualities certainly help. No, for many of these people, they have an economic necessity! That's not the only reason, of course, but I think the craft-based market has really expanded during this time of recession, and that's some serious motivation. Right now, I get paid pretty well, my job is fairly secure, and my wife is in an even better situation. If I really had to, yes, I could make that formula work and figure out a product and market to bring in some sort of income. In the meantime, there are other folks who want/need it more, and it's not worth it to me. One must know where his place is, and mine shall not be in the handmade instrument market.