Why should a mass produced guitar cost $2000+

[EmgEsp]

That's only if you assume every $2,000+ guitar is objectively better than a well made $800 import guitar.

[Grant Harding]

I play mostly clean tones and to me there's a huge difference in sound and feel between a cookie-cutter CNC copy with so/so pickups and a CNC-enabled Anderson built without compromise, including incredible pickups made by someone with decades of experience making them.

 

I suspect that gain and distortion play a significant part in your view, as less of the guitar's character show through, especially with active EMGs and the like. I'd probably save the extra $1K as well.

[Verne Andru]

There are usually 4 components in the sales channel - maker->distributor->reseller->customer.

 

Customer buys from a reseller at MSP (but expects to pay as little as possible).

 

Reseller buys from a distributor expecting to pay between 50 and 60% of MSP.

 

Distributor buys from maker expecting to pay anywhere from 45 to 25% of MSP.

 

Working backward from $2000 MSP from customer to reseller to distributor, the maker is probably invoicing around $600 to $800, or a little less than 3x cost.

 

The general rule of thumb for someone in manufacturing is to set MSP at between 3 and 5 times cost so we're at the low end of the profitability scale in the MI biz.

 

It's very easy to see a small run of these - they are a specialty instrument with a more complex neck-through build - cost a fair bit per unit once everything is accounted for. We don't know how many were made - costs drop as quantity goes up but unless you're an Epiphone or Squier production runs are not nearly as high as you think.

 

Out of that $800 they not only build, inventory, inspect, package and ship the product, they have to put in marketing and other resources before seeing sales and hopefully a profit. Overhead takes 15% of the $800, marketing 30-40%, etc.

 

Lots of factors to take into account and without an inside look it's impossible to say if they are over priced or the company is losing money.

 

[Etienne Rambert]

I just had a made-in-USA Les Paul faded delivered to my home today. Superb workmanship, plek'd frets. It was under $1K brand new. It cost less than my POS Korean-made Guild Starfire III.

 

Gibson is selling made in USA instruments for very reasonable prices.

[hellion_213]

IMO, the only Real difference, because yeah, labor's higher, BUT, with the exception of Custom Shop gear, how many per hour are churned out of the ol'CNC? Anyway, the only Real difference between $2500+ and sub $1000 guitars, same pickups, Rosewood boards, premium fret finishing, CTS pots, Grover Tuners, blah, blah, blah, is the Made in the USA sticker or engraving. The only workers churning out one guitar a week are Custom Shop guys, everybody else has a quota. That and the top. You will pay for AAAA maple, Birdseye, etc. And typically, the finishing is better on an American made guitar. Soldering ability or attention to detail anyway, i.e. quality control, is also a bazillion times better. Is it $1500 better? Depends on whether or not you expect to potentially work on a $1000 guitar. To me, the answer is no, I'll save the $$, deal with a cold solder, suck it up and move on knowing I just saved some cash. But that in and of itself lends to another problem with the market today! Why should we accept sub par at $1000!?!? That's a thousand bucks! I wouldn't accept it if it was a Tool! I'd send it back. What about a burger with no pickle, open the wrapper, and....Yep...A pickle. You'd send that back, and at most, it was what? 6-7 dollars, tops. But most of us would just snuff aside a cold solder here, a scratchy pot there, or maybe even an improperly wired switch, why? Because the guitar was $800. It's ludicrous. We expect more out of a hamburger thats going to be around, fifteen minutes at most, made at minimum wage, and costing less than 1% of the guitar, than we do a Guitar, that could last, what, ten, twenty years, a lifetime? I call shenanigans.

[Bucksstudent]

You don't have to buy any guitar for any price point. It's a luxury item. Generally, people gripe about prices because they want something they either can't afford or don't want to shell out for.

 

I can't afford a new Gibson. Even if I had millions of dollars, I wouldn't buy one over a good Epiphone. You buy Gibsons as an investment, the paint job, and the name on the headstock. They're guitars, but they're sold as products moreso than instruments, IMO. PRS is more guilty of that than Gibson, though.

 

Recently, Fender increased the prices on their Mexican models, and Squiers now have $500 guitars. That tickles me to death because when I started playing, my Standard Strat was $400 with a case.

 

And when I buy a guitar come tax return season, I'm probably going to buy an overpriced name brand instrument.

[bookumdano4]

With CNC and Plek machines becoming more and more common the quality differences will become smaller and smaller between a well made import and a Made in USA guitar. At what point are you just literally paying for the "aura" of owning a really expensive guitar over just paying for something that simply plays and sounds well?

 

You can see from the guitars I own that I don't skimp on quality, but there is no way I'm going to spend $2,000+ on a mass produced guitar. At that price I expect something custom.

 

Going from a $200 guitar to an $800 guitar is going to be a much bigger difference in quality over a $800 guitar compared to a $2,000 one. That is when you start heading into diminishing returns. Again with CNC machines in the picture its much easier to build guitars with a higher level of consistency these days regardless of where a guitar is being made.

 

Interesting thread that you have created. My reactions to your comments come from a few random places.

 

First, considering that you are of the opinion that retail price "should" be a factor of some sort of costPlus formula, I offer that your "should" is faulty. In other words, I wouldn't hire you for my company with that sort of mindset . You could of course, create your own guitar company and find out pretty fast why costPlus would quickly bankrupt you over time... unless you adopt a more conventional mindset. A costplus may work okay if you plan to open a 99-cent store or something, but otherwise, your "should" is definitely way faulty.....in the real world....imo.

 

Second, while I never have and never will buy a guitar with the name "Jackson" on it (just to narrow down my history as a consumer....Jackson may be great, but I don't shred and the name sort of for some reason, rings the bell Hondo or Silvertone or Buddy or whatever... which I also wouldn't buy because I have a real narrow mindset as a guitar consumer), it's certainly possible that your observation is correct that Jackson $400, $800, $2400 guitars all play and feel about the same. I have no opinion on that one.

 

All my Les Paul Customs/Standards/Deluxes were purchased new between 1971-76. As I paid dealer cost at the time, my cost for each averaged around $400 to around $500 for the Customs. That was the Norlin era. The guitars were okay, served me well in my own little fame-trip, and I still have some of them. I TRULY believe there is about $250 worth of "work" in each of my 1970s Gibsons. That's parts and labor to build them circa 1974, for example. Reasonable cost and what I paid was reasonable as far as I'm concerned.

 

Fast forward to 2017, I'm STILL convinced that there's about $250 in a black Gibson Les Paul Custom.....plus, the added cost for some of the parts being higher priced now (dunno what richlite costs to make, but secondary ebony .. the streaked type... is a bit higher now than jet black ebony where an option). So, in my opinion as I hold a Les Paul Custom in a store and look at it closely.... and consider my herd of 1970s Les Pauls at home.... the one in my hand feels like it has, oh... $500 worth of parts and labor in it (gotta consider the guys running the machines get wages that are above those of 1973).

 

Okay, so I figure a 2017 black Les Paul Custom with two pickups has about $500 worth of "work" into it. Which perhaps "you" would say, should retail at xxxxx, instead of $6000. Sort of like I feel a Corvette has about $15,000 worth of parts and labor inside and could easily be priced at xxxxx instead of whatever they go for.

 

As I see it, an Epiphone branded Les Paul Custom has just about the same $500 worth of work into it. Which is cool, because those retail for what, $600 or something? A bit of difference here and there, but the Epi version is pretty cool when I take one of my Gibson LPC into a store and stand there, comparing to the Epi.

 

But I'm not in the market to get an Epiphone brand LPC.

 

As so happens though, I AM buying a new Gibson LPC. New. I'm getting a nice deal, but it ain't nowhere near what I paid in 1975. Or near what I would pay for an Epi brand version. I'd love to pay half the price, but as it is with my other passion, Gretsch White Falcons, I'm used to paying a high price for them. Even as rarely as I buy new guitars nowadays.

 

Why am I doing this? Cuz I want another Gibson Les Paul Custom. And I don't buy guitars used. I'm fully aware of the.... price situation. I could scream "why doesn't Gibson price Les Paul Customs at $2800 instead of $5999?????.... highway robbery and stuff like that. But I'm not.

 

I'll buy the guitar and pay a pretty high price for it. Because I can. And it's what I want. It's also apparent I'll never sell a lot of my guitars, so resale value isn't a factor. Maybe for my heirs. But it's not a concern.

 

This all boils down to what the market will bear. Am I buying an "aura"? You bet. As I was in 1973 at $500 a shot then.

 

In my case, I don't give a rats a** how much of the guitar is made by a machine or guy or computer designed or whatever. If I like the feel and sound and color, I'm most likely to buy just about ANYTHING that catches my eye. Although I only have three-brand interests when it comes to guitars.... as it should be... I come from the century when there were only three tv networks.

 

I'm also historically, not looking at ANY guitar with a microscope. I buy them, use them, make an insane amount of money from what I do with them, and move on. These are not cars I keep locked up in a warehouse somewhere.

 

Yeah, $2000 would be a cool price for me to pay.... but then the universe would say...."psst.... get an Epi for $600... that's why we make em'"

You DO get what Gibson does here right? There IS someone paying 6 grand for some of these guitars. I personally know at least one of them.

I would also like a $30,000 2017 Corvette if I could have one because my history is so linked to Route 66 (never mind that topic). Why can't Chevy do costPlus on those

 

Anyway, this was long-winded because you have SO many replies to the replies to your original thread.

 

I get your mindset-in-the-form-of-a-question. But it is faulty as long as there are guys like me around with money to burn. Gibson or Jackson (if I were into Jackson stuff) would be idiots to not cater to where money can be found for them to rake in.... at every level and crack and corner.

[Axisplayer]

Much as bookumdano4 said, companies can and do charge what the market will bear. I am probably the guy they shoot for because I want what I want and pay what it cost. I am NOT rich, don't make my living on guitars, and probably don't play any better than most people here. I worked hard to establish a good, upper middle class income in the low 6 figures, so neither rich nor poor. Just middle class with some disposable income. In 1980 I was playing a lot more. I had owned Beatles, OR120 stack, Hiwatt DR504, all the normal suspects and then Boogie came about. I bought the first one in Tidewater VA, where I live. Cream 60 watt with extension cabinet to match, and both with EVM12Ls for a mere $4500 because the market bore it. I bought the first wireless for guitar I ever saw back in the 70's. It was two specially tweaked Advent radios linked together to make a diversity system,. $2500 back then ( a few dollars more than that number represents today.) And then I wanted an equally nice guitar. I had owned an early Guild M-65, a ~1960 ES335 with PAF pups, a 1963 sunburst Strat, a 1974 LP Deluxe in cherry red, and everything else that was hip and cool in the day. And then a guy in California named Steve Hagelson started a little company called Moonstone. They were incredible, beautiful, EXPENSIVE, hand made works of art. This was before the advent of custom high end guitars like PRS. They used quilted maple, burled maple, and other expensive, hard to locate, hand selected wood. The gold hardware WAS gold-plated hardware. Long thin necks, Bartolini pups, top of the line TKL cases, real hand cut MOP inlays, etc. Several reviews in esoteric magazines have referred to them as the Rolls Royce of guitars, some saying nothing finer ever built. I won't go that far, but they are exquisite (and still being made by Steve alone.) I ordered an M-80 which was a custom remake of an ES-335. When I got it in, the local humidity which runs an average of 90% year round played havoc with the long thin neck. Intonation was measured in days. I called Steve and he said send it back and he would change necks for cost. We changed to a woven graphite composite neck that took a month to get from Modulus as it was custom made. With the cost of the just the neck itself at $1000 (in 1980 money) and the guitar cost, I spent $5,000 on that guitar back then. So I guess I had a $12-13K rig for a local, hobby, bar band, remembering that $12-13K in 1980 was a little more than it represents today (it was a decent car.) All that to say, there will always be people who can, and will, spend whatever it takes. It speaks to them, and makes them happy. Is it worth it? Probably not to anyone but the guy that writes the check. He pays what he thought was fair for what he got. I can't afford to be that extravagant with my money now that I am retired on fixed income, but I have around $10-12K in todays money invested in my rig and it sits in my living room. I haven't played out in 17 years but just started playing again (first gig this Saturday night.) IF I ever see another M80 with graphite neck, it will be mine if I can afford it....sell blood, sell a car, sell????? They are worth it to ME, and thats all that matters. BTW, mine looked like the pictures below but with the composite neck. If you ever get a chance to play one, do it. Are there cheaper guitars that play as well? Maybe. Are their beautiful guitars that are cheaper? Maybe. But to me, the sum is greater than the sum of the parts. It speaks to me. Bottom line is, it doesn't matter if the USA version cost 3x the foreign made. If it matters to someone, and they have the cash, they will buy it. Enough people must find the difference worth it since they still sell them, so whether they ARE worth it doesn't really matter. It is the perception of value by the people that can buy them, and thats the name of the game.

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http://www.moonstoneguitars.com

[Freeman Keller]

 

You can see from the guitars I own that I don't skimp on quality, but there is no way I'm going to spend $2,000+ on a mass produced guitar. At that price I expect something custom.

 

.

 

Emg, I happen to build custom guitars (a few folks on this forum have seen what I do). My guitars probably don't appeal to you but a $2K down payment would put you on my waiting list - I'm about 9 months out. I'm a lot cheaper than most custom builders.

 

I also looked at the guitars you own. Lets put things in perspective, the current price for your RG421 seems to be about $300 - I just installed a $300 Kahler bridge in a customers guitar (oh, the labor was $200 more, bad analogy). You Charvel seems to be right at 300 also, that would buy a nice pair of non boutique PAF's. You have a Jackson at $340, that would almost buy the Benedetto pickups that I put in the last jazz guitar that I built. And your Gothic V seems to be selling for around a grand, I picked up four very nice pieces of Brazilian rosewood for 800 bucks the other day - that will make a nice heirloom acoustic for someone.

 

I don't own a Plek or a Fanuc cnc, each runs about a quarter of a mill and you really need to amortize that over a few thousand guitars. Instead I do my work by hand and I'm proud of it. For what its worth, you simply don't understand your own question.

 

[GAS Man]

Man, I'm an accountant, been one professionally for over 34 years so I'd have to charge for a complete answer, but short answer is, it costs.

 

Wages, + ~ 40% benefits, then calculate how many hours are they actually working, i.e. subtract breaks, sick leave vacation leave. Then add management overhead, factory cost overhead which includes maintenance, custodial, machinery, tools, utilities, property taxes, etc, marketing, customer service, shipping. By the time you're done, their $15 to $18 build rate per hour balloons. Then divide that hourly rate by the amount of the cost of the guitar that is not raw material to derive build time and you'd find their costs are reasonable. Ask any of the builders here how long it takes to build a guitar, even with CNC machines and you'd probably be surprised at the relative efficiency of the big builders. And don't forget that owners/stock holders want to see some profit too.

 

Now if you want to discuss something that interests me, then I'd say, wow, how come some Indonesian made guitars are now topping $1K

 

I mean, as I've gotten older, I now believe Milton Friedman was a tool, but still, market competition does indeed have a big influence on price. In other words, if better could be done cheaper, it would exist and prevail. If nothing else, it keeps Gibson's pencil sharper than one might think. Now if you're talking the highest end custom shop pieces, then indeed "panache" plays a significantly larger role.

[EmgEsp]

Its just hard for me to understand why someone would pay crazy money for a standard mass produced guitar when there are companies like Kiesel offering custom guitars, which are also made in the USA for under $2K. Obviously if a smaller company like Kiesel can still make a profit by selling made to order guitars for under $2K, I'm pretty sure Jackson could come down on some of those mass produced made in USA guitars.

[EmgEsp]

All those guitars were made in Japan and are known to have great price to performance ratio. Just because they don't have high resale on the used market doesn't mean they are low quality.

 

Again, what about Kiesel? They are selling incredibly high quality custom guitars for under $2K. Obviously it is possible to make great made in USA guitars for under $2K without having the guitar stripped of features.

 

Yeah, it seems you are targeting the boutique market with your products which are for guys that play Golf and smoke cigars, obviously that is not me lol.

[EmgEsp]

Then explain Kiesel? Are they paying their employees incredibly low wages, because they offer semi-custom guitars at under $2K and are made in the USA.

[GAS Man]

Please post pics of you Kiesels.

[EmgEsp]

I never said I owned one, but they have reputation of making very high quality instruments at any price. The fact that you can get a semi custom made guitar at under $2K proves those bigger companies are just jacking up prices because they can. Kiesel is a very small company and are not mass producing guitars, yet their prices are ridiculously good compared to the competition, especially considering they are semi-custom. Try and build a custom Jackson, Gibson or PRS for under $4K, let alone $2K.

 

Here's a little walk through of their new factory.

 

 

[1001gear]

Why so preoccupied with Carvin? I own two Carvins. Ah skroodum to gether. They play and sound like guitars. Their custom shop stuff seemed attractive till I got my hands on a couple at their store. Suddenly they were overpriced. They plain didn't sound very good. That changed over the years to "they pass for professional use" but mostly they just got prettier. So what makes them worth the grand plus they ask?

 

[EmgEsp]

They are no longer Carvin, its Kiesel now and the quality has seemed to improve since the split.

 

Again, these are not mass produced guitars with standard options, these are semi custom guitars at prices below what those big companies sell their standard mass produced guitars at.

 

You most likely just didn't dig the stock pickups which is normal, but that can be fixed with a swap of pickups to your liking, though I would be surprised if you say they didn't play well.

 

Please let me know of another company that sells semi-custom guitars made in the USA for under $2K.

[Chordite]

I recently bought a Jackson Dinky (the exact white JS12 model the Captain is playing here) It is a perfectly usable guitar that was cheap as chips new and I think cost me around 60 like new at auction. I have never played an expensive Jackson but my only criticism of mine is that it feels to freshly built and I like my guitars a bit more "rounded off" with use maybe the expensive models manage to craft that in and you don't get that new leather shoes break in period. Even the tuners look a few steps up from the cheapest option. Jackson do seem to be the current masters of budget guitar production.

I'll let the comedians demo

[video=youtube_share;CI5p79rDr0M]

[Etienne Rambert]

Dunno how Gibson is doing it, US-made M2's starting south of $400.

Les Paul's starting south of $800. That's cheaper than MiM Fenders

and MiK Guilds and Gretsches.

 

It looks to me like anew era of cheap gear is just getting started.

[Freeman Keller]

By definition a "custom guitar" is hand built to the specifications of the buyer, almost always to provide something he/she cannot get in a manufactured guitar. That can include special woods, electronics, shapes and sizes, construction methods, inlays and features. Many times a custom size/shape will require a custom case - those typically cost me $300+, about the price of some of your guitars. They tend to be purchased by people who know what they want and have the disposable income to purchase it.

 

My guitars are affordable by many standards - it is not uncommon for custom guitars to be in the five figures. At a recent lutherie conference I played a very nice archtop with a hang tag price of $30K - someone will buy that guitar and make wonderful music on it.

 

When I build and sell a guitar I only have to make what I feel is an adequate return on my materials and labor. A manufacture has to amortize many other costs - the manufacturing plant and equipment, labor, overhead, advertising and legal costs, maybe endorsements from some big name star (so you'll identify with the guitar and want one just like it). Manufacturing costs are different for a domestic company and overseas - even as our new King threatens to increase tariffs and make it harder to do business.

 

Your original question has spawned some good discussion by people who understand many parts of this big and complex picture. You can make the same arguement for almost everything on the market today - why does this car sell for so much more than that one, why is this bottle of wine so expensive, how can you justify the price on this pair of shoes. I happen to drive nice cars, drink good wine and play expensive guitars. Your milage will vary

[Freeman Keller]

Here is a recent project that you might understand. A customer brought a perfectly fine Epiphone flying Vee to me and wanted an active pickup and a device called a "Sustainiac" installed. I did it, charged him $400 and lost money on the deal

 

 

[Verne Andru]

I think the OP's focus on Kiesel/Carvin deserves a straight-forward answer - it's marketing!

 

Fender, Gibson, PRS, etc. put tons of money into establishing and marketing their brands (Fender owns Jackson) whereas Kiesel/Carvin not so much.

 

 

Fender, Gibson, PRS, etc have decades of big star endorsers adding value to their brands whereas Kiesel/Carvin not so much.

 

Etc.

 

Does 'brand value' add 'real value' to the product? Not from a functional POV, but from a sales POV definitely, which is what you're asking about.

 

I have a few 'nice' guitars but most I've picked up super cheap. My Les Paul doesn't say Gibson on the headstock and my Stratocaster doesn't say Fender, but my Les Paul plays, sounds and looks like a Les Paul and my Stratocaster plays, sounds and looks like a Stratocaster. The only difference is in resale value, but since I don't have an interest in reselling, the issue is moot.

 

As much as musicians try to pose as being outside the box thinkers, most are a bunch of conformists mimicking those who came before. Smart brand marketers know this and target those market features.

 

As the line goes in "Home Alone" when the mom is trying to raise money selling her watch, the prospective buyer asks, "Is it a real Rolex," to which the mom answers, "do you want it to be?" Perception is reality.

 

Kiesel/Carvin make some great gear but their marketing has left them an also ran. They can turn it around, but it requires a different approach than the road they've been traveling.

[EmgEsp]

Kinda makes you wonder why they should even keep the Epiphone line around if they are willing to release authentic Gibson's at import level pricing.

[EmgEsp]

Finally, someone gets what I'm trying to say. The pricing is just inflated because those big companies can get away with it, and as long as relevant Artists keep playing those guitar brands ignorant consumers will continue to convince themselves those high prices are justified.

[1001gear]

Say the fish wise up and boycott. Prices will head downward slightly. If the fish cave, prices go back up. If the fish go to war, MFGers will just go make something else - like more war - and they do deal directly with the powers.