Why do $3000+ mass produced guitars cost $3000+?

[EmgEsp]

I made a similar thread a few years ago, but would really like a fresh take on it and hoping newer people chime in.   

Also, let me clarify I'm talking about mass produced guitars that go through CNC machines, not handmade guitars.  

We have an idea what wood costs and we know that the big guitar manufactures buy in bulk and get a discount, same is true for hardware and electronics as well.  

I would love for someone to be able to break down how a guitar manufacture comes to the decision to price a mass produced guitar at $3000+ when there is really not much different in terms of the materials used vs their cheaper offerings.  Yes, they might use higher grade flame maple and such, but how does that = a $2000 premium?  

Just go on Gibson's website and look at all those reissues that have a MSRP of over $4000.  I can't for the life of me understand how they are able to convince people to pay that much for reissues.  $4K just because its a reissue of an older guitar?  Its no wonder why Guitar sales are declining, when companies keep pricing themselves out of the market and only catering to rich Dentists and Doctors.  

Lastly, please don't answer with "Because people will pay those prices."   Yes, obviously some will, but no consumer said "Please make your guitars more expensive or I won't buy."  

[Grant Harding]

I'm guessing you mean like Anderson and Suhr? 

1) CNC is expensive

2) Even with the big shaping done with CNC, there's still a huge amount of master-grade skilled labour required to make a top end guitar

3) Great wood is also expensive

4) Why would anyone take the risk of building a guitar factory for razor thin profit margins

[gardo]

Short answer, because someone is willing to pay .

[EmgEsp]

2 hours ago, Grant Harding said:

I'm guessing you mean like Anderson and Suhr? 

1) CNC is expensive

2) Even with the big shaping done with CNC, there's still a huge amount of master-grade skilled labour required to make a top end guitar

3) Great wood is also expensive

4) Why would anyone take the risk of building a guitar factory for razor thin profit margins

1. The machines initial costs are expensive, but they allow you to make a lot more guitars faster which makes up for those costs.  

2. Every manufacturer has to hand finish their guitars. Gibson doesn't have some kind of monopoly on skilled labour.  And, I question "Master Grade" quality when speaking about Gibson or any other company who mass produces guitars.  Some guitars will be great and some guitars will turn out bad, its just the way it is.  

3. Sure some wood is more expensive, but unless you are using something very exotic most of the wood used is rather readily available like Mahogany and Maple. And again, Gibson is paying in bulk, so we can't just look at what prices would cost for me  and you. 

4. Do you really think Gibson needs to charge $4000 to make a decent profit on a reissue guitar that is just basically a modified version of one of their standard guitars?  

[Grant Harding]

I agree that Gibsons are way over priced. I'm thinking Anderson, where they use CNC to shape the guitars perfectly, then master craftspeople do the rest. Then they leave them set up for a week or more then tweak them before they ship. 

[daddymack]

On 12/10/2020 at 6:09 PM, EmgEsp said:

1. The machines initial costs are expensive, but they allow you to make a lot more guitars faster which makes up for those costs.  

2. Every manufacturer has to hand finish their guitars. Gibson doesn't have some kind of monopoly on skilled labour.  And, I question "Master Grade" quality when speaking about Gibson or any other company who mass produces guitars.  Some guitars will be great and some guitars will turn out bad, its just the way it is.  

3. Sure some wood is more expensive, but unless you are using something very exotic most of the wood used is rather readily available like Mahogany and Maple. And again, Gibson is paying in bulk, so we can't just look at what prices would cost for me  and you. 

4. Do you really think Gibson needs to charge $4000 to make a decent profit on a reissue guitar that is just basically a modified version of one of their standard guitars?  

1) Depreciation and defrayment on production equipment [purchase, installation. training, maintenance] is a long accounting process. The ROI is not a week or two, it is typically years. So there is a huge cash outlay up front and a slow 'payback'. It is a business, so they need to show a profit, not a loss due to costs incurred to improve processes.

2) US labor rates are pretty high, even in Nashville or Memphis [yes, Memphis is gone, but not forgotten.]

3) wood isn't just wood. There are a series of 'grades'. A slab of highly figured maple can get pretty danged pricey. And even how they are cut and matched is an art, not a CNC function. Gibson was burned in the past over where their wood came from,  so now they are VERY particular.

4) no, they don't need to, and yet, there are people willing to pay those prices. I agree many of these gorgeous instruments wind up on the wall of some rich person who can't even play a barre chord. But, again, who and what the end user is and does with the instrument is not up to the manufacturer. They work to meet the needs of the market they are in, and if the market says 'make these, you can sell them for this price', they will do it.

All that is moot when you consider what a Fender Custom Shop guitar can run, with a bolt on neck and a slab body.

Basically, you are paying them to put their logo on your new guitar.

[1001gear]

Who goes into business to make as little money as possible?

[EmgEsp]

On 12/22/2020 at 8:25 AM, 1001gear said:

Who goes into business to make as little money as possible?

I never said they shouldn't want to make a nice profit, but there is a difference between making a profit and just aiming high because enough people with more money than brains will pay for it.  I mean look at Kiesel, they are a 100% American guitar manufacture that gives you custom options and the prices are extremely fair.   They even have things standard like carbon fiber rods for neck stability and Stainless Steel frets.  Is there any Gibson with stainless steel frets?  $4000+ guitars and still using standard fret material, ridiculous.

[1001gear]

Rhetorical question. My take is the economy is all greed and as long as supply side is the only one doing, they'll just keep raising.

The true law of supply and demand:

First, supply.

Then, demand.

[daddymack]

10 hours ago, 1001gear said:

Rhetorical question. My take is the economy is all greed and as long as supply side is the only one doing, they'll just keep raising.

The true law of supply and demand:

First, supply.

Then, demand.

actually, no...

First: demand, then supply, almost meeting the demand...always leave them wanting more

Then, make a cheaper/slightly 'shoddier' version of the product and see if you can stimulate new demand at a lower price point.

Hence, how many different Les Paul models are there?

[1001gear]

Much more euphemised con is all. Get 'em hooked and start extorting is all it amounts to.

[gp2112]

On 12/10/2020 at 2:49 PM, EmgEsp said:

Lastly, please don't answer with "Because people will pay those prices."   Yes, obviously some will, but no consumer said "Please make your guitars more expensive or I won't buy."  

Unfortunately, that is the best answer. I am quite sure there are many, many guitarists that can take my $129.00 Epi Les Paul Special sound like a million bucks but will gladly pay far more for a guitar just because they can.