Re: Which should I buy!
How the prices of guitars are constructed, a break down. (especially for the high end section of the market).
Let's say you want to make a 1500 guitar, a simple one, like this:
Let's break down the costs, shall we.
Bridge (hipshot): 50
Tuners (hipshot locking): 50
nut (graphtech): 10
trussrod: 10
pickups (say, seymour duncan, cause this is the SD forum): 120$
pots, switch, jack: 25
neck wood+veneer: flamed maple with walnut pinstripes (made in-house, so just the costs for the materials): 120
ebony or ziricote fretboard: 25
body wood (ash, knot free, fairly straight grain, medium weight): 100
finish (epoxy porefill, 2K satin topcoat): 60
Jescar fretwire: 15
glue: 10
Subtotal cost: 595 dollars.
Without all the shipping costs necessary to get all the goods to you, but let's round it off to 600 dollars.
A customer also desires a case or premium gigbag, plus a strap and preferably a shirt: +125 (going with a hiscox case at trade pricing and a leather strap).
Total: 720 dollars.
(all prices VAT exempt).
Now, let's build the bloody thing!
laminating the neck: ideal situation? 1 hour.
leveling the neck blank + cutting neck: 1 hour
preparing headstock veneer: 0.5 hours
routing the trussrod, headstock, glueing fretboard, glueing inlay, glueing headstock veneer: 2 hours
leveling body, cutting shape, routing: 1 hour
cutting neck pocket, pickup pockets, control cavity: 1.5 hour
cutting backplates: 0.5 hours
cutting trussrod cover: 0.5 hours
edge sanding body, bevel sanding body: 1 hour
radius fretboard, level sanding: 2 hours
fretting (no binding): 1 hour
fret leveling + polish: 1.5 hours
neck shaping: 1.5 hours
porefill + sanding: 2 hours
finish application+sanding: 1 hour
assembly: 3 hours
Total: 21 hours
You really want to get paid, eat, but also pay rent for your workshop, home, car etc etc. Decent rule of thumb for a starting independant is $30/hour. So, we come to 630$.
Then, depreciation of the tools. Here, we are allowed to depreciate the value of our tools by 10% a year over the net value of the total cost of the goods we create. So, that's (630+720)*1.1 = 1485$
And then... VAT. On average, it's 10% in the USA but 21% in the Netherlands.
The total sum would come up to $1633 (shop would sell for 1630, looks cleaner) or 1797 in the EU.
Let's reverse engineer: if you want to sell for 1500 including VAT in the USA, we'd hit 1363$ ex vat. Without depreciation, it's 1240. Subtract the materials and we get $520. That's the hourly wage for the luthier, which still has to include his salary, shop rent, travel expenses, employer's ensurance etc. 520$ would equate to 17 hours of labor, but where can you cut those four hours?
It's almost impossible to cut those hours if you want to make a great product because the customer
demands a premium product at this pricepoint because folks like Kiesel are able to do the same, at a lower pricepoint. But economics of scale are being forgotten. Kiesel can sell some guitars at wholesale cost because their super-duper-spec'd out premium guitars offset that difference. Also, those larger shops have had the opportunity to invest in a CNC which can cut necks to shape (shaves off a few hours overall per guitar) and/or use a dust-free spraybooth where they can spray a finish like Duritan which doesn't need to be sanded in between coats and can be applied in one go.
That's why IMHO, a 1500 dollar guitar is on average not a premium made guitar and that's why a 1500 dollar guitar, handmade by a small shop in the EU or USA, is a rarity.
