How much do you think it really costs Fender or other companies to make a guitar?

Discussion in 'Bad Dog Cafe' started by Kloun, Aug 23, 2020.

  1. Kloun

    Kloun Tele-Holic

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    Just wondering out loud what the actual cost would be. I mean, we are not communists (well those of us on the forum who aren't from Cuba, North Korea, Vietnam or China) and companies like Fender and Gibson gotta make money. But what do you think their costs to manufacture a guitar really are and what the markup is?
     
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  2. TeleTucson

    TeleTucson Friend of Leo's

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    I have no basis for this specific to guitar manufacturing, but in many industries a respectable margin is 50% -- meaning a 2X markup from cost of manufacture. But that extra factor is not all profit, because it has to cover everything else - marketing, R&D, etc. - and other expenses that are buried in G&A. R&D for guitar manufacturers is probably minuscule, however.

    If they were publicly-traded companies you'd be able to have a better idea, but none of them are.
     
    Last edited: Aug 23, 2020
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  3. Ebidis

    Ebidis Friend of Leo's

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    Yeah, there is a lot of overhead in any business. Employee salaries, benefits, insurance, day to day operations, utilities, etc.
     
  4. RollingBender

    RollingBender Tele-Afflicted Vendor Member

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    For some companies, R&D is a large sum of money. For other companies, R&D stands for “Rip-off & Duplicate”.
     
  5. Steerforth

    Steerforth Friend of Leo's

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    Find out what the employee discount is at Guitar Center.

    Then multiply what a GC employee can buy a guitar for by 0.5 and figure that’s a high estimate.
     
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  6. EsquireOK

    EsquireOK Poster Extraordinaire

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    I would assume that on average, their base wholesale (i.e. dealer) prices are about twice what they figure they have into each guitar, using a very complicated calculation considering all expenses. And your base wholesale price is about half of what list price used to be...in the days when Fender actually used list price. That would mean, for example, that a guitar that retails for $700 (which, in the "old days," would have listed for $1,000), costs them $250 to make, and costs a dealer $500 to buy at base wholesale price. Then high volume dealers get discounts.

    Just a stab. I am sure the actual numbers are far more complex and nuanced, and that they find any way they can to get more than 2X what they'v got into each one. But I can't imagine the guitar making operation of their company staying in business if they aren't setting their base wholesale prices at at least 2X what they have spent making each instrument.
     
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  7. Switchy

    Switchy Tele-Afflicted

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    1/2 of a Squier retail will give you the wholesale price, and then half of that will give you the cost. Is my guess. So I'm going with $30 to $45 bucks. :)
    I'm willing to bet regular Fenders cost just a little more, but retail is higher more due to advertising and marketing than actual upgrade in materials.
     
  8. vhilts1

    vhilts1 Tele-Holic

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    Fender USA Swamp Ash Body is probably about $10 worth of wood....maple neck is probably about $10 worth of wood. The PUPs are probably less than $10 worth of materials each. The tuners are under $20 a set....material wise...USA telecasters are well under $100....less than $80 wouldnt surprise me....The American Original lists at 1999.99 I think ?? .....dealers probably get those at $1000 plus shipping
     
  9. Bluego1

    Bluego1 Friend of Leo's

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  10. That Cal Webway

    That Cal Webway Friend of Leo's Silver Supporter

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    $47.00

    Total
     
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  11. DougM

    DougM Poster Extraordinaire

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    Labor is always the biggest expense, which is why American, Japanese, and European made guitars are the most expensive, followed by Mexico, Korea, and then other Asian countries. The cost of higher quality parts in MIA guitars is higher, but is less indicative of final cost than labor and other overhead expenses, which are also higher in the US, Japan, Europe and Korea than other places.
    And, many Chinese companies are subsidized by the Govt. there.
    The general dealer cost is half of MAP/retail, but I know on some Fender and Gibson products it's less. On Martin and Taylor it's pretty much half.
    And, in response to the OP, those countries are not really Communist, but are actually Fascist. They call themselves Socialist or Communist to make their poor citizens think that they're helping them.
     
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  12. PlainAllman

    PlainAllman Tele-Afflicted

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    The factors involved in building something like a guitar are so varied it would be extremely difficult if not impossible to boil it all down to one set of dollar amounts. The materials involved may be sourced from multiple different places causing wide ranges of different costs throughout the year let alone from one year to the next. That doesn’t even get into the costs associated with hiring, training, retaining employees etc. All that goes on in multiple locations sometimes across multiple continents. Then there’s marketing and ad campaigns that span the globe and have to be managed by personnel from the different geographic areas and translated and so on. Then there’s facilities maintenance and utilities costs, legal counsel and government regulations and compliance and so forth unless it’s in somewhere like China where the workers are basically slaves and are lucky to get to work inside a building rather than in the rice fields or whatever.
     
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  13. tfarny

    tfarny Poster Extraordinaire

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    $50 to $400 depending on parts, and labor costs in country. Not more than that for a tele.
     
  14. burtf51

    burtf51 Tele-Afflicted

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    how much does it cost to play a job=$100
    Pay=$50
     
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  15. dlew919

    dlew919 Doctor of Teleocity

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    How many guitars an hour would fender make? And how many would Gibson make? This would be useful to work our labour costs.
     
  16. nojazzhere

    nojazzhere Doctor of Teleocity Ad Free Member

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    I thought we already determined a non-Fender branded partscaster was worth about $300.???????
     
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  17. Fretting out

    Fretting out Doctor of Teleocity Platinum Supporter

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    I guess for an average

    But you gotta think how many hands are on one of those guitars probably a dozen by the time it’s done, with each one of those 12 employees probably making between 10 and 50 dollars an hour

    At the end of the day it really doesn’t matter how much is actually put into the guitar

    Because everyone always forgets about

     
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  18. Fretting out

    Fretting out Doctor of Teleocity Platinum Supporter

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    I appreciate this thread but it really doesn’t matter how much it cost for fender or Gibson to make a guitar

    All it does is Make people want to buy imports because they can never see the big picture

    Having been involved in business I’m gonna continue to buy USA fender

    Yes I know this is just in good fun, I’ll curmudgeon somewhere else
     
  19. warrent

    warrent Friend of Leo's

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    Before everyone chimes in about how cheap wood and steel are I would seriously look on youtube at the various factory tours. A lot of the actual cost is setting up those factories with equipment, staffing the machines, and buying and storing large quantities of wood and other materials.

    Cort built this factory to build PRS guitars in Indonesia. It's a substantial investment in staff and equipment even at Indonesian labour costs. Part of all that cost gets added to each PRS SE guitar they make.
     
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  20. tele12

    tele12 Friend of Leo's

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    The article was from 4 years ago.
    I don't think it will be that accurate now.
    Since most manufacturers are moving production from China to Indonesia their cost can't be double to do that.I don't think the difference between Korea and USA is more than double anymore.
     
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