How much does it cost for Fender to make a tele?

Discussion in 'Telecaster Discussion Forum' started by doruondun, Aug 22, 2010.

  1. Jason G

    Jason G Tele-Meister

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    Your 1st question is difficult to answer from the knowledge I have. I figure a custom shop may require more time keeping the instrument within specs: weight, one piece body, quartersawn neck, unique finishes and/or hardware and wiring, etc. Otherwise, automation has made it possible to make extremely consistent parts. Less labor of the "hands-on" type across the board, but the machinery and tooling costs and overall "overhead" costs the production plenty. Remember too that Fender, like Gibson/Martin/etc, competes largely against themselves... in the form of used instruments. I'm not a market strategist, but I'm sure they put lots of research into how much they "can" sell a particular model for. So the answer to how much it costs them to build is kinda irrelevant. They have so much purchasing power and suppliers that you'd probably have to ask someone within the company, or in a similar production company. I know I'm not alone when I can say I've picked up a dirt cheap Squire that plays and sounds, feels better than a USA built that's 10 times the price. That's why I feel a person may be better off going with a high-end builder that has very high quality control, than searching around for just the right high-end Fender at the same cost. But then it's all in what you're wanting to own. The best tele I've owned came in a box of parts I bought online for $66 back in '97. It had a MIM neck, a gun metal blue poplar body with Bigsby holes in it, a Texas special neck pup, 4-way switch and I added a used Jerry Donahue bridge pup. Go figure? Man it was just right. I parted it out like an idiot so now the body is gone.:confused:
     
  2. 51Nocast

    51Nocast Tele-Meister

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    If you knew the answer what would be gained from it ? Just a "hmmmm imagine that!"
     
  3. dconeill

    dconeill Tele-Afflicted

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    Fashion, mostly. Like salmon to their home streams, guitarists seem to believe that there was something magical about the guitars used to play the music from their formative years. IMO it was the players, not the guitars, though of course the guitars put limits around the sorts of sounds that could be created.


    Not the same? Based on what? Fender hardware was about the cheapest they could get away with. From a design and structural standpoint the hardware is much better now. But the original hardware, cheapness and all, contributed to the sound of the instrument, so there's that fashion thing again.


    Oh, please. You're talking about dead wood and metal here, not babies.
     
  4. jetagegreg

    jetagegreg Tele-Meister

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    And there is a lot of demand for guitars that say "Fender" and "Made in USA", regardless of the wood, build, or pickup quality. Which is why a lot of people on this forum buy G&Ls or CIJ/MIJ Fenders or Tokais or Pro Tone or CV Squiers or make partscasters or go to boutique builders instead....

    I also can't imagine what liability and health insurance costs for the Fender factory, with all that machinery. Not cheap, for sure.

    -GB
     
  5. Jack Wells

    Jack Wells Doctor of Teleocity Ad Free Member

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    There's an old saying in business....... "If something doesn't sell, the price is too high". This applies to everything. From that I think you can deduce that if something does sell, the price is not too high. Many Fender models sell at the price they set so they are not priced too high. When a model doesn't sell in sufficient quantities, they discontinue it.
     
  6. Dan German

    Dan German Poster Extraordinaire Silver Supporter

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    Except G brand guitars post-Henry J. I'm not being a smarty-pants, when he took over he said: "... we are going to increase prices. Prices were ridiculously low. And people said, the price has been decreasing 20% a year, how can you reverse that? I said I'm just going to double the prices on a lot of models. I actually tested it and got an inverse price curve. Basically it showed that every time I raised prices a certain amount, volume would go up."
     
  7. DavyA

    DavyA Tele-Meister

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    Well yes and no. If you want customers to percieve something as "high end " you may need to inflate the price. Let's face it Fender has always mass produced it's products. No differene in the 50's or today. Even CS is (mostly) mass produced. So the differnce in the cost of making a custom shop as opposed to say an american standard may not really be that great. But to convince you that CS is better they may (I'm not saying this is true) make the price higher to convey a preception of quality.

    I had a business making high quality items (fishing tackle) and it wasn't 'till I started charging a little more that my bussiness took off!

    Crazy huh?
     
  8. MN Punk

    MN Punk Tele-Holic

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    Well, Fender CS lacks (some of) the economies of scale that their regular identically-assembled lines of guitars enjoy. The Custom Shop is more about tapping in to the growing build-to-order market created by small boutique luthiers (like some of the folks here) than it is to create the illusion of "high end".
     
  9. boris bubbanov

    boris bubbanov Tele Axpert Ad Free Member

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    As suggested by the member from Stuttgart, someone at FMIC knows or tells his boss he knows how much these things cost to make. I like to poke fun at the analysts who claim to have a handle on this because I agree it does seem improbable that you could truly weigh every component and item's cost all that accurately. The thing is, we cannot dissect these studies because (like production numbers) this stuff is all proprietary (undisclosed). One of the many advantages of not taking a business enterprise into public stock ownership.
     
  10. BentheMighty

    BentheMighty Tele-Meister

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    One thing I was wondering...

    Since the Tele is a slab and not sexy curved, shouldn't it be easier to wonk em out so therefore cheaper?
     
  11. jefsut

    jefsut Tele-Meister

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    Great thread! Keep it going! I don't have any special insight to add here, but I'm loving all the intelligent posts.
     
  12. Ricky D.

    Ricky D. Doctor of Teleocity

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    A lot of people don't understand overhead costs and depreciation, and this is no place to set up an accounting course. There is a big difference between the total costs that have to be covered by markups of the products sold and the incremental cost of producing one more guitar. Figure it out right and you have a nice business, figure it out wrong and you have a factory full of worn out machines and no money to replace them. You can't run a guitar factory without wood, drill bits, toilet paper, secretaries, shipping and receiving, electricity, insurance, and more things than I can possibly list. The customers have to pay for all of this stuff. And we wouldn't be able to answer the OP's question from publicly held corporations published reports anyway.
     
  13. jetagegreg

    jetagegreg Tele-Meister

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    Yes.

    -GB
     
  14. DavyA

    DavyA Tele-Meister

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    Yes, they are tapping into that market!! But, do they really hand craft these guitars one at a time to order like the small luthiers do? How many Custom Shop guitars go out of Fenders doors every year? Can they all possibly be made one at time by order?

    I don't really know the answer to that. If they are truely hand made to order, the necks fit to each body and hand finished etc. then maybe the price is truly reflective of what it costs them to make one.

    Of course you can't actually order one custom just exactly how you want one either. ( I know...that's a diferent story)
     
  15. teleduster

    teleduster Banned

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    About 45% less than you pay for it.
     
  16. Mark Davis

    Mark Davis Telefied Ad Free Member

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    CNC machines cut all the bodies and necks they dont care what the shape is.

    All they know is what they are programmed to do.

    Now back in the Leo days when they were made with simple hand tools a Strat would take longer to make than a Tele and they always cost more too.
     
  17. jetagegreg

    jetagegreg Tele-Meister

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    So does the CNC machine do the whole body in one pass then? Welcome to the 21st Century, I guess. I keep thinking I should try to get a tour of a modern guitar factory, but i fear it'll just ruin my idealized teenage vision of these places....

    -GB
     
  18. Rolling Estonian

    Rolling Estonian Friend of Leo's

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    Look up going to PRS in Annapolis.

    M
     
  19. Slann

    Slann TDPRI Member

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    Fender sells about 1,000 Teles a month. Depending on where they're made, the production costs will vary(mainly Mexico/U.S.), with labor and overhead being the differing cost components. I think it's fair to assume the material costs for Teles don't vary much, regardless of hardware options and finish variations. They make the largest margins on "top end" guitars(Custom Shop), but most revenue comes from mid-level guitars. My guess is their direct manufacturing cost averages about $150-$250 a unit. This includes materials, outside costs, labor and overhead.
     
  20. Omiewise65

    Omiewise65 Tele-Afflicted Silver Supporter

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    If Fender does not take care they will earn no more money at all .

    Please don't get me wrong . I love Fender guitars and i will always pay the price for the real thing .
    But Fender has to find a way to protect it's trademark .
    How come some chinese factory can put deceptive marks on guitars , which tell the customer it's the real deal ?

    Like this for example : Serial number says ( guitar dater project ) Corona plant , USA, 2000-2001 : Z0161258

    And now look at this : http://cgi.ebay.de/ws/eBayISAPI.dll?ViewItem&item=300456468411&ssPageName=STRK:MEWAX:IT
     
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