1. The Rules have been updated regarding posting as a business on TGP. Thread with details here: Thread Here
    Dismiss Notice

What do you think it actually cost Gibson/Fender to make their guitars?

Discussion in 'Guitars in General' started by carbz, Feb 14, 2009.

  1. carbz

    carbz Supporting Member

    Messages:
    4,280
    Joined:
    Mar 24, 2006
    After all expenses. Let's use an American Stratocaster and a Les Paul standard as they are popular examples. Obviously the gimmick/cosmetic stuff like Flame wood, binding, relicing will be much more profitable.
     
  2. jeffwith1f

    jeffwith1f Member

    Messages:
    3,814
    Joined:
    Sep 19, 2007
    Location:
    Toronto, Canada
    I would suspect that labour is the largest part.
    and I would suspect that per unit cost is somewhere between one tenth and one quarter of MSRP. would love to know if anyone knows for sure though.
     
  3. guitarist58

    guitarist58 Member

    Messages:
    6,016
    Joined:
    Apr 9, 2007
    Location:
    ♥ Lost in the Far East...
    Back in the 80's when I was a NAMM member it was often about 1/3 of MSRP on average, IIRC. In other words an item with a $995 MRSP might cost the manufacturer around $340, but it can vary quite a bit.

    That was for your typical mass-marketed stuff, though, not custom shop or boutique or whatever.
     
  4. devilrob1979

    devilrob1979 Member

    Messages:
    3,126
    Joined:
    Mar 7, 2008
    Location:
    Mill Creek, WA
    Are you talking about all expenses including marketing, payment of salaries to executives and office workers, payment of benefits, etc or just the cost to build the guitar?
     
  5. XKnight

    XKnight Member

    Messages:
    11,095
    Joined:
    Apr 8, 2007
    Location:
    Republic of Texas
    Whatever the cost, I'm quite certain that I can't build it myself.
     
  6. AustinIsPresent

    AustinIsPresent Member

    Messages:
    1,522
    Joined:
    Nov 7, 2008
    This.
     
  7. Steve Dallas

    Steve Dallas Supporting Member

    Messages:
    8,205
    Joined:
    Feb 22, 2005
    Location:
    Surrounded by Idiots
    Are we talking about unit cost or total cost?
     
  8. carbz

    carbz Supporting Member

    Messages:
    4,280
    Joined:
    Mar 24, 2006
    Good question as if you take into account every expense the profit may not be much. In addition to that when we buy a guitar new from the retailer they have expenses as well. Could this mean that Gibson and Fender barely make much profit per guitar but since they sell literally thousands of them they are able to keep it going? It also could mean that without the big corp expenses something like a Les Paul could probably be built for a few hundred bucks at the most?
     
  9. roomservice

    roomservice Member

    Messages:
    620
    Joined:
    Dec 27, 2007
    Location:
    Dear Old Blighty
    about $100 each - seriously!

    I was in a guitar shop six months ago and this rep from an amp company walked in. Anyway - we started talking and the shop was empty and we all had a bit of time to kill......and so we spoke about lots of things (one of the most interesting conversations I've ever had - learned loads and loads of things about the business I had no idea of) and one of the things we spoke about was costs etc.

    Of course - he could have been pulling our legs but.....seemed to know what he was talking about.

    oh yes - the $100 includes overheads.

    just relaying what I was told so don't shoot me lol!!!
     
  10. 84Bravo

    84Bravo Member

    Messages:
    10,238
    Joined:
    Aug 28, 2006
    Location:
    Madison, WI
    You have been sadly mislead. The "overheads" alone, insurance, etc, would be a multiple of that. No shooting, just sayin'.
     
  11. devilrob1979

    devilrob1979 Member

    Messages:
    3,126
    Joined:
    Mar 7, 2008
    Location:
    Mill Creek, WA
    That might be the materials cost but it certainly can't reflect overall cost. The time it takes to just sand a Les Paul even if those doing it were making minimum wage would exceed that.
     
  12. roomservice

    roomservice Member

    Messages:
    620
    Joined:
    Dec 27, 2007
    Location:
    Dear Old Blighty
    thanks for not loading both barrels!

    It does seem a low cost but he was adamant about it. I'm far too trusting - i amaze myslef i made it through puberty sometimes lol
     
  13. SteveSchu

    SteveSchu Member

    Messages:
    56
    Joined:
    Apr 5, 2008
    I would guess the cost per guitar is amazing high......way above $100 a unit. The wood alone is expensive.....include labor, the operating costs to include the machines, utilities, plus the overhead....benefits, insurance, advertising, taxes and the huge salaries of the Big Shots. I would guestimate, guestimate mind you, that a 30 - 40% range would be more like it. That's why American manufacturing is going to China.
     
  14. shane88

    shane88 Member

    Messages:
    22,831
    Joined:
    Oct 10, 2008
    Location:
    X
    i'd like to know what % they spend on marketing/advertising/endorsements
     
  15. sanhozay

    sanhozay klon free since 2009

    Messages:
    11,266
    Joined:
    May 4, 2003
    If you're spending $2000, the dealer is making about $500 - $600 and the BIG manufacturer {Gibson, Fender} is making about $900 - $1000. Believe.
     
  16. Dan S

    Dan S Member

    Messages:
    414
    Joined:
    Sep 9, 2008
    I believe it.
     
  17. Sadhaka

    Sadhaka Member

    Messages:
    1,252
    Joined:
    Mar 31, 2007
    Location:
    Sydney, Australia
    Is the missing $500 going into wages etc?
     
  18. shally

    shally Member

    Messages:
    459
    Joined:
    Jun 24, 2008
    Location:
    palm springs of Washington
    payoffs...lol
     
  19. Kingbeegtrs

    Kingbeegtrs Senior Member

    Messages:
    1,926
    Joined:
    Oct 23, 2008
    Location:
    Lufkin, Texas
    I'd be willing to bet that they spend more on advertising and attorneys than they do on the guitar itself.

    You can build a very nice parts caster for about $450 if you shop it right.

    Now, imagine you cut your own bodies and made your own pickups.

    I'd say that it probably costs Fender $200 total. I'm sure that Gibson spends a lot more.
     
  20. justabubba

    justabubba Member

    Messages:
    448
    Joined:
    Oct 29, 2004
    Location:
    metrolina
    this is dated and it includes all musical instrument manufacturers
    but i don't think the industry costs would vary much from year to year, so it might give you a sense of the cost of goods sold as well as non-production wages to compare to gross sales
    http://www.census.gov/prod/ec02/ec0231i339992.pdf
     

Share This Page