#1
Hey Everyone!

I am doing a project on Gibson's supply chain and manufacturing process for my Operations Management class at Northeastern, and I was wondering if anyone had an educated guess as to how much it costs Gibson to make a Les Paul. I was wondering how much the wood, electronics, and actual manufacturing cost in addition to transportation costs, but an overall figure is all I really need to do some calculations required for the project.

If anyone could give me an estimate, it would be a huge help and go a long way with this project!

Thank you very much!
#2
Step 1: find a Gibson general enquiries email address.

Step 2: ask them.

Step 3: get answer.

Step 4: have a celebratory wank.
#4
thanks!

this estimate can be for any model of Les Paul, but preferably a Les Paul Standard., if possible.

Thanks again!
#5
im guessing around 50USD.

for any make or model.


thats because you pay for the gibson logo. thats the expensive part....
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#6
i used to make fender strats when they were made here in mexico, it cost more or less around 800 pesos which is a a little over 100 dollars, i cant imagine lp's would cost very much more to make. hope thats helpfull
#7
100 to 200 USD?
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#9
You guys are saying 100-200 USD for every gibson model? Come on...

Maybe the wood/parts (all the raw materials) would be about 200USD but all the labor involved? Even if they're made by computers, they probably still have tons of employees whose salary's all add up. I'm guessing on a les paul studio, you're looking at about 400USD for it to be made, something like a les paul VOS or custom shop is probably closer to 1000USD or even possibly higher.
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#10
about tree fiddy.


seriously, i think it would be impossible to estimate. they buy materials in huge quantities, manufacturing costs vary by location (they have more than one) and engineering costs have to be divided over the total sales for a production run, etc. nowhere in there did you mention advertising/marketing/promotions.
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#11
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about tree fiddy.


seriously, i think it would be impossible to estimate. they buy materials in huge quantities, manufacturing costs vary by location (they have more than one) and engineering costs have to be divided over the total sales for a production run, etc. nowhere in there did you mention advertising/marketing/promotions.


For once i agree, it's probably difficult to estimate and to compare the costs of an individual making an instrument out of the same materials and products is not going to be realistic. However, i think they probably know how much their instruments cost to build because they would be a pretty crap company if they didn't know the costs of their products, and therefore their profit margin on that particular product.

Quote by webbtje
Step 1: find a Gibson general enquiries email address.

Step 2: ask them.

Step 3: get answer.

Step 4: have a celebratory wank.


They're not exactly going to tell you, are they? I agree with step 4 though. But to be honest, i'd do that anyway. It's all about reducing the likelyhood of getting testicular/prostate cancer, isn't it?
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#12
thanks to everyone who has responded and taken time to put a little thought into their answers!

I fully agree that it is very hard to estimate and that Gibson would most likely not give me an exact answer as to how much it costs, but I am going to shoot an email anyways just in case.

Thanks again! You guys are awesome.
#13
Quote by awaitrescue
thanks to everyone who has responded and taken time to put a little thought into their answers!

I fully agree that it is very hard to estimate and that Gibson would most likely not give me an exact answer as to how much it costs, but I am going to shoot an email anyways just in case.

Thanks again! You guys are awesome.


Well, if someone has already told you that when they made MIM Fenders, they were 800 Pesos, or about $100US, then surely...you can make similar assumptions about a Gibson? There is no way in the world, that a run of the mill Gibson costs anything like $400. How about, ask a guitar store (if you are friendly with one) what THEY pay for a Gibson as a trade price and compare that.
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#14
Theres alot that gets factored into the overall cost to build a gibson. The bulk they buy in certainly makes the cost in raw materials pretty cheap. Im gonna imagine the cost in materials and man hours to build a regular gibson is not really high. The overhead of a company like gibson isnt gonna be cheap tho. Im sure the CEOs paycheck is pretty substantial, and the army of lawyers they keep around cant be cheap either. Then there is advertising, all those magazine adds etc. Plus insurance, electric, machinery, environmental compliance, etc etc.

TS it is gonna be very very unlikely they would tell you the true cost of a gibson guitar. People would probably be pretty upset if they found out their 2500$ guitar only cost 300$ to build.
#15
Yeah, I agree that they won't tell me what it costs to manufacture one based on the fact that: 1. they probably want to keep this info from their competitors, and 2. people already think Gibsons are over-priced and lacking in Quality Control, so they would be pissed if they found out if the guitars are really inexpensive to make.

I emailed Gibson anyways though to find out! haha

I don't expect a response, but if I do get one, I will let you know what they say.

Thanks again.
#16
Quote by danyellenik
You guys are saying 100-200 USD for every gibson model? Come on...

Maybe the wood/parts (all the raw materials) would be about 200USD but all the labor involved? Even if they're made by computers, they probably still have tons of employees whose salary's all add up. I'm guessing on a les paul studio, you're looking at about 400USD for it to be made, something like a les paul VOS or custom shop is probably closer to 1000USD or even possibly higher.

$400 is what a Gibson buyer wants it to be. Reality will be different alas! A CNC machine will maybe cost a $1 to route out a guitar in electricity. Wood is obviously bought in massive quantities and the amount of actual labour will be relatively low with such a big company. They have a lot invested in machinery, but as a result the cost every produced guitar will be very low.
The main cost will be maintaining a brand (which adds value to a product), investments in machinery, advertising and developing. A very obvious and extreme example is Microsoft. The cost of making the CD and package is like $1. The main costs are R&D.

The good side of Gibson guarding their brand is that the guitar maintains value. A second hand Gibby is still worth a fair deal, while an exclusive custom brand tends to drop a lot more in value.

If I was to make an estimate: around $100 tops for a simple guitar like the studio without nice wood and manual labour. The shop buys for $400-500 and sells for $800-900. In between there are transport, insurance, taxes and storage costs.
#17
Quote by danyellenik
You guys are saying 100-200 USD for every gibson model? Come on...

Maybe the wood/parts (all the raw materials) would be about 200USD but all the labor involved? Even if they're made by computers, they probably still have tons of employees whose salary's all add up. I'm guessing on a les paul studio, you're looking at about 400USD for it to be made, something like a les paul VOS or custom shop is probably closer to 1000USD or even possibly higher.
You have to remember that Gibson are buying everything in huge numbers, wood, hardware, electronics etc, thats bringing down the price a very large amount, I could personally (and any one in the US with access to a decent lumber yard could) source the wood for a Gibson guitar for well under $50, Gibson probably do it for a couple of bucks.

The entire cost of materials is probably under $50 to them, plus very cheap labour in China, and pretty cheap labour in the US, probably brings the total to produce one guitar between $50 - $100 depending on where its made and how much hand work is involved.


An approximate finished cost of the guitar including all labour, R&D, shipping, rent, advertising etc is 1/4 of the RRP, this is very approximate though.

Say the guitar has a RRP of $2000, someone like GC might pay $1000 (although probably less in large numbers) and so Gibson need to make a profit on that $1000, so the cost to them is about $500.

I have no experience in the guitar market or how much the original manufacture will make and sell it to the distributer for, but 1/4 RRP is my simple guess




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#18
^Right, $500 ish sounds about right to me, maybe a bit less. The thing that complicates it a lot though is that it's not like a small luthier where once you buy your tools, you're done, and then the cost is just fixed based on labor involved and the price of materials.

Bigger companies like Gibson retool more often - CNC machines, PLEK machines, etc - which are quite expensive. Big companies are expected to be using good technology to make their instruments; they're also expected to have an R&D department and advertising to keep people aware of the brand. Those things all bump the price of a LP up.

While it doesn't contribute to the actual building of the instrument, I don't think it's fair to say that those things aren't part of the price, since Gibson/Fender/PRS are in a situation where they have to spend a certain amount of money on things that don't contribute to instrument quality just to stay competitive.

So maybe the materials and labor cost gibson $400, but the cost of actually selling that guitar to gibson, considering all the peripherals, is, let's say, $600. While that's not the greatest reason in the world to raise the price of the final product, I think the issue isn't nearly so clear cut as "Gibson sells $50 worth of wood for $2000, you're just paying for the logo." Like it or not, you're paying for more than a guitar with a gibson or a fender or a PRS.
#19
jeez
dont forget you guys, the parts cost less because gibson is MASS ordering them, they get the parts at slashed prices, so the $100 is probably right.
Have a go at it, buy stuff offa ebay, that is your mass buying price, discounts rather, put it together yourself.
It's only going to cost you around 1 or 200 dollars if you know where to look.
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#20
COmpanies like Gibson has quite a bit of horizontal expansion. Im sure they own their own all the companies that produce their hardware and probably lumber mills too.
A quick google search will show you gibson pays their workers shit. so i dont think that maybe 200 is what they pay for the total production of something like an Lp Custom.
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