#1
I've seen threads like this, but with no answers. Does anyone here know how much companies such as Fender or Gibson make on their lower end, middle, and high end guitars? Also how much does for example a guitar center profit on each sale? My guess is they make a hell of a lot more on their higher end models, similar to cars, where you pay for the name and status. Just something I've been wondering, thougt you guys might now.
'I love her, but I love to fish...I'm gonna miss her"
#2
gibson makes a load on famous muicians and spoiled kids <- (this is mainly because of guitar hero) anyway same with fender and other companies but im going with companies like nintendo making more then fender
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#3
I'm guessing Fender makes more money from Squier, just because tons of people start out on them!
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#4
Quote by Lil Macker
I'm guessing Fender makes more money from Squier, just because tons of people start out on them!

true but gibson is making alot more money then epiphone
edit:actually if they slapped gibson on the headstock of every epiphone theyd probaly make so much more money.
My Gear:
Jackson DK2M
PRS Paul Allender Sig
Epiphone SG Special
Fender Blues Jr.
Roland Micro Cube
#5
Quote by gstacey1
true but gibson is making alot more money then epiphone
edit:actually if they slapped gibson on the headstock of every epiphone theyd probaly make so much more money.

Then they run the risk of losing the prestige of Gibson, and may lose sales of higher end...but then again fender sells their mim guitars in the epiphone price range and it works for them
'I love her, but I love to fish...I'm gonna miss her"
#6
As far as brands go, they sell to a dealer, who then sells onto stores. At each stage everybody wants to make some profit, so the original price that Gibson or Fender sell to the dealer for is much lower than guitars are priced for on the shelves of a guitar store (so don't bother thinking about final sale prices - I'll get onto those in a moment).

Normally brands will be looking to make a 20% profit on their guitars, so let's say if they make a guitar at a cost of £100, they will sell it to the dealer for £120.


As far as shops go, we'll continue with our example above:
Brand has sold a £100 guitar to a brand dealer at 20% profit, £120.
Shop has to buy stock from a dealer. The dealer usually also asks for about 20% profit. Let's say now that the store has to buy the guitar in for £144.
Stores normally start off with a basic 200% markup, then vary depending on model (more on that in a second). So now, the store will sell the guitar on the shelves for about £188.


Store markup does vary. Some smaller stores will charge less markup, online stores won't ask such huge prices either (since they cost less to run and don't have physical sales staff to pay). Chain stores tend to put the most markup, in a couple of places I've worked it's not been rare to see 400% markup or more on certain models.

General, famous 'rock' brands get the most markup, with their most famous models always getting even more. In the last place I worked, Gibson and Epiphone Les Pauls had a basic 360% markup over what we bought them in for ourselves. Fender and Squier Stratocasters had a 290% markup. SG and Telecaster models from those four brands were 260% markup each. This is mostly due to demand, and this is what causes some guitars by those brands to cost £3000+.

Conversely, brands/guitars with less prestige in a more saturated market actually got less markup. Jackson super-Strats for example only had a markup of 140%, which in guitar store terms is nearly nothing. This is because there are more super-Strat models made by many brands than any other (higher supply and comparatively lower demand), and because of all those brands that make these, Jackson is one of the less popular (compared to say, ESP or Ibanez).

Additionally, some brand dealers will charge handling fees for certain guitars. For example instead of charging 20% profit for handling a regular Gibson Les Paul Standard, for a Gibson Custom Shop VOS 1959 Les Paul, they might charge more and make 40% profit or something along those lines.



So, to answer your questions, guitar brands don't make a huge profit per guitar. They make a fair profit, just like any other manufacturer of any product in the world does; 20% or so is always deemed fair for all products the world over. It's the stores that charge the huge 300%+ profit margins.
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#7
ex long time guitar center employee here (FU*K THAT PLACE!)...

they're raping everyone...
...but so is every other retail store on the planet so read on at your own discretion.

brands like ibanez, schecter, gretsch, washburn, jackson, etc. you can buy at dealer cost for around 40% off the GLP cost. (NOT THE LIST PRICE!!!) give or take a few percent depending on the model.

Cost on any 399.99 fender is 264.99.

GET THIS!!!!

Faded SGs and Led Pauls (either or. they both have the same base cost) can be purchased not for the 800.00 guitar center price but:

***DRUMMMM ROLLLLL***

!!374.99!!

higher end model gibsons and PRS will on average only make around 400 dollars profit per a 3000.00 guitar so its not THAT bad on the higher priced stuff..

Damn near all pedals are 50% profit...

Your hundred dollar roadrunner or skb case only cost about 25.00.

strings cost about 2.00 per set.

zildjian cymbals are bought for about 60 percent off of what YOU pay.

some squiers can be bought for up to 70% off what theyre charging.

proprietary brands are even worse (ie. laguna, raven, sound percussion, traben, bogner, orange county, acoustic, etc..) Figure theyre all at LEAST 50% profit. some are closer to 80%.


These are just the base costs that i'm listing here as well.

EVERYTHING IS ACTUALLY BOUGHT FOR EVEN CHEAPER THAN EVEN THESE PRICES!!!

from what me and a few of my co-workers figured out, corporate actually gets this stuff for about 30+% off of the base cost.

So your 399.99 MIM fender strat/tele that can be bought for 264.99 by any GC employee using their discount actually only costs around 184.99...


Kinda seems like everyone's getting Fu**ed. Eh?
#8
What everyone is talking about here is turnover - not what people "make" - profit and turnover are totally different things.

Your city centre guitar shop, with hundreds or thousands of square feet of showroom are paying rent/mortagage on every square foot, and they are paying business rates. Then they are an unpaid tax collector - taking your sales tax, and passing that onto the government. Then they have to pay employees, heat and light their shop.

They have to carry a massive stock of guitars, keyboards, drums etc - so they have to invest hard cash there too. They have to have those guitars in stock, otherwise where would you try out your next guitar, before ordering it on line for the lowest price you can find?? How many people that actually go into a guitar shop actually make a purchase that's going to cover their costs for the day, compared to the number that go in to look at guitar p0rn and try out the guitar they aspire too?

Yes, there is a good margin on these products, to suggest that they are "making" that margin is simply rubbish.

If you are smart, and you shop around, you can eat into that margin substantially too.
#9
its understood that theyve got bils to pay but if you were to actually spend some time in the operations office of these places, you would see that it doesnt take much (at all) to cut off even for their expenses. everything else is gross profit. i'm talking THOUSANDS of dollars of gross profit each day that goes toward paying the corrupt coke-binging upper management.

The FACT of the matter is that places like guitar center ARE making the margin. Its one of the first things they teach you in management training. being the largest music chain in the country, they set the price and the others follow. thats exactly what they tell you.

They look at you as a dollar sign. Not a musician.

i would tell you not to buy into it but theres no changing the machine. thats how it is and thats how its going to be. its actually best not to even think about it and pretend its not happening.

but as mark said there are ways around it. shop online. you'll find much better deals than in your local mega chain music store.
#10
If they can operate and still make a large margin off of their products, how come another music chain doesnt come in and sell the items for a much lower price? Also, independent music stores used to charge outrageous prices compared to guitar center...is that because guitar center and online shopping wasnt around? or because they couldnt get the low prices that guitar center is able to from manufacturers?
'I love her, but I love to fish...I'm gonna miss her"
#11
Do any dealers sell directly to customers?
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#12
Quote by MrFlibble
As far as brands go, they sell to a dealer, who then sells onto stores. At each stage everybody wants to make some profit, so the original price that Gibson or Fender sell to the dealer for is much lower than guitars are priced for on the shelves of a guitar store (so don't bother thinking about final sale prices - I'll get onto those in a moment).
SNIP


You seem to be pretty knowledgeable so I will ask you.

When I am at the local guitar store they have the price tag which says something like

List price: $1200
Our price: $600
That was for a Jackson DKMG dinky, but all of their guitars have a list and out price on the tag.

Now I am wondering why is the list price so high compared to their price? Do they just put that list price on there so it seems like you are getting a good deal?
#13
You gus are aware that the mark up on most things are way over 100%

A slice of Pizza adjusted for inflation now costs about 20 CENTS to make. in New York a slice sells for $2.50 or better.

A pair of Nike Air Jordans costs about $14 to make (rubber, glue, hide, stiching, labor, etc.) THEY RETAIL FOR $149.99 They are expensive though as an average pair of Nikes costs about $8 to make, so they are better.

Way of the world kiddies.
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#14
Quote by Copilot911
You seem to be pretty knowledgeable so I will ask you.

When I am at the local guitar store they have the price tag which says something like

List price: $1200
Our price: $600
That was for a Jackson DKMG dinky, but all of their guitars have a list and out price on the tag.

Now I am wondering why is the list price so high compared to their price? Do they just put that list price on there so it seems like you are getting a good deal?


Dude if you are paying $800 for a guitar you'r probably using less than $100 worth of wood and wiring. You are paying for "craftsmanship", "labor", and the slapping of the company name on the product. If guitars costs 300 to make and they charged $600, they still wouldn't get to rape you and be a multi-billion dollar industry. 50% is nothing.


WATER IS FREE!!! We'll pay upwards of $2 for it. Watch Penn & Teller BS they had a great segment regarding bottled water.
GEAR:

Gretsch 5120 Anniversary Ed.
Ibanez Artcore AS73
Mann 2350CS (Les Paul Copy)
Epiphone SG Special
Fender Squier Bullet
Boss OS-2
Vox Valvetronix AD30VT 30w
Line 6 Spider III 15W (Hey, I jam in my living room...)
#15
Quote by Dav23
Dude if you are paying $800 for a guitar you'r probably using less than $100 worth of wood and wiring. You are paying for "craftsmanship", "labor", and the slapping of the company name on the product. If guitars costs 300 to make and they charged $600, they still wouldn't get to rape you and be a multi-billion dollar industry. 50% is nothing.


$100 worth of wood? What the **** are you smoking. My friend just finished making his own guitar. The wood for the body cost $400.

Also what did your reply have at all to do with asking what the list price and actual price is.

Obviously a guitar is going to be marked up, profit is what companies want, its not like I am just going to go build my own guitar so I get it cheaper.
#16
Retailers mark the price up by roughly 35% from the distributors price, (% varies from chains and stores).

$100 worth of wood for an $800 guitar does actually sound pretty normal. Remember, your friend didn't buy mass bulk of the wood did he? Or did he? Chances are he didn't. Remember, he is a consumer. The manufacturer is just another piece of hands moulding it before they sell it to you, they'll get all their products at a different price. (Bulk, Bulk, bulk, bulk, bulk, bulk)

@Copilot:
An answer to your question is yes and no. They may increase the list price to make you think you're getting a good deal. But sometimes they will lower their price against competition.
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#17
Quote by Dav23
WATER IS FREE!!! We'll pay upwards of $2 for it. Watch Penn & Teller BS they had a great segment regarding bottled water.
How on earth is water free? You can't just drink it straight out of the ocean, you know! It costs money to purify it.
#18
Quote by Noodle93
Retailers mark the price up by roughly 35% from the distributors price, (% varies from chains and stores).

$100 worth of wood for an $800 guitar does actually sound pretty normal. Remember, your friend didn't buy mass bulk of the wood did he? Or did he? Chances are he didn't. Remember, he is a consumer. The manufacturer is just another piece of hands moulding it before they sell it to you, they'll get all their products at a different price. (Bulk, Bulk, bulk, bulk, bulk, bulk)

@Copilot:
An answer to your question is yes and no. They may increase the list price to make you think you're getting a good deal. But sometimes they will lower their price against competition.


It is normal. More than you know. But **** this idiot. I only took economics for a yaer. What the **** do I know? Like his friend has a guitar company and the lumber yard where he bought enough wood for ONE guitar would charge a company a comparable amount of money for wood to make 100,000 guitars.
GEAR:

Gretsch 5120 Anniversary Ed.
Ibanez Artcore AS73
Mann 2350CS (Les Paul Copy)
Epiphone SG Special
Fender Squier Bullet
Boss OS-2
Vox Valvetronix AD30VT 30w
Line 6 Spider III 15W (Hey, I jam in my living room...)
#19
Quote by Copilot911
$100 worth of wood? What the **** are you smoking. My friend just finished making his own guitar. The wood for the body cost $400.

.


Yeah but he didn't buy huge pallets of it either, doing so drastically decreases the price, $100 of wood on an $800 guitar is a fairly high estimate actually, I would put the cost of manufacturing an $800 (at point of sale, since the list price would probably be about $1,100 depending on the manufacturer) guitar to be about $200 tops, including all parts and labor.
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#20
don't know how much profit this local shop is going to make by selling me a brand new fender CIJ mustang, priced at £600, for £350... if they can afford to sell it for that little, then i guess they really are making a lot of profit if they sell it at £600.

edit:I might even be working at that place soon
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#21
Quote by smb
How on earth is water free? You can't just drink it straight out of the ocean, you know! It costs money to purify it.



The ocean? Really?

Wow, never heard of a fresh spring? You are aware that people have been boiling water in their homes and drinking it for CENTURIES?


Jesus...
GEAR:

Gretsch 5120 Anniversary Ed.
Ibanez Artcore AS73
Mann 2350CS (Les Paul Copy)
Epiphone SG Special
Fender Squier Bullet
Boss OS-2
Vox Valvetronix AD30VT 30w
Line 6 Spider III 15W (Hey, I jam in my living room...)
#22
I was thining they can also charge a lot for guitars simply because most of us cannot make it ourselves or at least to the quality that these companies can, therefore, well pay top dollar to get the guitar we want. (dont have much of a choice) I like the nike analogy too, it just proves supply and demand and the importance of making a product that the consumer cannot make themself.
Also to spartan: Agile seems to be one of the only guitars that i know of that sends from as close to the manufacturer as possible. If you read the rondomusic website, its why they can make quality instruments for a fraction of the price. They dont advertise, or sell through major distributors, so they cut out a lot of the middle cost.
'I love her, but I love to fish...I'm gonna miss her"
#23
Quote by Copilot911
You seem to be pretty knowledgeable so I will ask you.

When I am at the local guitar store they have the price tag which says something like

List price: $1200
Our price: $600
That was for a Jackson DKMG dinky, but all of their guitars have a list and out price on the tag.

Now I am wondering why is the list price so high compared to their price? Do they just put that list price on there so it seems like you are getting a good deal?


So the list price is a suggested retail price from the manufacturer for the seller. Guitar center and other stores would like to sell these guitars at such high prices, but due to competition with other sellers, they must sell this guitar for less. Most products have a MAP price (Minimum Advertised Price), a price which is set by the manufacturer so distributors do not try to sell their product at too low of a price. This keeps competition above the wholesale price of the guitar. Correct me if I am wrong.