Standard Retail Markups on Guitars? Guilds?

[LateStart]

Anyone here have a sense what the standard markup is on guitars? I know standard markups vary greatly by category. For example, the markup on nice bikes is not very much and pricing is very competitive. On the other hand perfumes are 3x retailer's cost.

Anyone know the range of discount to 'the channel' in the guitar business. Is the mark-up more or less on a more expensive guitar. To make a specific example, Guild F50 is $3900 list. What is the price to the dealer to make her whole for rent, staff, selling effort, customer management, etc? I am guessing on that F50 they must pay around or just under $3k?

Anyone have better info?

If this is a verboten topic, the mods can delete the post... :livid:

 

[SFIV1967]

I'm pretty sure that depends on the size and buying power of the shops and cannot be answered in general. 50% of MSRP is probably a good value that a shop would pay to the manufacturer. (now I hope the owners of shops who are on that forum don't flame me...) It was already discussed in great length on almost every other guitar forum in the past, just do a Google search. And today with using the internet everywhere prices are open book anyway, so what is the advantage of knowing what a dealer paid to a manufacturer? It's worthless to discuss such topics I think because price is what demand and offer build up. If somebody tries to squeeze the last dollar out of a dealer we will end up with only Guitar Centers...I rather pay more and support a good guitar shop.
Ralf

 

[fronobulax]

My experience based upon Guild pricing before the sale to Cordoba was that the dealer payed about 50% MSRP to Guild. Depending upon circumstances a dealer would sell at retail at 30-40% off of MRSP. The smaller discount was usually on the more limited models although that was not a hard and fast rule. It also depends on the specific cost structure the store is operating under.

That said, a lot of dealers are well aware of the price competition and will work with you to get the sale. My Newark Street Starfire Bass was the third Guild I bought from my dealer so I know he likes me, but when I decided I wanted it, we did a web search for prices. We found what we agreed was the best price to my door which included sales tax and shipping. He then took that number, ran his numbers and offered me a delivered price that was about $10 less. I accepted, of course, and he threw in a few accessories for free just because.

Note that Cordoba has not yet shipped any MIA acoustics so if you are looking at a New Hartford F50 there is a very limited supply and I would expect many dealers would charge what they think the market can bear and not some expected discount from the MSRP. I would, however to expect the percentages quoted above to apply 3-6 months after Cordoba starts producing and shipping.

 

[fronobulax]

If this is a verboten topic, the mods can delete the post... :livid:

As a Mod, I'm (obviously) OK with this. There is at least one dealer who is active on LTG and previous price discussions have ended up with the LTGer buying an instrument from the dealer. I won't name the name in this post because I don't want to appear to be endorsing or advertising but if someone else drops the name, I'm OK, or you can PM me

 

[adorshki]

From a guy who's sold wholesale and retail in a variety of markets (but not musical instruments), I think Ralf and Frono covered all the bases very well and probably accurately.
Just "corroborating".

 

[LateStart]

Sorry if it is a repeat question -- I searched here and didn't see a thread...

Thanks for the information. I am definitely *not* trying to squeeze anyone. If we don't allow for profit, we won't have anywhere to get service and support. Small retail is tough and I am ok to pay more to avoid big box owning the retail distribution of musical instruments. In this case I bought 7/8 guitars used from private parties and I don't know what's fair.

That being said, I recently had reason to look at prices online and the range of variance is unusually large. I saw plenty at MSRP but also a fair amount at 25%-40% off of that. Some of the noise may that as Fender shut down they 'jammed the channel' with discounted goods...

I appreciate the answers, it will help me understand a way to have the dealer make a buck and still get a reasonable price.

 

[Walter Broes]

Well, I work for a small, privately owned guitar store part time. I could answer that question in detail, but I'm not going to. I'll just say that the dealer profit margin on guitars is surprisingly low, in the case of some name brands, it's unbelievably low.

 

[adorshki]

I'll just say that the dealer profit margin on guitars is surprisingly low, in the case of some name brands, it's unbelievably low.

Walter, I think we took the OP to be asking about the typical margin between dealer cost and MSRP, but I suspect you're talking about the actual average margins on actual selling prices?
And I also realize that I have no clue about what that Belgian market is like so it would be kind of interesting to get clarification of which way you meant that.

Thanks for the information. I am definitely *not* trying to squeeze anyone. If we don't allow for profit, we won't have anywhere to get service and support. Small retail is tough and I am ok to pay more to avoid big box owning the retail distribution of musical instruments.

I think we realized that from the way you asked, and you "get it" the same way a lot of us do, about helping a bricks-and-mortar store survive . I don't think it ever got its own thread before, it kind of comes up under other questions.

 

[Walter Broes]

Walter, I think we took the OP to be asking about the typical margin between dealer cost and MSRP, but I suspect you're talking about the actual average margins on actual selling prices?
And I also realize that I have no clue about what that Belgian market is like so it would be kind of interesting to get clarification of which way you meant that.

Yes, I meant margins on street prices. I never really saw the use of the whole "list price" thing, nobody pays list anyway, right?
I don't think the Belgian or European market is any different from the US market, except that the "Guitar Center/Musician's friend/Big Box/online-store" effect happened with some delay here, and I mean the impact of online sales and big box stores on the dealer landscape.

Americans, probably due to the geography of the country, have a long standing mail-order tradition, so the online sales thing took off earlier and easier than it did in Europe. Also, it's one nation under one flag, so something like Guitar Center happened with physical stores. That would be much harder to pull off in Europe, next to impossible, so in Europe the mom and pops online really started suffering badly when the online thing really went in overdrive.
Smaller shops and even importers/distributors have been closing at a pretty alarming rate In Europe, and the situation still hasn't really stabilized, it's still in motion.

I think it sucks. Without wanting to get too political, I think big business sucks, and buying online....meh. I'll admit I buy certain things online, but I'm not a big fan of buying musical instruments online, even though I've done it.

As for what I was talking about earlier, dealer profit margins....it's a sad situation that's getting worse every year. Bigger brands don't seem to care about mom and pops anymore, and their policies are geared more and more towards the huge retailers. I don't think that's the smartest thing to do for a number of reasons, and it does annoy me. I think it's short term thinking, and nobody except the shareholders really wins IMO.

 

[Westerly Wood]

Any new update on MIA production?

 

[merlin6666]

Well, I work for a small, privately owned guitar store part time. I could answer that question in detail, but I'm not going to. I'll just say that the dealer profit margin on guitars is surprisingly low, in the case of some name brands, it's unbelievably low.

I guess that's why stores offer a variety of products and services - even if they would not be able to survive on guitar sales alone there are other money makers.

 

[Walter Broes]

I guess that's why stores offer a variety of products and services - even if they would not be able to survive on guitar sales alone there are other money makers.

Absolutely. But in more recent years, the online price wars have seriously lowered the profit margins on accessories etc.... too.

 

[LateStart]

As someone stated at the outset, the internet makes it 'hard to ignore' prices across markets, regardless of where you are buying. There is a lot of truth to the concerns about the impact of big box on local economies. Local stores tend to: (1) charge somewhat higher prices, (2) spend locally for supplies, (3) hire more people full time versus part-time. All good things.

At the same time, we will have a hard time 'stopping the tide', particularly for products that are 'uniform' in nature. The challenge for everyone is that your 'relative' mark up has to have a reasonable relationship to the value you deliver. So while I might be fine to pay 15% more to a local seller, most people simply won't pay 30% or 50% more unless it is a product that requires a high level of service, support, customization, etc.

NAFTA, Unification of the EU, Internet, very cheap shipping, precision machinery all reduce the ability to have different prices in different markets. For example justify this to yourself:

$3800 USD

http://www.chicagomusicexchange.com/products/guild-orpheum-slope-shoulder-12-fret-mahogany-dreadnought-sunburst

Versus

Approximately $2600

http://www.thomann.de/gb/guild_orpheum_slope_shoulder_14_fret.htm?sid=5e86e5693f6d6e38a15492557eb28ed9

When you remove VAT, and add shipping, the price goes *down* another few hundred $.

Is there really $1200 of value being added by the store? Are they simply advertising MAP but it's not the real price? Was this purchased before the Euro was devalued?

For me this is not a debate about dealers earning a living, it's just trying to get a sense of what's fair.

*I know the guitars are not identical, but close enough for comparison.

 

[adorshki]

Yes, I meant margins on street prices. I never really saw the use of the whole "list price" thing, nobody pays list anyway, right?
I don't think the Belgian or European market is any different from the US market, except that the "Guitar Center/Musician's friend/Big Box/online-store" effect happened with some delay here, and I mean the impact of online sales and big box stores on the dealer landscape.

Thanks!
Didn't mean to "drag you out" but thanks for the extra insight from a European perspective.
On your comment about a mail order tradition here in US, it's kind of funny, there was one up until about the 50's when we started growing our suburbs and interstate highways, stimulating growth of a huge retail outlet infrastructure, it catered to "instant gratification" and ease of access.
You knew the scale had tipped when Sears Roebuck, the granddaddy of mail-order, opened up storefronts.
From my perspective, what happened with online sales is that the internet merchants HAD to stimulate business with low pricing to offset our conditioning to being able to see it, feel it, touch it and take it home immediately, and be able to take it back next day if there was a problem, all on cheap gas. There was also a sales tax exemption loophole on interstate sales for a long time, that's still got some leaks.
It did obviously begin to have an adverse effect on retailers who now had to justify their price to a customer who was beginning to be willing to wait a few days to save a lot of money on "big ticket" items, and gradually even a little money on everyday things.
Now it's gone in the other direction: what's beginning to really p--s me off is things like certain vitamins and cleaning goods aren't profitable enough anymore and get dropped from retailer's shelves and become ONLY available on the interenet, so now I can't buy things at the place I'm going to for other stuff anyway.
Means I still have to use my gas for some stuff AND pay shipping on more vitamins than I'd prefer to buy at a time to get a decent price and/or free shipping.
Clothes are another favorite gripe category too. Retailers dont want to stock decent quality stuff like wool slacks, only want want to only stock high-profit synthetic stuff, so you can't even try 'em to be sure in the store first and when you buy on the internet it turns into a PITA to return something that doesn't fit right or has some other unpredictable construction shortcoming.
I hope it all comes full circle to bite 'em you-know-where.
And I'm done ranting.

 

[SFIV1967]

Approximately $2600
http://www.thomann.de/gb/guild_orph...fret.htm?sid=5e86e5693f6d6e38a15492557eb28ed9

No, Euro 2600 is not US$2600 but almost $3000. And yes, when the Orpheums were sold the Euro to Dollar was 1.4 not 1.14 as now. €2600*1.4=$3600.
And you can't compare a Chicago Music Exchange with the probably highest US prices to a Thomann with the probably lowest European prices.
So all in all such comparison as you made makes no sense.
Ralf

 

[adorshki]

So all in all such comparison as you made makes no sense.
Ralf

I think that might be misinterpreted semantically here, Ralf, when I think what you really meant was "Is not valid", because of his error in the monetary unit of the Thomann listing.
"Makes no sense" implies "lack of logical thinking", as opposed to "results of an honest mistake".
Not sure if Latestart knows you well enough to know your English isn't "fully Americanized", so just trying to help out there.

 

[davismanLV]

Without wanting to get too political, I think big business sucks, and buying online....meh. I'll admit I buy certain things online, but I'm not a big fan of buying musical instruments online, even though I've done it.

I'm with you on this, Walter. Here's the deal. If you deal locally you can really focus on the SOUND. Buying online shifts the focus. I had decided I wanted a small, rosewood guitar with a short scale. That limits what you can get but.... going out and PLAYING them and making a decision, vs. deciding the BRAND and STYLE before anything and then just ordering.... probably gets you a guitar that meets that criteria. Small, rosewood, short scale. But you can't hear what it SOUNDS like. By itself, or compared to other guitars.

I personally think that forcing people out of their houses to a store or many stores, where they play and compare the instruments at the same time... they tend to get the BEST guitar, vs. the one they thought they wanted.

Honestly, they're such individuals... these guitars. I played two Martin D-42's at GC. Both the same model. Each built the same day, with serial numbers consecutive. And one was probably one of the BEST guitars I've ever heard. The other one sounded like it had a pillow shoved into it. SO different. If I'd have ordered online, what if they sent me the "pillow" one?

I'm just throwing this out there. There's tons of things I'd buy online, but a guitar isn't normally one of them.

 

[JohnW63]

Buying a guitar online is a bit scary. I have done it. I bought an Ovation 12 string, used, from a GC in Florida and had it shipped here. I trusted Ovation to not have a lot of variance in tone. It worked out. I find it a great sounding 12 string. At 500 bucks, it is a real winner for my dollar. But... a new guitar, from a brand I don't know how consistent they are ? Some day, I may have a D-55. I don't need it. I've just wanted one since the middle 70s. Even though I have not heard of any dud D-55s, I would pay extra to play it before paying for it.

 

[davismanLV]

I don't need it.

HAAAAAAAAAA HAAAAAAAAA!!

Never mind...... :encouragement::encouragement:

 

[LateStart]

No offense taken. And seriously not trying to 'stir the pot'. Even in the US there is fairly large variance in online prices. As noted above, Euro devaluation has created 'deals' for certain product lines for US buyers and that could be a big part of the difference if the sellers are moving 'old stock'. Adjusting the math for today's rates:

Price without VAT is roughly 2100E

1 EURO = 1.14 USD, so $2,390. Shipping +/- $200, US duties, approximately $130. Gets you back to the neighborhood of USD $2750.

For non-used Orpheum, "A stock" with Warranty, I haven't seen much below $3500. If you buy in California, add 8% Sales Tax. If you buy outside of California add $100 for shipping. Still a big gap in price.

This was simply an example that raised the *original* question regarding margins. Are the Euro sellers making any money at their prices? How much room do the US sellers have to negotiate and still earn a reasonable profit? Being an informed buyer is different than being a 'bad' customer who places no value on the selling shop.