Mythbusting

First off, i think there’s a perception issue when it comes to what people think a “handmade” guitar is. (For the sake of this discussion, i’ll limit myself to solid-body electric guitars, which is what i make and is what i’m most familiar with from a historical and production perspective.)

I’m sure many people have romantic ideas of the stringed-instrument artisan sitting in a dimly-lit workshop, carefully and lovingly carving guitars from solid blocks of wood using hand saws, rasps, spoke shaves and chisels. While a lot of these hand tools and traditional woodworking techniques are indeed used in modern guitar construction, i would say a very large proportion of modern guitar construction is done with the assistance of machines of some description or another: The table saw for cutting raw lumber down to size; the bandsaw for re-sawing or cutting out body and neck blanks; the jointer or edge sander for prepping wood for gluing; the surface planer or drum sander for leveling and smoothing out body and neck blanks; routers for cutting cavities and contours; the drill press for accurate hole drilling, and so on.

Guess what? Your “hand made” guitar was touched by a lot of machines in its creation!

Along with these tools come a variety of templates and jigs to ensure accuracy and consistency. Many of these templates or jigs will be hand-made, but sometimes they’re made by machines. The templates i use are laser-cut acrylic, created by a skilled and knowledgeable technician with the tools and knowledge to give me outstanding results. Yes, they’re cut by a machine and i use them to guide another machine over the surface of the wood because human hands cannot cut straight lines or accurate curves with a motorized cutter spinning at 15,000 RPM. And i prefer to cut out the contours of a body in a matter of minutes, rather than the hours – or days – it would take to get the same result using nothing but hand tools.

Let’s just pause here for a moment and consider that: Why do modern artisans use power tools and accurate templates and jigs rather than purely using hand tools? Because they’re faster, they produce cleaner, more consistent cuts, and with good templates and jigs, the work is repeatable from one workpiece to the next… something very valuable when you’re in any production environment.

Heck, some builders even use copy-carvers… sort of a three-dimensional pantograph, allowing them to make one “master” neck or body and carve one or more copies at a time by using a router on a hand-manipulated control arm that’s linked to a probe that traces the original master workpiece.

Yes, there are instrument makers who use more hand processes than others, and more often than not, these are hollowbody acoustic instruments that require human intervention in more aspects of the process because there are so many more parts and variables in an acoustic instrument compared to a solid-body electric. But many acoustic builders also rely on machines these days for the same reasons of accuracy, consistency and speed in their builds.

Closing the perception gap

Yet for some reason, when those three letters – C N C – are uttered in the context of the manufacturing of guitars, some people lose their heads. “A guitar made by a machine can never be as good as a hand-made guitar,” they say, even though most luthiers who are “hand-making” guitars are likely using routers and templates in addition to many hand tools. Some (like me) are using templates that were cut with (*GASP!*) a CNC machine or a laser. If i’m already using a router, why should it matter if i’m using a router that’s attached to the end of a robotic arm or hooked up to a stepper motor that can work more smoothly and accurately than i can with my hands?

Maybe there’s a perception that guitar building is being handed over by the artisans to the technicians, who simply load a slab of wood into the CNC, press “print” and out comes a finished guitar in a few minutes. It’s not quite that simple, as even with guitars manufactured with the assistance of CNC machines there is still a significant amount of hand work to be done. But the advantages offered by computer-controlled machines give the luthier a tremendous advantage in the three areas already mentioned:

Accuracy: Parts are milled to an extremely fine set of tolerances. You want things like your frets, nut and bridge to be as accurate as possible, also any parts that mate up like neck heels and the pockets they go into. CNC excels at cutting things accurately, to within thousandths of an inch.

Consistency: When building guitars in a full production situation or even in small runs or individual instruments built at a slower pace, the builder can be sure that necks and bodies built cut at different times will come out more or less exactly the same, meaning parts and components can be stockpiled, allowing for greater efficiency. Matching spare parts can also be swapped out if there are warranty issues down the road.

Speed: Bodies and necks can be roughed out in much less time, and can be done while the builder works on other things. Less time doing time-consuming and routine work like cutting out necks and bodies and routing cavities in multiple operations, means the luthier can spend more time on the things that are better done by hand, like final neck profiling and fretwork… things that require that human touch. This allows instruments to be turned around with excellent quality in less time.

When people get unsatisfactory instruments made using CNC machines, it’s not because of the machines… they just execute the tasks they were programmed to do by their human operators. It’s because the manufacturer likely cut corners on the human component… the neck carving, the final sanding, the fretwork, the setup, and final quality controls. These are the elements of guitar building that no machine can do well. (Although the Plek machine is a giant leap in the right direction for final fret dressing.) A computer doesn’t know what a “good” neck feels like or how to interpret a player’s preferences into a workable neck profile.

But what does it all mean?

CNC machines do, however present tremendous opportunities for the small builder to increase production speed while not sacrificing quality, and perhaps even improving accuracy and consistency from one instrument to the next.

“So if CNC machines help increase production speed, prices should come down, right?”

I wouldn’t be so quick to jump to that conclusion. As i pointed out in earlier editorials, the time invested in the production of a guitar is quite possibly the largest cost in making each instrument. Reducing that time investment does yield some cost savings per instrument, but those savings are usually offset by the cost of owning and maintaining the CNC mill, or of outsourcing production to a dedicated CNC shop that can absorb that overhead. In order for the CNC to pay for itself (and for the full-time operator/technician to run it and maintain it), it pretty much needs to be kept busy all the time. Not all small shops have the luxury of doing this, so they outsource production of components.

Get used to it

In my view, moving to CNC-assisted production is a critical step in the growth of most luthiers’ business, where time needs to be reduced and volume increased in order to maintain profit margins that will allow their business to continue to grow and sustain itself. Some luthiers building high-end boutique instruments can sidestep this if they have built up enough of a name for themselves that their pricing and production time (and the length of their waiting list) can sustain their business. In the solid-body guitar world, that’s a tougher sell. There’s a certain price threshold that can’t be exceeded in all but the rarest of cases, so something has to give somewhere.

I definitely see CNC in the future of Decibel guitars, because there are definitely advantages in accuracy, consistency and speed to be realized, but also because there are some technical things i think the machines may be able to do better than human hands (multi-scale fretboards, for example) but also because i’d like to have my time freed up from some of the drudgery of the routine cutting and drilling operations to focus more on the high-touch parts of the building process such as the fretwork. It also gives me more time to think, to dream, to design and to write blog entries about all of these things.

In some of the guitar forums i frequent, i encounter players (or hear stories passed on from other builders) who are looking for the custom-built guitar of their dreams for $800 to $1000, with a laundry list of exotic woods and high-end hardware… and they want it in 8 to 10 weeks.

There’s an old axiom that goes like this…

GOOD — FAST — CHEAP

Pick any two.

Click past the break to read on…

You may be able to find someone good who can build within your budget, but you may have to wait over a year (or more) for it to be completed. You may be able to find an amateur luthier who can build what you want fast and cheap, but the resulting product may be… less than spectacular.

There’s even a small group of elite builders who run small shops, and deliberately limit their production to maintain quality and remain personally involved in the build process where much of the work is still being done by hand. Many of these builders have long waiting lists, command prices well into the five figures, and have no shortage of satisfied customers and eager future customers willing to pay the asking price and wait as long as it takes.

So the bottom line is that if you want a good guitar in a reasonable time frame, you’re going to have to pay a reasonable price for it. And to understand what i mean by “reasonable,” please see Part I of this series.

Probing the price perception gap.

In the last few years, there seems be an increasing number of people in my experience who are looking for “cheap custom guitars”. I’m not sure from where this trend has come, but there seems to be a gross misunderstanding among certain groups of people regarding how much time, energy and effort go into building a good guitar. And conversely, there seems to be little appreciation for the fact that the people committing their livelihood to luthiery (or those who are doing it as a sideline, a second career, or even as an intense hobby) actually deserve to make money at it. If you want to get a very high-level sense of the economics of being a small guitar builder, please read my earlier post on the subject.

Guitar building takes time, money, tools, materials and resources, not to mention skill, creativity and passion. For a small builder to make a “custom,” a selling price of $800 would mean pretty much zero profit for the builder… they’d essentially be building it for barely more than the price of parts and materials only. Not exactly a fair deal, and certainly no way to run a sustainable business.

When is a “custom shop” not a custom shop?

Many people point to Carvin’s “custom shop” prices when questioning why small builders charge what they do for their instruments. Carvin is very much the exception and not the norm in the guitar manufacturing business. They aren’t so much a “custom” builder… they’re a fairly large-scale production operation that happens to have technology and workflow in place to build excellent quality “semi-custom” guitars to order. Profitably.

Even with that, while it is possible to price out some Carvin models for less than a grand, the specs end up being pretty basic. Starting to pick from Carvin’s very attractive options list gets the price up fairly quickly. A well-equipped one can even run $1800 or more, which is getting up there for high end production instruments, but the bang-for-the-buck ratio with Carvin is very good. Carvin doesn’t have a distribution or dealer network to support, so they cut out a lot of layers of profit-taking, allowing the consumer to get their hands on top-notch instruments for less. But as i said, Carvin is very much the exception and NOT the norm in the business, and guitarists need to appreciate that.

The custom compulsion.

Many young players on limited budgets seem to become obsessed with the idea of owning a custom instrument. Years ago, custom guitars were a rarity, and only the most elite of players could afford to commission a completely unique instrument from a boutique builder. Most other players “got by” with modified stock instruments, with slightly modified neck profiles, upgraded hardware, aftermarket electronics, and so on.

What drives this desire for a “custom” over a modified production instrument? Is it sound? Feel? Aesthetics? It seems that modifying production guitars is still happening quite a bit… there continues to be a healthy aftermarket in pickups, electronics, replacement parts and hardware.

Yet with all these options available, some players still become obsessed with the idea of owning an instrument they’ve had a hand in designing to meet their own tastes and needs… and there’s absolutely nothing wrong with that. Sometimes a totally custom-built guitar is the only thing that scratches that itch. But we need to be wary of that obsession potentially leading to unrealistic budgets, expectations and deadlines. Prices aren’t always negotiable. Low-balling on price can come across as disrespectful of the luthier’s time and experience, not just as a bargaining strategy.

Keeping things simple.

Everything i’ve written here is i suppose a long-winded way of communicating my business approach for Decibel Guitars. I’ve given very careful thought to my observation of these issues over the last couple of years, and i’m taking very careful steps to start this venture slowly and build it at a sustainable pace.

Decibel Guitars is currently a sideline… an intense hobby that i’m engaged in fully as something i’m passionate about, something i love to do, and something i’d like to see grow into something more at some point in the future. But it is not currently structured to be my primary source of income, and i think my customers and potential customers need to be aware of that, if only for managing their expectations.

That said, i’m still treating it more or less like a business, and would like to have it be a self-sustaining one that does not require infusion of large amounts of my own personal funds to keep it running. Yes, that does mean that it has to be profitable. If it’s not making money, i can’t possibly afford to keep doing it.

At this time, i have no current plans for Decibel Guitars to become a “custom shop” or even build guitars to order for the foreseeable future. As soon as money changes hands for future delivery of a product or service, i feel there are expectations for deadlines, update frequency, response times, and so on. (And a lot of these expectations are justified… paying customers should be kept up to date with where their instrument is in the build queue and when they may expect to get what they paid for… within reason.) However, even the process of preparing quotes and discussing specs with customers – not to mention managing change orders once a build is in progress – takes up tremendous amounts of time and energy that i’d rather spend on more productive pursuits, like actually building guitars.

Becoming a “custom shop” or being able to engage in a build-to-order process is not something i feel i will be able to do reliably and consistently until i’ve been doing this for a LONG time, and have my workflow down to an exact science where i can accurately forecast production times and delivery dates. Even then, i’m not sure it’s worth the potential risk. As i’ve learned in the last couple of years, both first-hand and from friends and colleagues around me, is that life does sometimes get in the way… illness, deaths, other extenuating circumstances and life events can throw small businesses into turmoil, and not everyone wants to share every intimate detail of their life with their customers and/or the general public. I know i don’t. But as a one-person shop, if you’re accountable to people who have already given you money for a product you have yet to deliver, you almost have no choice. (Again, within reaonable bounds.)

I’d rather produce short runs of instruments i’ve spec’d out, designed and built, then sell them when they’re done… which is exactly what i’m going to do. My business model is essentially this:

I design what i want.
I build what i like.
I take as much time as it takes.
And i only sell completed instruments.

It’s simple and straightforward, customers know what they’re getting, and they can get it as soon as their payment clears.

And i get the satisfaction of knowing that every instrument has been conceived, spec’d out and built by me, without compromise, and without the stress of deadlines or keeping up extensive communication with each individual customer. I can truly pour every ounce of energy and passion into building each instrument, instead of trying to manage all the other day-to-day crap that a “custom shop” would have to go through.

Will it limit my business somewhat? Absolutely. But it will allow me to keep the business small and manageable, and have me not go insane or broke in the process, or worse yet, lose the passion for something i love to do, and hope to keep on doing well into my retirement years.

A big part of what i’m hoping to achieve by using this blog, Facebook, Twitter, YouTube and other social media to interact with customers (past, present and future), is a level of openness, honesty and transparency about the process of designing and building guitars, but also about my business practices and what people can expect from Decibel Guitars now and in the future. I don’t want there to be any guesswork or potential for misunderstanding along the way. And by laying the process bare, i hope to de-mystify it somewhat, and hopefully help people to gain an appreciation for the creativity, passion, skill and process that goes into crafting fine guitars. I also hope to help other small builders to think about their business practices and pricing policies, in the hope of having more small builders survive and flourish. If you have any thoughts or comments, i’d be happy to hear them… please post in the comments section below, or hit the “Contact” link in the top right to send them to me privately. – darren.

Why guitars cost what they do.

I’ve noticed in the last few years that there has been increasing demand for “custom shop” instruments. It’s one of those things that ebbs and flows over time, and the current economic situation notwithstanding, we seem to be on one of those upward swings where guitarists reach a certain level in their playing, and they’re no longer satisfied with “off-the-shelf” instruments, and start looking for something unique, something different, or something that just suits them better.

Along with this trend, i’ve also noticed (in general terms) that the average age and pocketbook depth of people seeking boutique or custom-shop instruments seems to be inversely proportional to the demand. I can’t count the number of threads on guitar discussion forums i’ve seen where a young player thinks he or she can get a guitar built to their spec for $1000 or less. A worrying trend is that there have actually been a few luthiers who will take them up on it.

Yet when you stop and look at what the true costs of building guitars as a small independent builder, you get a very different picture. No matter how you frame it, penny-pinching, perpetually broke musicians often don’t seem to understand why their dream custom guitar from a small builder should actually cost much, much more than the $1000 they’re willing to shell out. They can’t comprehend why the price list at a big-name custom shop like Jackson starts at around $3500. Click past the break to read more…

Lots of luthiers command premium prices… and they should.

It’s really hard to make a living at building guitars full-time. Unless a luthier is charging premium prices for their product, (or they’re cranking stuff out in volume) in order to have a profitable business that’s going to grow – and pay themselves a decent wage so they can have a house, a car, a family and a life – they need to charge what the guitars are actually worth, and not be afraid to actually make a profit on every instrument sold.

For example, take a look at the range of pricing on David Myka‘s site. He’s a small builder whose work i admire a lot, and he’s been gradually building a stellar reputation for the last few years. His cheapest guitar starts at $2750, and they go up from there. Way up. Just taking a wild guess, but i wouldn’t be surprised (knowing his work and the kind of players he’s likely attracting) if his average selling price – once the guitars are optioned-up with killer woods and top-notch hardware and pickups – is pushing $4k.

Simple economics.

Say you’re a luthier just getting started. How much do you need to make in a year to have a comfortable life? How much money does your business need for a shop (plus heat and light), tools, raw materials, consumables (blades, drill bits, router bits, paint, glue, etc.) and enough cash flow so you can buy and stockpile wood, hardware and other parts? Add those two numbers together, and that’s your minimum profit you have to make every year.

Let’s just say you want to bring home a modest income of $50k per year. Assuming a cost of about $500 per instrument for the raw wood, hardware, electronics (all at wholesale prices – not retail) and a fairly modest final selling price of $2500, let’s assume half of that profit goes to the business and half goes to pay yourself a fair wage… you would have to build 50 instruments a year at that price to pay yourself that $50k.

That leaves only $50k for the business, for rent, utilities, tools, materials, etc. And that doesn’t even take into account things like a marketing plan to help grow the business, or potentially having to pay a bookkeeper to help run the numbers, or eventually maybe having an extra set of hands to answer phones, take orders, help pack and ship instruments, maintain a Web site, etc. This also doesn’t include the cost of building prototypes, getting tooling, templates and jigs made, the time spent doing research and development, legal fees, taxes and so on. That’s actually a pretty slim profit.

Drop the selling price by 30% and the volume has to increase considerably to maintain a comfortable profit, because your costs are fixed and dropping the selling price has just eaten up your margin. Drop the selling price too far, and the business isn’t profitable (at best) or you can’t make ends meet, can’t even pay yourself, and the business folds (at worst).

Of course, working out of a home workshop will save some of those costs, but it’s still hard to make it a profitable business if you want it to flourish and grow. And some people are actually embarrassed about making a healthy profit. If you’re one of those people, you really need to get over that. Businesses are not sustainable without profit. Period.

The seduction of production… doing it in volume (or die trying)

I think a lot of luthiers chronically under-charge for their work, especially when they’re starting out. Many of them get seduced by the idea of keeping their prices artificially low to spark demand, and then trying to meet their revenue and profit targets by trying to build stuff in volume. They end up keeping the business afloat for a short while on all the deposit money that comes in with the customer orders – robbing Peter to pay Paul, so to speak – and before they know it, they’re in over their heads and staring down a three-year backlog of orders and they’re STILL just barely squeaking by.

These backlogs of work result in lengthy wait times, which inevitably leads to unhappy customers, and real potential for the business to collapse under its own weight. They’re also not likely paying themselves a decent wage while doing this, because they’re working with slim-to-nonexistent profit margins to begin with. And slim profit margins means there’s no money to hire extra hands to try and process the work more quickly. Even if they could build more quickly, if their margins are too slim to begin with, building twice as many instruments won’t make them more profitable… the economies of scale only really start to take effect when you get into larger-scale manufacturing. For the small builder, either you profit or you die. I’ve seen this happen numerous times, when talent, skill and ambition meet terrible business sense.

Based on the numbers above, you’re looking at producing about an instrument a week, on average. With no vacation time or sick days. I think it would be quite a challenge for a one-person shop to deliver an instrument a week. Stretch that timeline out to an instrument every two weeks, and you’d have to double your selling price to $5000 to make sure the cashflow stays in positive territory and you pay yourself a living wage.

As you can see from this very basic introduction to the economics of building guitars, it really is not unreasonable for boutique or custom-shop instruments from small independent luthiers to cost $3500 to $5000 or more.

Now, some people are doing it as a hobby or a part-time pursuit, and aren’t expecting to make a living from it… but guitarists should not make that assumption and pressure prices unrealistically downward.

For a more detailed analysis of what it costs to run a small CNC-equipped shop, Mike Sherman (who worked in Hamer’s custom shop and later ran Washburn’s custom shop before moving out on his own) wrote a summary of some of his hard costs… quite an eye opener!

Watch for Part II, coming in a few days…