Why Are Custom Guitars Expensive?

Why Are Custom Guitars Expensive?

We see this question pop up all the time, and it’s a great question!

Raw materials aren’t that expensive right?

A slab of swamp ash, some maple for the neck, frets, pickups, hardware, etc… none of that adds up to $4000.  So where do these companies get off charging so much for a guitar?

Are these custom guitar companies greedy and trying to get away with charging as much as they possibly can?

Nope.

A company charging $3000 a pop for a custom guitar honestly isn’t even making much.  How do I know?

I’ve done consulting work for a few of the big boys in the guitar industry, and obviously, we are dealers for most major brands, including those that offer custom shop products.

Their margins are often razor thin!

This doesn’t just include small luthiers, it includes the big players too.  It’s very, very hard to make a custom shop instrument, and make a decent profit at the same time.

This leads us back to our initial question, why are custom guitars so expensive?

Labor costs involved in crafting one off instruments are the primary reason these guitars are so expensive.  It takes time to make guitars, even with a CNC machine, it isn’t a matter of just pressing a button and boom… 15 minutes later a guitar comes out hot off the press & ready to play.

With custom guitars, every small tweak a customer makes means more hours involved for the manufacturer.  If the builder uses a CNC machine (which is almost all luthiers), then it takes time to reprogram for the customer’s changes.  After reprogramming, a luthier has to test on scrap wood to make sure the CNC won’t destroy the wood they’ve selected for their customer.  Even then, there’s no guarantee the CNC machine won’t malfunction and destroy the instrument.

Want a super exotic rare wood for the top of your guitar?  The luthier has to source it first, and then ensure it meets his standards.  If it doesn’t meet his standards then it means losing time and money until he can find a good piece of wood that does.

Another big problem is that guitars are made of organic materials.  No two pieces of wood are the same, and you never truly know what could happen once the wood is turned into a guitar.  For example, if you pick out what you think is a gorgeous piece of flamed maple, the luthier might find it has flaws that prevent it from being usable for a guitar once they cut into it.  Again, this adds to the cost of the guitar for the manufacturer because they have to throw that top out and try again.

Compounding all of this are the usual expenses associated with running a business.  Accounting fees, taxes, employee salary, employee benefits like healthcare, rent, tools, good quality machines, website hosting, website developers, designers, marketing…it goes on and on.

The luthiers behind custom shops definitely aren’t doing it for the money, they are genuinely interested in making the best guitar they possibly can, without having to worry about limitations imposed on them if they were building production guitars.  If they wanted to make money, they would probably use their skills to get into making high end furniture or cabinetry.

Even the guys at the peak of their craft with decades of experience like Teuffel, Myka, Nic Huber and Ruokangas, who sometimes charge upwards of $6000 a build aren’t actually paying themselves much relative to how long they have been working on their craft.

I’m not saying $6000 isn’t a lot for a guitar, because it is…but it’s important to take into account that the guys charging that much per guitar are often in their 40s or 50s, and have had decades to hone their work.  A senior electrician or plumber charges a premium for their experience, and luthiers should do the same.

This is the same reason a PRS Private Stock instrument is priced at what it is.  The guitars are all made by experienced luthiers, and experience never comes cheap.

While we can’t post margins on PRS Private Stock guitars, I can tell you that they aren’t nearly as high as you would think they are.  Their pricing actually reflects a lot of the inputs that go into the guitars.  There’s a reason nobody else can do a finish as deep and 3D-like – it’s because PRS has, literally, some of the best finish guys working for them.

It’s actually very difficult to run a consistent and profitable custom shop, that’s why Ibanez has stayed out of it for so long.  There isn’t really much money in it relative to producing regular guitars.  Sure, Ibanez has the Los Angeles Custom Shop (LACS), but that is only open to artists that Ibanez has relationships with.  Even then, most LACS are assembled from production models and refinished/modified.  The only people with truly custom LACS are those who have been with Ibanez for a long time or are serious heavyweights in the industry.

While reading this article, you’re probably thinking about all the affordable custom shop guitars you see around.

Let’s talk about that…

These cheap custom guitars are frequently riddled with flaws you wouldn’t find on a budget guitar.  Here are common flaws I’ve found on budget custom guitars:

• Misaligned side dots.
• Poorly cut nuts.
• Loose neck pockets.
• Odd holes on the guitar due to not knowing how to use a CNC machine properly.
• Issues with binding.
• Improperly dried wood.
• Incorrect neck angles.(Bernie Rico Jr shimmed his neckthru guitars, which is…odd)
• Excessive glue around joints.
• Poor fretwork.

Largely, these are issues you wouldn’t find on an Ibanez manufacturered in Indonesia, so why would you be OK with them on a $2000-$3000 custom guitar?

These issues sometimes pop up on guitars made by reputable long-standing manufacturers, but they have the ability to quickly issue refunds as they are companies with a lot of cash sitting in the bank.

Sometimes, you’ll get lucky and will find a luthier who is very capable and just needs to get his name out there, so he will do a few builds at an affordable price to kickstart his business…

This is extremely rare though and I wouldn’t personally bank on it.  I have made the mistake of going with unproven luthiers & paid the price for it (bye bye deposit money).

More often than not, new custom guitar companies simply aren’t experienced, and don’t realize how little money they are making per build, then end up running their company into the ground.

As a business consultant, I see people do this all the time in different industries, and these guitar companies and no different.

They overpromise, and fail to deliver.  Compounding this is their inability to properly estimate just how much money it takes to stay afloat as a business.

This isn’t a dig at them by any means, just something to know before you decide to part with your money for a custom shop instrument.  Buying from a new business run by inexperienced business owners is always a risk, no matter what you are buying. 

Don’t believe me?  Take a look at how bad the survival rates are for most businesses.

If you are set on buying from a newer company without many reviews or operating history, then I would try to arrange payments on a milestone basis with the luthier.  This means you pay them agreed upon sums when the guitar reaches certain stages.  This is good for the luthier and good for you, although the only true way to hedge risk is to buy from a company that has been in business for years, and offers a good return policy.

Although, again, I’ve played that game many times and it has ultimately led to disappointment.  I either ended up with a substandard guitar, or my deposit vanished.  That’s why I bought two of my most recent customs from long established luthiers, two of which we do not deal.

Hopefully this article has shed some light on why companies charge what they do for custom guitars, if you enjoyed it, then don’t forget to check out more of our articles here.