Official Luthiers Forum!

A lot of people shoot their wad on a big advertising splash and when it turns out to cost more than the sales they generated with the ads they say, "Well, that didn't work" and they give up.

What they really needed to do was make sure their pricing structure supports spending a substantial percentage of their business budget on regular and carefully planned marketing. (Ads are only part of the picture.)

Can you buy your way into the guitar market? Of course you can. But it takes more than just money. You also have to have a consistent product that people are willing to buy and you also must maintain a steady marketing effort.

The Martin is worth $25k because Martin staked out a market position and have spent more than a hundred years marketing their brand. That's where that "loyal army" of Martin fans came from (Hi Dave, nice turn of phrase!)

As far as marketing guitars in an airport kiosk, goes, someone must have figured out that people who can afford $5k for a guitar are more likely to fly than to take a bus!

Anyone who wants a realistic shot at making a living in business must exercise some marketing skills. There are plenty of community college courses available. You don't have to get a degree, just go see the instructor and get permission to "audit" the class. Or go buy a book like "Guerilla Marketing," by Jay Levinson. Better yet, start by reading a few of his free articles.

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D..

Hesh, you're absolutely right about the pitfalls of pricing too low. I have a part-time business buying and selling collectibles and I've seen that principle in action more than once.

A few years back I was selling at a table in a local flea market. I just wanted to get rid of the stuff and had priced everything "stupid-low." Among the items was a small hand-carved cigaret box from the 1930s. It was easily worth $65 or more in the Atlanta auctions, but I priced it at $20. During the morning at least a dozen people picked it up, carefully examined it, then put it down and moved on.

During lunch I joked that "it must be priced too low" and made out a new tag pricing it at $35. The very next person who walked into the booth picked it up, gave it a cursory glance and then pulled out his wallet.

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D..

Dave, I should have clarified my point better about building a similar guitar to the Martin...

Let's say I build a guitar just like it, and another builder with more of a recognized name builds the same thing. Both end up on the shelf at a music store. The Martin sells for $25,000, the other guy's sells for $15,000, and mine sits there for months with no bites at $7,000. Name recognition. Sometimes you have to sacrifice profits at first in order to build a reputation of quality, at which time you can command a greater price for your wares. It doesn't matter that my guitar was better than the other guy's guitar. The guy who had the cash to buy such an instrument was going to buy what he perceived to be the better value because of name recognition, even if it wasn't the better value.

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"I want to know what kind of pickups Vince Gill uses in his Tele, because if I had those, as good of a player as I am, I'm sure I could make it sound like that.
Only badly."

I believe Mario does A LOT more marketing than just tossing in a handful of business cards in the guitar cases he send out. Now I realize Mario said his ad/marketing "budget", and not marketing in general, but he appears to me to understand that the value of non-cash marketing is under-exploited. Not unlike Martin, Mario also has a loyal following among several internet forums...among them is the flatpick-l list, in which he has an almost cult-like following. If he chose to (and he might for all I know) build a few spec guitars each years, I suspect they'd be sold well in advance of their completion date, based on this ONE list alone. How can this be?

Well, Mario is a regular on a variety of forums (the aforementioned flatpick-l, the OLF, he moderates, I think, the luthier forum - the one with no "s", and there may be others I'm not aware of). His insight, advice, tips for guitar-building techniques, sense of humor, seemingly endless patience with newbies, etc. are - without a doubt - a significant form of "free" marketing. (I know, his time isn't free.) Also, he periodically acts as the "Camp Guitar Doctor" for the much praised Steve Kaufman camp. Again, this is marketing, albeit in a non-cash form...but I bet this gets him a few orders per year. I'd imagine I'm aware of only a few things he does that go a very long way towards making his order list as significant as it is...nevermind that his guitars gather rave reviews.

In a niche like this, personality sells guitars as much as anything else. He may be "grumpy" - his words, not mine - but he's got this marketing thing figured out fairly well.

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Eagles may soar, but weasels don't get sucked into jet engines.

[QUOTE=Bill Greene]

he moderates, I think, the luthier forum - the one with no "s"[/QUOTE]

That is a different Mario at the luthierforum, but you are right about the rest.

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Don Atwood
Arlington, VA

Bill, interesting take. Yes, I do spend time on many forums(but not the luthier one, though: banned from there <bg>), but it is honesly because I love to share, not for exposure. I know of only one sale that has come about from being on luthier's forums, so, in 8 years of being on them daily, that would be a poor use of my time if what i was after were sales.

I was a member of flatpick-L before I was a professional luthier. I was a member because I am a player first, luthier second. When I joined there, I was there to better my playing(having read of the list in Flatpicking Guitar Magazine, if which I am a subscriber from day one, and still am, some 10 years later!). Once there, I saw much discussion on what made guitars what they were, and discussions on how to fix this or that, and jumped-in.

The cult-like following I have from the listers there came from having met a few on my trips into the US. See, the key, again, is that I'm a player first, luthier second. When I go to a gathering, I'm not walking around handing my guitars to people to try. I'm playing them! I go there to jam. I might even be there as part of a band.

I've never been Kamp Doctor; I attend Kamp, but as a student! I don't even let it be known that I have my toolbox with me while there(I always have tools in case of emergencies, and to do some warranty work while in the US), but I've never been Kamp Doctor. I do hang around the doctor's offices, though <g>

Again, I'm at Kamp not to garner sales, but to further my playing.

Anywho, from being at these places, and having my guitars around, folks took notice, and sales came forth. Not because I used a great sales pitch(I'm an awful salesperson), but because when they were heard, a lot of people took notice.

As for how I got going; this was a hobby. I had guitar #4 with me at a festival, and a gfriend used it in a jam session with some of the pro players that were there in the wee hours. These boys took note! The next day, they tracked me down, and asked to try the guitar on stage to see how it mic'd. The rest is history. That guitar took me to Nashville, via one of the players who commissioned a guitar then and there, and he happened to be one fo those Nashville cats. A month after that festival, I was backlogged. A year later I was finding out the guitars were being used on albums.

All this, while holding down a day job, but, after 14 years at the same place, they downsized(remember that buzz-word of the late 90's?), and I found myself either having to move to find work, or "going pro". I already had a strong backlog, and was turning orders away, so I just went with it, hoping the snowball would continue to grow like it was doing. It has...

I still don't make what I was making at my job, but we get by.

Life is good.

If there's any marketing involved, and I guesss there was, it was incidental, and not intentional.

[QUOTE=Brock Poling] I certainly am not saying that you don't have to
have the quality. I think that is the price of admission. All the marketing
in the world will not turn a pig into a race horse. [/QUOTE]

Brock, I totally understood what you wrote, I specified "beyond excellent
skills at the trade". I meant of course that the 1st condition is to build a
high-quality instrument, we definitely agree on this!
As for the high cost of advertising in an airport, maybe Mr. McPherson is
financing his guitar ventures with capital coming from the archery
business? He definitely would have an advantage… But somehow I can
hardly believe that it would increase sales. High-end guitars is a highly
specialized niche where players/collectors know what builders they want
to order from. Maybe there are enough people/guitar amateurs going
through airports who can spend $5000 on a whim…
What amazes me is the belief that there is room for every luthier to
expand and/or grow. There isn't, the market is just too small, and the
amount of people willing to spend over $3000 for a flat-top is limited, no
matter what advertising scheme one comes up with.
Mario's strategy makes perfect sense to me: word-of-mouth and constant
presence where potential buyers hang out.
I see some builders selling hand-made instruments for under or around
$2000…
I am wondering 1/ how do they make a living (like do they get support
from a wealthy family and/or max out their credit cards)? 2/ how does
this affect the other builders who clearly can't sell for so low. 3/ are the
instruments even worth the $2000?

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Laurent Brondel
West Paris, Maine - USA
http://www.laurentbrondel.com/

[QUOTE=Dennis E.] A lot of people shoot their wad on a big advertising splash and when it turns out to cost more than the sales they generated with the ads they say, "Well, that didn't work" and they give up.

What they really needed to do was make sure their pricing structure supports spending a substantial percentage of their business budget on regular and carefully planned marketing. (Ads are only part of the picture.)

Can you buy your way into the guitar market? Of course you can. But it takes more than just money. You also have to have a consistent product that people are willing to buy and you also must maintain a steady marketing effort.

The Martin is worth $25k because Martin staked out a market position and have spent more than a hundred years marketing their brand. That's where that "loyal army" of Martin fans came from (Hi Dave, nice turn of phrase!)

As far as marketing guitars in an airport kiosk, goes, someone must have figured out that people who can afford $5k for a guitar are more likely to fly than to take a bus!

Anyone who wants a realistic shot at making a living in business must exercise some marketing skills. There are plenty of community college courses available. You don't have to get a degree, just go see the instructor and get permission to "audit" the class. Or go buy a book like "Guerilla Marketing," by Jay Levinson. Better yet, start by reading a few of his free articles.[/QUOTE]

Another series of books I have always got a lot out of are the 22 immutable laws of branding, the XX rules of local advertising, the 33 rules of selling.... (these titles are not exact... but close enough to help you in the Amazon search box)

They are short and the information is very good and reasonably easy to implement.

_________________
Brock Poling
Columbus, Ohio
http://www.polingguitars.com

What Mario fails to mention is that people are naturally drawn to grumpy people. I don't know why, but that's the real secret to his success.



Laurent, the reality is that there are more of those people than perhaps you realize, and some of those are collectors...   
I know a very successful luthier who has a large number of dentists as customers. Why? Because they have lots of money, and probably still have that small part of them that wanted to be a musician and wish they had given it a real shot instead of reaching into people's mouths all day. So they compensate for the loss of that dream by buying expensive handmade guitars. The market is always increasing, but so is the number of builders.
Few will have the success that Jim Olson or Kevin Ryan, or any of the other "big names" in the industry have, but there's always room for someone who builds a great product with great value attached.

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"I want to know what kind of pickups Vince Gill uses in his Tele, because if I had those, as good of a player as I am, I'm sure I could make it sound like that.
Only badly."

Some of you guys are still missing my point. You have to know what your costs are...not how much profit I want or what I need to live ( Although that may be nice to know). You need to know production cost. Mario talked of "economies of scale". Economies of scale are also reversing...there comes a time when they either cease to exist or actually become burdens because of the cost to maintain. You don't simply go out and buy as much of a material because the more you buy the cheaper it gets. There is a holding cost...it's costs money to store something, an opportunity cost...I could have invested the money in something else(in an appreciating asset), obsolecence factor...(what if I had bought 10,000 tremolos during the E.V. craze), natural decay cost...things rot, rust, warp just plain get old or go bad , etc. If you don't know the cost of what you are building how can you reasonably price/market it?

Mario is very lucky to have such a successful business but imagine this...What if thru proper marketing he would have achieved the same level 5 yrs sooner? What would that have allowed him to do that he hasn't yet done? What if he had instituted a marketing plan that allowed him to reach a level where he was selling guitars, even more guitars at higher prices?

See, we will never know that...we only know that he has decided that marketing s/b throwing a few cards into a case and the guitar sells itself( and I am not knocking that). What if he had done that AND had a regular marketing plan in place? What I am saying is, you, me, Mario, all of us, we need to know what things really cost or we simply won't market our product at the right price. Mario or me or you can only make so many guitars a year. If he wants to build more he must change what he does currently. If he changes...will he make more money? will he work harder for less return? or will he become rich beyond belief and retire on French Riviera? Who knows? Well if you know your true cost you can figure most of that out to a certain degree of accuracy. Rest assured Martin could build a million more guitars if they wanted to, but what would it do for them? Believe me they know their numbers. They know where they stand and where they are going. No shooting from the hip at Martin Corporate.

I am also saying that if you are going to build and sell in the Custom, Handmade Guitar arena then you should get paid Custom, Handmade Guitar Maker prices and not sacrifice to sell a few more guitars...marketing will do that for you. What level you wind up on is most certainly determined by quality...but don't forget the sizzle ( sizzle is marketing - folks). That's why those pretty shinny guitars sell faster than the satin finish ones.

In any case who wouldn't want to see the artist get as much as possible for his/her work? I think of the custom bulder like the artist of the business. Not the factory. I only say "have the knowledge" it can help.



p.s. Mario, the cost of living or your living costs are not product costs ( technically speaking). just FYI Production costs are things like materials, supplies, overhead, depreciation, ins. utils, etc. Anything that is realized as a result of the manufacturing process. Yes a reasonable wage would also be, but not from the angle of "what I need". That's relevant to your happiness, survival, and continued participation.

_________________
Dave Bland

remember...

"If it doesn't play in tune...it's just pretty wood"

[QUOTE=laurent] As for the high cost of advertising in an airport, maybe Mr. McPherson is
financing his guitar ventures with capital coming from the archery
business? He definitely would have an advantage… But somehow I can
hardly believe that it would increase sales. High-end guitars is a highly
specialized niche where players/collectors know what builders they want
to order from. Maybe there are enough people/guitar amateurs going
through airports who can spend $5000 on a whim…[/QUOTE]


We agree on 99.99999% of what we are both discussing. Please don't take my comments as anything but furthering the discussion.

Your comment above about the amount of money that it costs to showcase the guitar in an airport strikes at the heart of my branding vs. selling point.

Of course it isn't producing enough sales in the short term to win enough business to pay for itself. For that matter neither is an ad in AG or any of the big professional mags. It is really tough to turn advertising into a salesman. It can be done (look at grocery store coupons) but when the rubber meets the road advertising needs to be looked at as a branding investment, and sales needs to take different forms.

One promotions approach that we have not talked about and is an absolute gold mine home run is PUBLIC RELATIONS. Get a couple of well placed articles and THAT will make the phone ring. If I were hunting AG that is where I would put my money. Get some stories placed.

There is a lot of magic about how to run a successful PR campaingn too. Rarely can you come at them with "do a piece about my guitars"... you need to offer something of additional value, but I have always had great commercial return on PR.

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Brock Poling
Columbus, Ohio
http://www.polingguitars.com

roduction costs are things like materials, supplies, overhead, depreciation, ins. utils, etc.

Uh, my shop needs heat. I liove NORTH of the ARCTIC watershed. Cold up here... A little over $2700 worth of gas in 2005

My shop needs lighting. Electricity ain't cheap up here...

My shop gets taxed as a commercial build. All 1200 sq/ft of it.

My shop and business need thir own insurance policy. About $1700 worth right there.

My shop needs a humidifier, and a dehumidifer. If the roof leaks, I can't put it off; it needs a new roof. If the table saw dies, i need a new one now, not next week.

Stuff like that isn't 'cost of living', it's the cost of doing business, and those costs are fixed, and in fact those make up the bigger portion of my overhead. Since they are fixed costs(doesn't cost more to heat the shop if I make more guitars, doesn't take more lioghts if I make more guitars, my insurance isn't based on output, etc...), the more I make, the less it costs.

Materials and inventory costs are quite small. And wood always appreciates, so it is more investment than inventory. I could simply sell my wood inventory tomorrow and declare a healthy profit <g>

Yes, of course, we need to balance our output, as you state. There is indeed a limit to the economy of scale, but I'm afriad a one or two person shop would never reach that point, so it's pretty well moot for any of us.

For me, the whole thing is pretty simple; I pay the bills, and what's left goes back into the business in the form of extra woods or perhaps a new tool to help make more instruments, or make them better(both of which will bring in more income). If I need more money at some points, I drink more coffee, and work longer hours.

Mario:

I hope I wasn't out of line using you as an example of effective marketing - even if you sort of backed into it. I never meant to imply that your participation in various forums was intended as a sales tactic. On the contrary, I can honestly say I've never once seen you reference a sales pitch on the L...even when they give you good natured ribbing about trying to move up on the your backlog.

That said, I "knew" you were a player from reading your posts in the past. Did not know you were never the Camp Doctor, though. Seems like that would be a natural fit...well, except for the part where it cuts into your jam time. :-)

I suppose then that, to at least some degree, the initial marketing factor of your guitars was playing in a jam and having someone say "Dude, that guitar rules, where did you buy it?" To which you replied, "Well, I made it actually." Personally, I can see where that would be a good sales tactic...even if unintentional.

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Eagles may soar, but weasels don't get sucked into jet engines.

how about experimenting with raising prices until your back log decreases to say 1 year?

Yes, that would be the correct, and expected route to take.

But it's not my road.

If I raise my prices to where they -should- be, I'll be building for dentists and lawyers only. Now, I've got many clients who are such, and many friends who are such, also, and they indeed good folks, but I also like being accessible to the avergae guy, and to the proffesional musician. Little known fact is that most real musicians aren't millionaires.

also...

A LOT of my clients have become close friends, and I cringe to think of how many great friends I wouldn't have met if my prices were where they should be to stem the demand. Again, while it's not something you'll ever see in a business 101 book or marketing how-to, it's is nonetheless one of many things I took into accounht when I had to decide what to do.

So..., I closed the books instead of cranking my prices up to slow the demand.

This may go back to being a player first, luthier second. Heart, art, and soul VS hard numbers and "correct" economic sense. Works for me, works for Wayne Henderson, and I'm sure it works for others. We just don't make a big noise about it, and because we don't have the big prices, we remain off most radars. But the real players know where to find us. Suites me just fine...

If I wanted to make big money again, I'd put my engineering degree back to work for me. But I like the life I lead right now just fine.... I get to watch the sun rise over the lake every morning and watch it set down past the spruce trees in the back yard.

Life is wonderful goote.Mario38770.8027314815

Hesh... I don't see why you think the economic models and the marketing methodologies don't work. This is a choice that Mario made -- nothing else.

He is operating on a "what makes you happy" plan, and certainly that is admirable. I think the surest way to wreck a career you love is to do something that you don't enjoy simply to get sales.

But just because he has chosen this route doesn't mean that the model doesn't hold up.

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Brock Poling
Columbus, Ohio
http://www.polingguitars.com

[QUOTE=Mario] roduction costs are things like materials, supplies, overhead, depreciation, ins. utils, etc.

Uh, my shop needs heat. I liove NORTH of the ARCTIC watershed. Cold up here... A little over $2700 worth of gas in 2005

My shop needs lighting. Electricity ain't cheap up here...

My shop gets taxed as a commercial build. All 1200 sq/ft of it.

My shop and business need thir own insurance policy. About $1700 worth right there.

My shop needs a humidifier, and a dehumidifer. If the roof leaks, I can't put it off; it needs a new roof. If the table saw dies, i need a new one now, not next week.

Stuff like that isn't 'cost of living', it's the cost of doing business, and those costs are fixed, and in fact those make up the bigger portion of my overhead. Since they are fixed costs(doesn't cost more to heat the shop if I make more guitars, doesn't take more lioghts if I make more guitars, my insurance isn't based on output, etc...), the more I make, the less it costs.

Materials and inventory costs are quite small. And wood always appreciates, so it is more investment than inventory. I could simply sell my wood inventory tomorrow and declare a healthy profit <g>

Yes, of course, we need to balance our output, as you state. There is indeed a limit to the economy of scale, but I'm afriad a one or two person shop would never reach that point, so it's pretty well moot for any of us.

For me, the whole thing is pretty simple; I pay the bills, and what's left goes back into the business in the form of extra woods or perhaps a new tool to help make more instruments, or make them better(both of which will bring in more income). If I need more money at some points, I drink more coffee, and work longer hours. [/QUOTE]

Mario you are wrong here's why:
1)"your shop needs heat" is not a fixed cost. It goes up if you are there every day (vs. you aren't heating in the summer or if you are on a two week vacation)or if it's a particularly cold winter you may spend more in fuel. Not everyone salvages fuel from their backyard if you do you still have to run some sort of tool to get the tree into a usable form. that takes gasoline in most cases and gas goes up and down - variable.
2)"Your shop needs Electric". Electricity is supplied by utility companies who burn fuel and need to make a profit. Their costs usually go up steadily over time. Also if you run a power tool to do ONE MORE whatever you have consummed more electricity than if you made one less - It's NOT A FIXED COST.
3)"my shop gets taxed...all 1200sq ft." O.k. Now add 20,000 more sq. ft. and tell me the tax bill will be the same. Like wise cut it down to 600 sq ft and your bill would drop. Sorry Not Fixed is it?
4) "My business needs INS." double your capacity and therefore your risk of loss and see if your insurance will remain the same...NO IT WILL INCREASE. NOT FIXED.
5) Double the size of your shop and you will need twice/more the humidifier's twice/more de-humidifiers. Double or increase your production and your machines won't last as long and you'll probably need more of them, better, bigger, more expensive ones as well.
SORRY NOT FIXED!
6)"the more I make the less it costs" ONLY True to a limited extent. You have extra capacity at your current level. Once you go over that all of the above begins to happen and those costs are no where near fixed.
7)"wood always appreciates". Wrong ask anyone who has had to discard wood because of a mysterious fungus/mold. Or how about termites...perhaps this one doesn't apply to you but Florida is just one Big termite nest. I have to worry constantly about pest infiltration and control. Added Cost. and the more I buy the more at risk I am to loose it. What about a hurricane, Flood, Earth quake etc? How many business's have lost millions/billions because of natural disasters? You have no real security in a pile of wood. You only have the hope of security assuming everything remains constant.
8) You think because you are a one or two man shop that economies of scale are infinite...that's plain ridiculous. Economies of scale only work for those who can utilize them. Most one or two man shops can't truely make use of the economies of scale. Ask any luthier who has thought that making 50 bodies and then 50 necks at one production run if he really saved any money ( or even time in alot of instances). Most I have read about or talked to ( I'm talking about one or two man shops) will tell you they really didn't gain much if anything. Some have even said they would never do it again.

Finally you stated that if you needed to do more work you "drank more coffee". I don't know where you buy your coffee but every cup I drink just means sooner or later I have to go to the store and BUY MORE.

Mario, you love to argue, and I think you like to argue with me even more. I am done...NO MAS! Dave-SKG38770.8672569444

_________________
Dave Bland

remember...

"If it doesn't play in tune...it's just pretty wood"

_________________
Brock Poling
Columbus, Ohio
http://www.polingguitars.com

Just my two cents: when I was shopping for a guitar(handmade) was looking for the sound I wanted,lead time, esthetics and, I hate to say it,price. But if a luthier was asking the same price for his guitar as say,a Taylor or Martin, it made me think....and I was hesitate about trying out his guitar. BTW I commisioned one (7 string) from Rick Davis (Running Dog Guitars) One time I put a chair out for the garbage man to pick up, it sat out there for two weeks, so I put a $50. price tag on it,it was stolen the next day! Good Post. Clinton