Lutherie - the business.

[Ormsby Guitars]

I've noticed, especially on forums such as mimf.com, there seems to be an attitude that we can only hope to ever earn just above the poverty line, and that we are struggling 'artists' and know that going into this career. You've seen the jokes: "best way to get a million in this business is to start with two!" etc...

It is absolutely, the most common thing mentioned to me by luthiers, whilst I was establishing my business in the beginning.

I'm curious to see how many people believe that going into it? Is it the case that you simply don't care, and the job satisfaction is worth more? Is it a case of 'thought there would be more than this, but Im happy with what Ive got'? Or even 'Im doing everything to succeed, and nothing is working?'?

If the income side of things isnt there (or there yet), what do you think needs to change? I'm talking about us as luthiers, AND our clients/players.

I guess I think about this every time I travel. I make a point of visiting luthiers around the world to try and expand not just my contacts, but my knowledge also. One thing that has really struck me is that guys that seems to be doing ok, really aren't (financially). They have the 'chops', but not the income. Maybe it's bad money management? Maybe it's just the areas Ive visited (mostly USA, but email conversations worldwide)? But it definately seems to be something else...

[P Bill]

Good topic Perry,

It applies to any high end craft. I was told early on to be much better at business than furniture making. 20 of my 40 working
years have been self-employed. I made more money working for a boss and no stress. The only reasons I can keep my doors open, I own the doors and no debt.
I've left it too late for a luthiery career. Before the GFC, I was doing 6 basses a year mixed with furniture. Then 2 a year; it's starting to pick up again but I'm not that interested now. Part of the reason for my acoustic builds was to lift my credibility to sell eubs. Now I only want to build what I want (that includes furniture). If someone wants to buy, great. I don't want to know about custom or repair. I'm finally where I want to be.

For someone younger, EXPECT to get paid what it's worth, no less.

[Ormsby Guitars]

The GFC definitely had an impact on my USA sales, but nowhere else. Having said that, I was offered a very impressive distro deal in 2008/09 but declined. I often wonder if it was the right decision, but no regrets.

I think it's more than the GFC though. I think it's the mindset of artists. I get the feeling they believe if their craft is good, then sales will happen automatically, but with a 'we've been told their aren't any clients' attitude.

[nnickusa]

Perry, I am of the opinion, as mentioned that "most" guys who are busy enough, but not making much money at whatever thier chosen field is, are not good enough at business.

I don't mean they aren't very good at making guitars, or doing repairs, nor are they no good at, in my case, making pizza, or furniture, or chopping boards, or anything. Ask Bill or Rob, I'm sure they agree.

Without a sound understanding of what it takes to run a business from the front door to the back door, it is very easy to be very busy but not make a successful business.

IE: I have sold one guitar, to a close friend for cost. I now am making one that is a comission, and I'm charging $2000. If you don't charge your wage, PLUS a bit of profit, your business is worthless, other than plant and equipment.....I won't sell another guitar for less than that $2000. At $500-600 in materials, and 100 odd hours invested in each one, I'm still making less money than if I was making coffee......You know that, clearly, and I wouldn't be surprised if your not taking up the distribution offer(was it for your production?) had a lot to do with not being willing to compromise your standards.....

We can all send a sample of our work over to China, and have nanometer specific reproductions sent back for a fraction of what it would cost us to do it ourselves, and they'd likely be good enough for most buyers, but would you or I be willing to do that,. and possibly sacrifice the good name already established? I'd guess not.....

If I recall, you mentioned in previous posts that your employees don't do work on your guitars, since your customers want one made by YOU, and not your apprentices....

As a piece of advice to anyone going into ANY business, luthier or not, bone up on your business skills first. That includes accounting, marketing, statistics, and the rest, so you 1. have an idea what the specialists you hire are talking about, and 2. can do it yourself for awhile until you can afford, say a marketing outfit....I mean, how do you want to promote your product? I have a Facebook page at the moment, and it serves my needs. Your website is very slick and inviting. The question for that is, how much do you pay and to whom, to promote it on the internet? Do you just leave that upto your web guy, or make some informed decisions?

As with any "specialised" craft/art/skill/production, being really good at doing the work is only a small part of the equation.....Very few luthiers sell thier work for enough to make a really good living, say Somoygi or Manzer, and I honestly believe therre's as much luck as skill in that.....

As for me, I'd be happy making 4-6 guitars a year and doing a few repairs. If my avocation became a vocation, I don't know if I'd love it, but I'd cretainly try, assuming I were lucky enough to make some kind of name for my guitars. I know katherine is over the moon with hers and I get lots of positive feedback from people, but not too many orders as yet. So far, I've spent significantly more than I've taken in, as you would expect. I have kept every receipt and expense recorded as I may want to set up at some point.....

Sorry if this is disjointed and confusing, but I'm in the middle of making lasagne and roasting chicken breasts, and my normal lunch service....multitasking skills are also a plus

[EricDownunder]

One thing I have learnt is people like to be right, if they think they wont make money then they will be right and those that really believe they will make a good living out of something then they will no matter what the business. Try POSITIVE THINKING!

[Ormsby Guitars]

One thing I have learnt is people like to be right, if they think they wont make money then they will be right and those that really believe they will make a good living out of something then they will no matter what the business. Try POSITIVE THINKING!

Without a doubt this is correct

I was about to post this:
The business side of things definitely is important. Maybe more important than the hand skills. But I honestly think the mindset is that "there isnt money to be made, so we won't try for it".

[demonx]

I think there is money to be made, however establishing a strong name and getting orders is quite difficult. Then on top of that having a top quality product to be able to charge a top shelf price doesn't happen over night.

When I first started selling, my guitars were priced to cover the cost of materials. I had no trouble moving them. Later on after getting a bit of a name and bit better quslity, I started charging $1500ish. Still no trouble getting orders. Had people lining up BUT not covering hours worked. Then late last year I bumped up prices again to around $3000ish. Then the orders stopped flowing in. I am obviously not well known to charge for my labour.

This is the struggle I believe most builders have. Establishing a reputation enough to cover labor. There in recent years has been a massive flood of boutique builders which is making it a hard market to enter. The Internet has enabled this.

Tough topic and it'll vary for different building styles etc as well

[Ormsby Guitars]

That could be because you started too cheap?

I was at $1850 ten years ago and went to $2190 then $2390 base price within fifteen guitars. My base went to $2590 last year, but with options people spend $4000-5000 on average. I tested the market with a 'run' of $6750-10750 guitars in April and sold them almost immediately. They'll be special guitars though.

I was pushed to set those prices by a couple business advisors I started working with. Their advice paid for their fees instantly. Just working with them has pushed me to do things I already knew I needed to do, just needed their kick up the arse to do it. We are analysing everything i do , from email replies to wording of quotes, everything, then tracking the differences each change makes. They are suggesting I offer the same deal to others, to spread the love. Kind of like a luthery incubator? I'm working with a guy now to see how it goes... Trial run sort of.

Most of the guys I talk to even seem scared of sales. I could even admit to that a little bit. You know you can do the work, you want the work, bit something holds you back from making the steps to TAKE it. I don't just mean not quoting on a job, etc, but all the little things leading up to that.

Of course, reputation is considered a big thing. But is it? I've sold commissions to people that have never seen or heard one of my guitars, nor heard of my name. Their feedback is that I sold them with my passion. We can all have passion, but do we express that? How did I express my passion to them?

[simso]

Interesting topic perry.

I think I can bring some info too the table and it will all be of course be IMO

The first is my tax accountant told me that if you have employees, then to survive in business you need to charge out triple what you pay them. If you pay them 25 you need to charge out 75 an hr etc.

That being said back to basics, single man enterprise

I believe you first must establish within yourself, that you are either a hobby business or commercial business

To do this you have to work out your costs, you need to pay yourself a wage.

Example if you are building and selling guitars

You sell guitar for $1500, the wood / paint / hardware component of the job is $235 (example) overheads are $40 a guitar (tooling / power / consumables / paint etc)

This means your profit is $1500 - $235 and $40 = $1225

If it takes you 80 hrs (2 wks) to build the guitar then your hrly rate is $1225 / 80 = $15.31

Now as your hrly take home rate is less than the australian award wage then you are still IMO a hobby business, because you cannot live of what you are doing.

You need to either work faster buy products cheaper or reduce your overheads and establish a proper wage for yourself.

If you cannot achieve a proper wage via the figures then there is no way your going to survive in any down turn / crisis / lack of payments etc, you will go under if you enter the commercial world of things

All of course IMO.

[simso]

Please note as a follow up on my other post

Being a hobby business or commercial business does not reflect work quality or ethics etc, it merely reflects ones ability to sustain a wage.

Even as a part time business you need to be able to take a proper wage from your labour.

If you cannot achieve a wage then your doing it for enjoyment not for financial gain

[nnickusa]

Steve, you kind of simplified my rambling rhetoric. In the food business, you have to charge 4 times the cost of your ingredients in order to cover labour, site and equipment costs. BUT, this multiplier doesn't guarantee you success, if you don't have enough covers a day....

There is a margin you need to make in any transaction in order to survive as a business. That varies, of course, as to where you are, average number of sales, your general costs of doing business, prevailing wages, etc, etc, ad nauseum.....

When you meet that margin and determine a profit, you are a business, until then, you are a hobby builder who sells a few.....and most builders I've spoken to don't make the bulk of thier money in building, which is why a repair department seems a good idea to me. Especially when times are tough(like now) folks will still want thier guitar fixed, but maybe not spring for a new one....yet. The guy who does a bang-up job on the repair stands to be in line when a new one is needed......marketing in a broad sense....

[Kim]

I think the comments your reading on other fori Perry would in the main be posted by those whom do not take on repair work 'and' they probably only make acoustics guitars. I reckon under those circumstances those comments are probably true.

Cheers

Kim

[EricDownunder]

You should have two sources of income, one that pays the bills and the one you love doing!

[simso]

Thanks nick.

Yes and no, too a couple of your comments.

I believe you first need to know whether you can make a profit out of it, hence the pay yourself situation, if you cannot make a profit then you are doing it as a hobby, its that simple.

I feel most people are doing this as a hobby, but wish they were doing it commercially, for that to happen you need to revisit your figures and make them work for you. By whatever means available.

If you can make a profit hrly, then you are IMO commercially sustainable, whether that be on a part time or full time basis, you are in essence now a profitable business. Whether or not that business can support you full time is another story.

I mean no disrespect to builders here as I too am a builder as well, but building something is far easier than repairing something.

[Ormsby Guitars]

I think the comments your reading on other fori Perry would in the main be posted by those whom do not take on repair work 'and' they probably only make acoustics guitars. I reckon under those circumstances those comments are probably true.

Cheers

Kim

Actually, they were both electric and acoustic makers, and nearly all said you need to take on repairs "just to be able to eat, and not lose money... you'll still never make any" (along those lines...)

[demonx]

I was told by one local luthier, who has been in the business longer than I've been alive that you cannot pick and choose what you build and that repairs are where the wage is. I replied that I do pick and choose, that I knock back repair work and without telling what our build numbers were, assuming we were both telling the truth, I had sold four times as many guitar builds as he had in that year. He couldn't believe it.

[P Bill]

As luthiers we have an advantage not many others enjoy. GAS, musos can always room for another guitar.

[Ormsby Guitars]

I was told by one local luthier, who has been in the business longer than I've been alive that you cannot pick and choose what you build and that repairs are where the wage is. I replied that I do pick and choose, that I knock back repair work and without telling what our build numbers were, assuming we were both telling the truth, I had sold four times as many guitar builds as he had in that year. He couldn't believe it.

Had that exact conversation numerous times, with numerous builders. Here and overseas.

[n~dl]

Thanks for this discussion, dudes. It's what I needed to hear as I'm sitting here planning to set up a shop (all the while getting ready to go off to my day job, which has me bored to blindness.) I've heard some of the same advise. Build what people want, D-28s and J45s, Martin style OMs etc. Keep busy with repairs. Sounds awful to me. One angle on the repairs which makes sense to me is you get to see a whole lotta guitars, see what you think works and what doesn't.

I think this forum, for whatever reason, over most of the others makes me want to keep going with all of this, thanks for that.

[KLW]

An interesting topic. I came to lutherie late in life so I doubt I will ever make a living at it but I do hope to make some income at it.. The sad truth about many of the jobs people day they would live to do for a living is that to make a living at them you need to spend as much if not more of your time running the business and marketing yourself as you doing whatever it is you love.. for example I am into photography as well and have been published in books and magazines but to really make a living you have to do all the marketing and the mundane business stuff... I never did that so it remained a hobby that came close to paying for itself..

Now looking back on my life and seeing that I am in a well paying but to me mundane job perhaps I would have been better served if I had done those mundane things.. Gotta love hindsight

One other thing to be concious of is those of use not doing this to make a full living at need to be careful not to under cut those who are trying to make their whole living at this..

Kerry

[Allen]

It's a very long and time consuming job to get well known enough that people will put down their hard earned cash for one of your instruments. And most people in this business whether part time / hobby or full time job struggle at the marketing and selling of their work.

It doesn't come easy to sell yourself when you have more interest in creating than marketing. And the sad truth is that there is an inordinate amount of time that needs to be spent on the latter. Anyone contemplating going into any type of production other than passing them along to family and friends for the cost of materials needs to come to grips with this.

[demonx]

The above post is spot on, I found myself, I use the word found rather than find as I'm having a break from building for a bit as I am a bit burned out from building and I'm also doing massive house renovations. As soon as the reno's are done its back to guitars, but as I was saying, it seems I found myself spending as much time answering emails etc as I did in the workshop. It's very time consuming. I'd guess that 95% of enquiries are tire kickers or people wanting things I simply won't do, like build a copy of, or some wanna be guitar designer looking for ghost builders etc

I should also make it clear I'm not a full time builder. Yes I was building six days a week and had a trainee working with me on weekends, but I still had a night time job to pay the bills. When the orders were plenty I was cashed up, if work at the factory got in low demand then the guitar building really helped out. At the moment I have no guitar income coming in with exception given to a few parts retail sales here and there and work at the factory is scarce, so I'm struggling, paying bills on credit card etc . It will all balance out soon though

[kiwigeo]

If it takes you 80 hrs (2 wks) to build the guitar then your hrly rate is $1225 / 80 = $15.31

Now as your hrly take home rate is less than the australian award wage then you are still IMO a hobby business, because you cannot live of what you are doing.

For me the above pretty well sums it up.

One problem I see is the public's perception of how much work and skill goes into making a guitar. I'm only a hobby builder but the people who visit my workshop and see what actually goes on during a build usually leave with their eyes opened.

[nnickusa]

I reckon you're right, Martin. Most people with whom I have conversations about building are gobsmacked that it takes me 80-100 hours to make one. I think I read somewhere that Martin has it down to 14 or 17, can't remember....

At any rate, once they start to think about what's involved, and the amount of wait time as well, they start to change thier position from "are you kidding?" to "Wow, I never actually thought about it....."

An educated consumer is our best asset. Particularly one that is willing to wait the process out, and then trumpet from the highest hill how happy they are.....

I've actually spoken to 4 or 5 people off the one guitar I have out there in the real world....

Still not enough marketing. The old idea of "build a better mouse trap and the world will beat a path to your door," no longer applies. There are TOO MANY OPTIONS in today's instant access and post anywhere world....

Like I said, you need to be as good at business in general as you are at what product/service you are providing....

[kiwigeo]

Last years Guitar Festival here in Adelaide had a series of "Meet the Builder" events. The builders would give a presentation and then field questions from the audience. Ashley Sanders (a member here attended). This side of the festival was low key but I'd like to see it expanded and a few more builders included. I'm not sure if the presentations were by invitation or the builders had to pay a fee.