How much extra are you paying for the Fender name on the headstock of a new instrument?

Okay, so this won’t be controversial at all, but hear me out.

There’s a concept in marketing known as “brand equity” and it’s not a complicated concept. Brand equity is simply the amount extra you can command in the marketplace over an identical good, simply by virtue of the branding.

One example could be the difference between an Epiphone Les Paul and a Gibson Les Paul, except that Gibson intentionally changes things like headstock angles to make the Epiphones not as good.

In some ways, you could just look at a Fender and then look at a clone, and use the price difference…but there isn’t always a great comparison in terms of features. I mean, it’s not totally straight forward even comparing a USA made Fender to a Mexican made one, by virtue of the different hardware.

But clearly, people are either paying more for the Fender name OR they are simply defaulting to the Fender name in the absence of doing research into other brands because of the equity in that brand name.

Now, there are some offsetting factors at play that do deserve mentioning - while you are paying more for the Fender name, you’re getting some discounts due to:

- Economies of scale: Fender is massive, and can thus source parts/raw materials for less than smaller competitors can.
- Cost of capital: Fender can obtain capital cheaper than smaller companies do, and your cost of capital definitely factors into your cost structure.
- Diversification: While Fender’s fortunes rise and fall with the musical instrument industry, it doesn’t just make basses, or guitars, or whatever. Along with its cost of capital, it has the ability to further diversify better than others.
- Diversification, part 2: USA. Mexico. Japan. Indonesia. China. Fender can build anywhere it needs to, and even develop product offerings to utilize excess capacity (think low-featured USA models in times where USA production would otherwise be running at less than full capacity).
- Owning the vertical: you can buy a Fender instrument, modded with genuine Fender parts, strung with Fender strings, plug it in to a Fender branded cable, hang it around your neck with a Fender strap, and then play away with a Fender branded pick through a Fender branded amp.
- Insert additional advantages that I’m missing.


As I think about all of these minuses, even if you have a Fender brand instrument retailing for the exact same as a perfect clone made by some random company, you’re definitely paying a pretty good amount in brand equity due to the differences in cost structure. In fact, Fender could probably still command a brand premium and charge less.

I’ll be the first to admit that the easiest thing to do is to go and buy a Fender. I’ve done so in the past. Some I’ve liked, and some I’ve been lukewarm on. Haven’t had any that were garbage…

…but then again, I didn’t buy any CBS-era ones.

And that’s sort of what prompted this. I was watching a video about Schecter guitars, and the person made the comment about Schecter coming about in that age where Fenders weren’t very good.

Nowadays, Fender makes instruments that meet the expected standards thanks to modern technology and proper QC. They can also leverage their massive size to drive down the cost of making that guitar for you. The result is that you can buy a quality instrument now for far less money than you could 50 years ago in real dollar terms.

And yes, you’re still paying “extra” for the name on the headstock, even if you walk away with a Fender for less money than a competing product that is otherwise identical.

Still, I would LOVE to know exactly how much extra Fender’s able to command. I know Gibson can command a lot because every time I play my Les Paul and have to re-tune the G string, I’m reminded of how it’s the most expensive guitar I own with the absolute worst tuning stability.

 

I have a Schecter guitar on order from Sweetwater…

…and unfortunately they have it in stock at my local GC I just discovered.

So when I was there today, I just played all the other Schecters. Very nice instruments for sure.

Closer to “Fender”, I own two G&Ls. In a way, I view G&L to be a branch of the Leo Fender tree that is no less a descendant of what he originally did than what modern Fender is…and in many ways, G&L is more Fender than Fender.

 

On road trips, I will always hit fast food chains.

I MIGHT be missing out on some good local food…but I can’t even consistently find good local food near my house.

 

It’s reverse arbitrage.

Normally it’s supposed to work the other way.