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How much should a custom luthier make per hour?

#61
landau roof said:
"Completely misunderstood" would have been far more efficient.


If you base it on such terms, their time can easily appear to be valued much less some hourly employees. How are you supposed to log the hours when the various processes are so varied and often sporadic? Does every minute slightly related to work count towards hours worked? Even a salaried employee who has a eureka moment in a dream, and then gets to organizing his thoughts in the middle of the night can't put that on his time card.

Nevertheless, you insist on condensing their compensation to the most basic of units, which is largely inapplicable because they are not paid in those units.
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I still maintain that, after all is said and done, they're wasting their time building basses if they end up with six bucks an hour for their efforts. There has to be some level of efficiency. I was salaried for most of my career, but I still filled out a time sheet, even when I was the boss.

As for the variable and sporadic tasks, a simple system of activity codes could be used for things like laminating, rough cutting, shaping, neck shaping, fretting, etc. I would want to know how much time was being spent on each aspect so I could figure out ways to make each process more efficient.
 
#62
KJung said:
Interesting topic. I agree with a few posts that suggest that an 'hourly wage' makes little sense for the primary business owner. One of the things I learned prior to starting my consulting firm almost 20 years ago was to stay away from 'hourly billing'. Yes, lawyers get away with it, but to me, it has nothing to do with the 'worth of the product'.

Put another way, I charge my clients for the 'worth of the product', taking into account supply and demand and my 'brand worth/reputation', etc. For some of my projects, I make well over $1,000 an hour (since I have some procedures down to an art, and am very efficient). I'm sure there are some projects that I make less that $100 an hour (luckily rare!). NO client would pay $1,000 an hour for my services if I billed that way, but many would pay $5,000 for a very worthwhile deliverable (even if it only takes me a couple of hours to do it), and it is none of their business or concern how long it takes me to do that.

So, it makes little sense to set an hourly wage for something like bass building (again for the primary owner/luthier). The price you can get for a bass is set by competition, and any sort of brand equity you have built with you name.

Like any business, if you are a luthier who works like crazy, and at the end of the year, can't make a decent living by subtracting his/her costs from the (price x number of instruments sold), then it is time to go out of business (which I assume many do).

Don't know if that even adds anything to the discussion, but it is one I often have with people new to starting up a small business. Unfortunately, most of these people have no business training and shockingly don't really understand the accounting/marketing concepts necessary to run a business efficiently and make a decent profit (or know before-hand that there is no chance to make a decent profit).
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See what you did there? You estimated your hourly equivalent even though you work on a project basis. I'm not saying that a luthier works for an hourly wage. I'm asking what the number should be when the net profit is divided by the number of hours spent building the bass. It's not complicated in any way.

It's like when someone in my business takes a project on a "lump sum" basis. There's a potential to make wads of money if you're efficient, or take it in the shorts if you're not. At the end of the project, you want to know which it was, so you compare the postings against the fee. Then you know.
 
#63
Munjibunga said:
See what you did there? You estimated your hourly equivalent even though you work on a project basis. I'm not saying that a luthier works for an hourly wage. I'm asking what the number should be when the net profit is divided by the number of hours spent building the bass. It's not complicated in any way.

It's like when someone in my business takes a project on a "lump sum" basis. There's a potential to make wads of money if you're efficient, or take it in the shorts if you're not. At the end of the project, you want to know which it was, so you compare the postings against the fee. Then you know.
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+1

My company does as much lump sum work as we can, but we are always concerned with our direct labor multiplier. It is a solid, basic metric in project profitability.
 
#66
KJung said:
Interesting topic. I agree with a few posts that suggest that an 'hourly wage' makes little sense for the primary business owner. One of the things I learned prior to starting my consulting firm almost 20 years ago was to stay away from 'hourly billing'. Yes, lawyers get away with it, but to me, it has nothing to do with the 'worth of the product'.

Put another way, I charge my clients for the 'worth of the product', taking into account supply and demand and my 'brand worth/reputation', etc. For some of my projects, I make well over $1,000 an hour (since I have some procedures down to an art, and am very efficient). I'm sure there are some projects that I make less that $100 an hour (luckily rare!). NO client would pay $1,000 an hour for my services if I billed that way, but many would pay $5,000 for a very worthwhile deliverable (even if it only takes me a couple of hours to do it), and it is none of their business or concern how long it takes me to do that.

So, it makes little sense to set an hourly wage for something like bass building (again for the primary owner/luthier). The price you can get for a bass is set by competition, and any sort of brand equity you have built with you name.

Like any business, if you are a luthier who works like crazy, and at the end of the year, can't make a decent living by subtracting his/her costs from the (price x number of instruments sold), then it is time to go out of business (which I assume many do).

Don't know if that even adds anything to the discussion, but it is one I often have with people new to starting up a small business. Unfortunately, most of these people have no business training and shockingly don't really understand the accounting/marketing concepts necessary to run a business efficiently and make a decent profit (or know before-hand that there is no chance to make a decent profit).
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well over a $1,000/hr!.....you are a genius!
I started a company once....thought I had everything figured out including my estimated hourly charge....it was a complete disaster...so many things I didn't think about...there were more than a few days that I was searching around town for the highest bridge.
I tip my hat to anyone that can start a business and be successful at it.
 
#67
KJung said:
For some of my projects, I make well over $1,000 an hour (since I have some procedures down to an art, and am very efficient). I'm sure there are some projects that I make less that $100 an hour (luckily rare!).
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Were I to guess, though, I would say that your $1,000/hour jobs are more "cookie-cutter," and your $100/hour jobs are more personally rewarding, and closer to the reason you started doing what you do in the first place. Often, the highly profitable stuff is used to subsidize the stuff you "love to do," especially in small businesses.

This is what drives luthiers' needs for product lines such as Skyline, Combustion, Legend, Performer, etc. These lines subsidize their main product, effectively boosting their average dollar per hour rate.
 
#69
Munjibunga said:
I'm going to say $100 an hour. I'm pretty sure thare aren't too many who make that but, for crying out loud, I make almost that standing in front of a classroom teaching people about orogenic belts. It seems to me that an artisan who produces a musical instrument of the highest quality should make at least that much.
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You make a good case, but I'll bet that very few - if any - expert luthiers earn even close to that much. Why? The market simply won't bear it. In addition to the customer base being simply not educated enough to be able to appreciate the level of expertise it takes to fashion a top-quality custom instrument, it is a labor-intensive process that takes many hours that are hard to justify to the customer.

I'd bet that only a very elite few luthiers, who make only the best of the best instruments - and deal only with affluent professional musicians, who can both fully appreciate the craftsmanship and can afford the premium price really earn what they're fully worth... :hmm:

MM
 
#73
Munjibunga said:
OK, let's look at another angle of the price of bass guitars. After all the bills have been paid - rent, insurance, materials, etc., how much should be left for the luthier's labor, per hour? Consider small high-end shops of maybe one to five people. For larger shops of 5 to 20 people, consider only the master luthiers - the ones whose names are on the bass. These are shops with the reputation of building basses of the very highest quality. You can consider "completely hand-made" instruments or highest-quality "parts basses" (luthiers, please don't be offended - I know there's more to it than that - I own a slew of your instruments).

I'm going to say $100 an hour. I'm pretty sure thare aren't too many who make that but, for crying out loud, I make almost that standing in front of a classroom teaching people about orogenic belts. It seems to me that an artisan who produces a musical instrument of the highest quality should make at least that much.
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Simple... he makes what the market will bear..
 
#75
shrimpflea said:
well over a $1,000/hr!.....you are a genius!
I started a company once....thought I had everything figured out including my estimated hourly charge....it was a complete disaster...so many things I didn't think about...there were more than a few days that I was searching around town for the highest bridge.
I tip my hat to anyone that can start a business and be successful at it.
Click to expand...

:p Well, I'm not getting that 40 hours a week! I'm actually not getting that highest 'profit per time' rate 40 hours a year, for the most part:p. Just pointing out that hourly rates can really screw you. Much better to view your work as 'what is the deliverable worth?', and let the 'hourly rate' fall where it may.

Again, more pointing out that a luthier like Ken Smith or Vinnie Fodera or Jimmy Coppolo, etc. most likely does not think about 'hourly rates.

As another poster put it a few posts above, you try to find a business you love and do the best you can, and charge an honest price (meaning providing good quality within the range of what price the market sets for your services or product), and hope there are enough customers interested so that you have some dollars in the bank at the end of the year.:)
 
#76
wvbass said:
Were I to guess, though, I would say that your $1,000/hour jobs are more "cookie-cutter," and your $100/hour jobs are more personally rewarding, and closer to the reason you started doing what you do in the first place. Often, the highly profitable stuff is used to subsidize the stuff you "love to do," especially in small businesses.

This is what drives luthiers' needs for product lines such as Skyline, Combustion, Legend, Performer, etc. These lines subsidize their main product, effectively boosting their average dollar per hour rate.
Click to expand...

+1 for the most part. Again, my main point is that, for most professionals, an hourly rate will actually minimize your income, and really box you in, since the first thing a customer will do is multiply that hourly rate by the amount of time he/she thinks the job will take, and if it doesn't square, you are in trouble.

Saying you want $200 for 10 hours of work is a lot harder for many customers to swallow than saying, the job will cost $2,000, no surprises, and I'll have the work done by the end of the week.:)

Again, sorry for the somewhat OT. I guess I would suggest for the Munj to rephrase the question of 'how much profit is reasonable for a hand made instrument. However, of course, the answer to that is 'as much as the customer is willing to pay, given the product and reputation/brand image of the company, and the availability of the product versus demand.
 
#77
Munjibunga said:
See what you did there? You estimated your hourly equivalent even though you work on a project basis. I'm not saying that a luthier works for an hourly wage. I'm asking what the number should be when the net profit is divided by the number of hours spent building the bass. It's not complicated in any way.

It's like when someone in my business takes a project on a "lump sum" basis. There's a potential to make wads of money if you're efficient, or take it in the shorts if you're not. At the end of the project, you want to know which it was, so you compare the postings against the fee. Then you know.
Click to expand...

+1 I guess you can look at it that way. Even though I posted an 'hourly rate' equivalent, my point was I really don't think of things that way (since my 'hourly rate equivalent' varies by project). It is all about profit at the end of the year. I agree though, if you are burning the midnight oil and working weekends, and not making a BUNCH of money, then you probably need to rethink your business. Although, I know some people who work their a**ess off and make very little money because they love what they do.
 
#78
KJung said:
:Much better to view your work as 'what is the deliverable worth?', and let the 'hourly rate' fall where it may.
Click to expand...

I imagine you can have a feel for whether your labor involved in creating a deliverable is adequately compensated, but what if you found out that the hours you spent creating the deliverable divided into your net profit was $9 an hour? I doubt you'd let that "fall where it may" again. While I'm sure you're comfortable in your assumptions as to whether you're getting well-compensated for your work, there are many small businessmen who not only don't know, they don't have a clue. Many of them find out only after realizing that they have insurmountable debt with no possibilty of ever generating the revenue to pay it off.

I know where you're coming from, though. There were quite a number of jobs that I could tell you the price after 10 minutes on the site, and still be sure of making a profit. Presumably you've been doing what you do long enough to do the same thing.

This thread isn't about luthiers working for an hourly wage. It's about what the return is on their labor, quantified by dividing the net profit by the hours spent. It's an equivalent. It doesn't mean they take a 40-hour paycheck home at the end of each week. (Ken, I know you know this - this is for the others who can't get their arms around it).

Depending on whose statistics you believe, 25 to 50 percent of all new businesses fail in the first year. Some say half are gone in five years. Without a good business plan, adequate capitalization, and rigorous accounting, you can pretty much assume that your business will fail.
 

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