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How much should a custom luthier make per hour?

#81
When I think about what an individual "should" earn, all logic sublimates. There's no moral rhyme or reason to what individuals make in a society, because supply, demand and what economic segment(s) of the population generate that demand dictate the end result. In a utopian scenario, where one makes what one's work is inherently worth, I suppose a highly skilled artisan making a niche product "should" earn enough to raise a family in moderate comfort; I'll arbitrarily peg that at 100K yr based on a 40hr work week, after expenses. However, the whole exercise is like debating who'd win a battle between Spyderman and Batman; it's interesting but unrealistic.

My opinion comes from my own experience. My work is essentially piece work. I am a radiologist and I get paid a set fee for each imaging study I interpret, regardless of how long it takes me. I could break it down into an hourly wage, but that'd be pointless. I don't get paid a nickel all my administrative work and I end up doing a large amount of stressful, non-billable time. Within the medical world, my overall earnings are unfair, as I earn much more than, for example, a pediatrician, who I feel "should" earn at least as much as I. Occasionally I feel my earnings are inflated when I compare them to a farmer, cop or teacher. Then I hear about an investment banker or some guy outsourcing manufacturing of clothes in China and selling them to Wallmart who is collecting Ferraris and washing down his French cheese with Sassicaia and my humility fades to moral outrage (sort of:p). We earn what we can. In the end, the market for btq basses is vanishingly small at 8K and tiny at 3K. A luthier should make what we all do....as much as he can manage.
 
#84
Look, we all know that the market dictates what luthiers can charge for a bass, more or less. To a certain extent, that's going to control what their ultimate profit is going to be. That, in combination with the time it took to build the bass, is the same thing as their hourly rate if you apply a little less-than-advanced mathematics.

As the OP and Supreme Commander of this thread, all I want to know is what you think is an appropriate number. Yeah, I know there are a bunch of econ majors out there looking for a place to strut their stuff. This ain't the place. Don't go all Keynesian on me, for crying out loud.
 
#85
Munjibunga said:
Look, we all know that the market dictates what luthiers can charge for a bass, more or less. To a certain extent, that's going to control what their ultimate profit is going to be. That, in combination with the time it took to build the bass, is the same thing as their hourly rate if you apply a little less-than-advanced mathematics.

As the OP and Supreme Commander of this thread, all I want to know is what you think is an appropriate number. Yeah, I know there are a bunch of econ majors out there looking for a place to strut their stuff. This ain't the place. Don't go all Keynesian on me, for crying out loud.
Click to expand...

Put that way, the question makes no sense. How much should a major league baseball player make, etc. It IS economics. Just because you are talented at doing something doesn't mean ANYTHING regarding 'how much should you get paid'.

I'll refrain from any more posts though, in the spirit of what you are looking for.
 
#88
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...

Like you said, arithmetic. You don't have to "bill" hourly to net the equivalent.
 
#89
MysticMichael said:
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
Click to expand...

As I think I mentioned before, if you outsource some parts of the build process you can make your own time spent on an instrument more valuable on an hourly breakdown.

Buying a finished, routed body and a fretted neck should cut down considerably from a 40-50 hour build.
 
#91
It depends on who it is, and how popular they are. If you charge $1,000.00 an hour and have no orders, you make nothing. If you charge $10.00 an hour and have more work than you can handle you've limited yourself to making that much.

I think the key is to find the number that the market will bear.

A good friend of mine makes acoustic guitars for about $5,000 a piece. It takes a ton of time so I don't know what he would do per hour, but he's always got a few in the works.
 
#92
nukes_da_bass said:
You know who must have made a lot of dough?

Ed Roman.

Ever see the prices he was asking for RickenFakers and EdRomanSteinbergers?

I'm just sayin...
Click to expand...

I really liked Ed. He was a funny guy and a brilliant builder and totally New Yawk. I remember walking through his shop in Las Vegas and looking at the 25-50K guitars that made PRS look like Chinese Epiphones. We had this conversation:
"Ed, musicians don't buy these guitars, do they?"
"No, they don't."
"Guys who played guitar in High School Rock Bands and now make 6 figures in Corporate Jobs, they buy these guitars, don't they?"
"Yeah, they do."
He was a one of a kind!
 
#93
I only read the first page and the last but let me put some real world numbers out there.

I sell active jazz basses at $2300, my cost is about $800-1000 when you factor in all wood, hardware, electronics, case, perishables, etc... It takes me about 50-60 hours to build one. That's not counting the dozens of hours i spend typing emails to customers before i get a deposit (sometimes 100 emails) At best i'm doing $25-30 an hour gross, thats before all other costs involved like electricity etc... And wasted time typing emails and working on designs.

In australia $20-25 an hour is pretty average money. If you want to charge $100 an hour think of Fodera type prices on a regular jazz bass.

And that is why lutherie will only ever be a part time weekend business for me, there's just no money in it, i'd have to pump out 70 of those in a year to make a decent salary but the stress level would be so much more.

I'm honestly awed by the boutique guys doing this full time, i don't know how they can survive without going crazy
 
#94
When I bought my CT this year and got to talk with him, he was saying he put out about 20-25 instruments a year. At an average of $5000 each lets say, we have $125000. He has two guys who work in his shop - Pete and Joe, and Kelvin does work for him on the side. Say Kelvin takes $10000/year, that leaves under $39000/year for each of the 3 guys in the shop - BEFORE shop rent, materials, etc.

How overpriced is your Carl Thompson now?

Edit: and for those counting.... $39000/year is about $18.50/hr.
 
#95
This is an interesting thread. It takes time to build any business. The Luthier I "contracted" to build my "dream bass" did not charge much - I assumed he was still building his buisness (I do not want to mention a name). I chose him because of the price and some of the basses he had built & I was on a tight budget. I sent him a link of a video of the bass body I wanted (just a vid I found on Youtube) and a picture of the head that I found on the net along with links to auctions for the hardware I wanted. When all was said and done I had a very good looking bass - close to what I had envisioned. I thought to myself he could not of made much money building my bass...most likely well below minimum wage if you base in on a 40hr work week, but, he seemed fine with the price he charged me at the time. Today it looks like he has been building a name for himself and builds for some signed artists now.
 
#96
KJung said:
: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.:)
Click to expand...

If they want to make sure their overhead is paid throughout the year, you can bet they definitely do care about hourly rates. They're open for business a certain number of hours, annually. All of the company's expenses are, or should be, based on this total of hours. The employees' burden is divided by the hours they work x wage + benefits and applied to the annual cost of doing business- at first, as an estimated cost, then as an actual cost after the business has been open for at least one year. If this method of cost recovery isn't at least monitored, it would be easy to charge far under the actual cost when pricing the product, whatever it may be. Taking an arbitrary number and calling it the price for the product is a good way for someone to lose their tookas.

Imagine someone whose shop can make 3 complete instruments/week, sold for $4000 each. That's $624K of gross revenue. If the shop costs $2K/month plus insurance, utilities & maintenance, their materials cost $1000/instrument and each of the four workers makes $20/hour for 40 hours per week + a week of vacation ($41,600/yr wages), it adds up pretty fast.

Rent-$24,000/yr
Utilities-$9600/yr
Accounting/financial services/bank fees
Machinery & tool costs + maintenance- $500/mo after startup, assume $30K of equipment cost- $6000/yr
Consumables- $3600/yr
Materials-$156,000/yr (see above)
Wages- $166,400/yr + owner's salary
Insurance- $350/month/person (5 total)-$21,000
FICA- employer's share- 7.75% of gross wages-$12896
Unemployment insurance- TBD by location
Worker's Comp- about $5.30/$100 of wages-$8870
Company's Liability insurance-about $11,000/yr
Vehicle expenses & insurance-$250/mo + $100/mo ($4200/yr)

About $423,500 in expenses, just off the top of my head, without paying the owner. Divide these costs by the number of hours open for business annually-
40 hours/week, 52 weeks/year = $203.64/hour without paying the owner, just to cover the cost of doing business + anything I estimated lower than reality.
 
#97
Phil Mailloux said:
I only read the first page and the last but let me put some real world numbers out there.

I sell active jazz basses at $2300, my cost is about $800-1000 when you factor in all wood, hardware, electronics, case, perishables, etc... It takes me about 50-60 hours to build one. That's not counting the dozens of hours i spend typing emails to customers before i get a deposit (sometimes 100 emails) At best i'm doing $25-30 an hour gross, thats before all other costs involved like electricity etc... And wasted time typing emails and working on designs.

In australia $20-25 an hour is pretty average money. If you want to charge $100 an hour think of Fodera type prices on a regular jazz bass.

And that is why lutherie will only ever be a part time weekend business for me, there's just no money in it, i'd have to pump out 70 of those in a year to make a decent salary but the stress level would be so much more.

I'm honestly awed by the boutique guys doing this full time, i don't know how they can survive without going crazy
Click to expand...

Since you're in that part of the world and you work wood, have you seen these?

Invalid Link Removed
 
#99
Munjibunga said:
See? That's part of the problem with many small business owners, some luthiers included. If you don't have a handle on your labor costs (including your own) you don't have a handle on your business. How can you figure out what the correct price is for your instrument if you don't know how much labor you have in it?
Click to expand...
Market price. Demand and supply.
And usually, an artisan has applied their craft as an apprentice at an existing business. If they know what existing custom-made goods cost, they know the "ballpark" figure they can charge for their goods.
 

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