Starting part time luthier business

Discussion in 'Luthier's Corner' started by JAKeverline, Jun 29, 2017.


  1. JAKeverline

    JAKeverline

    Jan 16, 2015
    Austin Texas
    Since I'm almost finished with my second build, which I will be putting up for sale soon, I have some questions:

    1. How do I protect myself legally? (ie, I sell a bass, then the customer comes back some time later after leaving their bass in a hot car all day, wanting their money back and threatening to sue.)

    2. I want a limited warranty on my instruments with a lifetime guarantee, covering things such as previously unseen flaws in workmanship, but not covering damage due to carelessness and rough handling. How do I go about that?

    3. Any financial tips would be greatly appreciated. I plan on building 3-4 instruments per year, in my garage, on my own time while still working a 40 hour/week regular job. I don't expect to make much more than a little extra pocket money (maybe 3-5k per year). How do you other part time luthiers out there keep costs down and handle taxes?

    While it will be nice and quite helpful for me to make a little extra money on the side, I feel the most rewarding part of being a luthier will be seeing other musicians playing my instruments; watching them take something that I built from raw lumber and using it to create awesome music!
     
    Leiria and William Shafer like this.
  2. Bruce Johnson

    Bruce Johnson Commercial User

    Feb 4, 2011
    Fillmore, CA
    Professional Luthier
    I'm really busy this week, and don't have much time to write, but here's a quick summary on the warranty issue:

    As a small part-time custom builder, I recommend that you do not offer any written warranty. That's your best protection against getting sued by a customer. If there's nothing in writing, there's nothing solid to sue about. If the customer is really local, like within your county, they could take you to Small Claims Court. But again, if there's no written contract, they aren't likely to win a judgement against you.

    But in general, lawsuits by retail customers against Luthiers over a single instrument are very rare. I don't honestly know of any cases among the Luthiers that I know. It's economics; the cost of filing a lawsuit far exceeds the value of the instrument.

    Instead, make a one-on-one verbal agreement with the customer. If there's a problem with the instrument, bring it back to you and you will fix it, as long as the complaint is reasonable in your judgement. And, if they just don't like the instrument, within some reasonable amount of time, you'll buy it back from them or help line up another customer to buy it from them. But that's the end, and as far as you'll go. When they buy your instrument, you are not agreeing to continuously repair, modify, customize, rebuild instruments for them for one fixed price. That would be stupid. Make the verbal agreement, and honor it....as long as the customer is being reasonable.

    If a customer insists on a written warranty to close the deal, let them walk away. Or triple the price.
     
  3. JAKeverline

    JAKeverline

    Jan 16, 2015
    Austin Texas
    Wow, thanks for the advice Bruce! The business side of being a luthier is uncharted territory for me, so it's nice to hear from a professional.
     
    William Shafer likes this.
  4. Rodent

    Rodent A Killer Pickup Line™ Commercial User

    Dec 20, 2004
    Upper Left Corner (Seattle)
    Player-Builder-Founder: Honey Badger Pickups & Regenerate Guitar Works
    profit? as a luthier? this is Friday humor, right?

    my advice: treat this as a professional business - obtain/maintain business license, financial reporting to local/state/federal revenue departments, maintain flawless bookkeeping that covers every penny in/out, and keep track of all your hours worked for L&I. with flawless books, you'll immediately if you're breaking even or better AND you'll see how many hours you spend to make $250 on a bass build. having this fiscal vision will allow you to know how much to charge over what you spent on materials, utilities, and amortized cost of tools/supplies. this right here will cause you to resist the many requests for free basses in exchange for 'exposure' (hint #1: unless it's Victor Wooten, there's not enough exposure to warrant a free bass. hint #2: you can't afford the marketing to see any ROI for having a high profile artist like Victor on your free bass list)

    by operating as a real business, you'll hopefully make smart business decisions and remain solvent for more than 2-3 years

    all the best to you on your new venture!

    p.s. if it was me, I'd wait until you had 20-30 basses under your belt before going 'pro' so you have a good understanding of what can go wrong, how to keep costs down, and how to fix your mistakes
     
    JAKeverline, GMC, Ukiah Bass and 5 others like this.
  5. William Shafer

    William Shafer

    Apr 25, 2017
    Denver
    I agree with rodent that this type of work (like most arts) is something you do as a labor of love especially in the beginning. It just happens to be that you might get a little of the money you invested back, unlike say, being a gamer.
     
    JAKeverline likes this.
  6. William Shafer

    William Shafer

    Apr 25, 2017
    Denver
    Thank you Bruce! I've been wondering this myself. I'm in a similar position to JAKeverline. Before pursuing luthierie I was/am making wooden flutes. Thankfully they are an order or magnitude less expensive then basses, but I found myself i the same situation with whether I should guarantee them or not. Verbal agreements or no agreement sounds like a sound policy for hand-made goods.
     
    JAKeverline likes this.
  7. I looked into this a bit a year or so ago. I decided that I will keep it a hobby where I try to get others to pay for me to keep making basses, not make money. I am about to send out the most expensive bass I've sold and it makes me nervous. I guess that's good. I'm making enough money on this instrument to buy more sandpaper. I'll continue to build the instruments I want to and see if anyone wants what I build in between commissions.

    I had a real revelation when I bought a bass from Keisel/Carvin to get playing after my fire - for $1800 you can get an amazing bass completely customized and perfectly executed. It plays and sounds amazing. The parts to put this bass together would cost me pretty close to a grand, so there's not a lot of room in there when you consider how long it would take me to put this together with my meager tools. Of course Carvin uses CNC to do a lot of their work, but you're competing against that, to some degree.

    I am always interested to see these threads though, it's great to hear the stories from people who have lived it.
     
    JAKeverline, Duder and William Shafer like this.
  8. William Shafer

    William Shafer

    Apr 25, 2017
    Denver
    Jisch, I pretty much came to a similar conclusion myself. I'll be happy once my hobby breaks even. On the other hand I'm fortunate to have a fantastic school in Denver that will train you and even give you an Associates degree in Advanced Woodworking. I've convinced myself I'm gonna go and get a degree as a cabinet maker and get training on how to use a CNC router. Long term plan would be to able to produce guitars like Carvin or Crimson maybe 10 years from now. Even if I never become a commercial luthier I love wood working so much I'd be happy with cabinets.
     
  9. Bodeanly

    Bodeanly

    Mar 20, 2015
    Chicago
    Totally my opinion, but I would start by never referring to it as a part time business. I am more inclined to give my money to someone who appears to live inside of their toolbox. I don't know how I ended up in the luthier's section. Sorry, guys!

    But while I'm here, as far as taxes go, I have a full time job and a design "business" that I've claimed as a "hobby" for the past ten years. I have contracts with several entertainment agencies and seldom seek work outside of those (unless it's summer; I'm a teacher and get bored). It generates a bit more than what you're calling pocket change and I have never been a blippity bleep on the IRS's radar (as far as I know).
     
    lfmn16 likes this.
  10. Not that this is binary, but you can either go down the "model" or "custom" path. On the model path you develop standard templates and processes to make instruments as quickly and efficiently as possible. On the custom path you make individual instruments based on what you (or your customer) wants.

    The competition is different for both those strategies.

    Cranking out the same bass over and over is not at all interesting to me. I prefer to challenge myself with design and build process for each instrument. Once I'm in the 'not interesting' area it moves from hobby and fun to "job". I already have a job that pays and is very stressful, I don't need another one.

    That said I love the process of working with a customer on what they want in a bass and making it a reality. So far, besides the woodworking, that's been the best part of this thing.
     
    bholder likes this.
  11. William Shafer

    William Shafer

    Apr 25, 2017
    Denver
    I'm torn on the choice of "model" or "custom", I've been wondering if I can split the middle. Maybe settle on 3-5 body shapes, 3-5 neck types, and then offer semi-custom options like fretted/fretless, wood choice, finish choice, hardware choice, etc. Look up Crimson Guitars on YouTube if you haven't already. They do fully custom work, but also got to the point where they have a few model types. A business like there's is what I'm shooting for. Eventually.
     
    JAKeverline likes this.
  12. bholder

    bholder Affable Sociopath Supporting Member

    Sep 2, 2001
    Vestal, NY
    Received a gift from Sire* (see sig)
    I wanna do what @JIO and @Dadagoboi and several others here do - follow the muse and create something new (and sometimes old, too)! :thumbsup: I guess that's the "custom" path, for the most part, though building various similar models of the custom design on customer demand maybe too. So a mix really I guess, but weighted towards custom designs. Wishful thinking at this point, you guys are way ahead of me. Gotta get my shop building built first! ;)
     
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  13. bholder

    bholder Affable Sociopath Supporting Member

    Sep 2, 2001
    Vestal, NY
    Received a gift from Sire* (see sig)
    My first from scratch project is going to be to actually build a bass designed from the sketch in my current avatar pic, here's the big version. Maybe someday. :)
    kewl5.JPG
     
    JIO likes this.
  14. BassUrges

    BassUrges

    Mar 14, 2016
    Denver
    Look up "implied warranty of merchantability" and "implied warranty of fitness for a particular purpose." You will most likely be making them. Typically disclaimers must be in writing, which is why consumer goods have those warranty cards in the box.

    I agree with the advice to be thoroughly businesslike, have an LLC or s-corp, maintain separate accounts, charge and pay sales taxes, and so on. It is highly unlikely anyone would sue over defects if you offered a refund, but there are some nutjobs out there in the music world.
     
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  15. Coolhandjjl

    Coolhandjjl Supporting Member

    Oct 13, 2010
    Appleton
    In my state, all I need is a resellers permit which is basically a sales tax license that does two things: It means I have to collect and send in state sales tax on every sale. But it also allows me to purchase raw materials sales tax free. I think it was around $25 with a $10 annual renewal.

    No separate bank account is required, but I strongly recommend it. Tricky thing is that if a bank knows it is for a business, many have $1000 minimum balance requirements. Not all, but many, so shop around. If you can't find one, set up another personal account in your name to avoid the high business balance requirement.

    Many states allow you to set up an LLC, which is a business entity, on-line for maybe $50 with an annual renewal of $25. Some people think that the 'LLC' after your business name adds credibility, especially if you want a customer to give you a large deposit for a build. In your case, the LLC will be what is known as a pass-through or disregarded entity as you are reporting income and expenses on your personal 1040.

    Now the fun part. Any income and expenses (whether or not you opened up an LLC ) get reported on your normal 1040 tax return on a Schedule C. You can do it yourself or use a pro. But along with your expenses, you may be able to deduct a portion of your rent/utilities/etc., if you are doing it at home. See a pro for this

    Once you become official, some municipalities charge what they call a 'Personal Property Tax' which is a tax on the tools you use in your business. Most people just open up shop and hope for the best and deal with that once the taxing authority finds you. They may or may not find you so don't sweat it. But if they do, you must comply or they will apply a domage which is usually more than if you followed their tax tables.

    Once you are set up, look into what are known as 'best practices' for your business. Basically, you want to make sure you get paid while minimizing any possibility of having to 'take it on the chin'.

    Don't be freaked about about all this stuff. It's really not that hard. My wife spins wool, knits, and sells the knit goods and we set up an LLC with a separate bank account to handle all that. It's pretty simple once you get going.

    Now, after you deal with all that, you still have to be a great luthier!!
     
    Last edited: Jun 30, 2017
    JAKeverline likes this.
  16. bholder

    bholder Affable Sociopath Supporting Member

    Sep 2, 2001
    Vestal, NY
    Received a gift from Sire* (see sig)
    Great info and advice. I think we've all seen what happens when new custom builders ignore good business practices and end up in trouble - we see the worst cases in the sticky threads at the top of most of these boards - it's a slippery slope from optimistic wishful thinking to developing a reputation as a thief who never delivered the paid-for product.
     
    JAKeverline likes this.
  17. William Shafer

    William Shafer

    Apr 25, 2017
    Denver
    The last part of your post is a good argument for the "model" approach as opposed to the "custom" route. At least with pre-made basses so long as you accurately represent what it is your customer is buying you can't be accused of not delivering/finishing the instrument.
     
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  18. Coolhandjjl

    Coolhandjjl Supporting Member

    Oct 13, 2010
    Appleton
    One thing I just thought of is what happens if you have a serious injury with a power tool? If your homeowners insurance finds out you are making guitars for hire, they may deny the claim. I'm not suggesting a full blown Incorporation with Workman's Comp, but a general business liability insurance policy may be worthwhile. Be up front with your homeowners policy about what you are doing and see what they suggest. For a hobby business, they may tell you it's fine while other insurance companies may not allow it. You want insurance to be there to pay out if there is a claim.

    Also, make sure if a customer drops off a bass for service, you give them a service ticket with a liability waiver to protect you if your home gets robbed, burns down, etc.
     
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  19. Thumpin6string

    Thumpin6string Supporting Member

    Apr 25, 2013
    Shoals Indiana
    I actually considered building and selling custom basses after building mine (see avatar). I had about $1K in parts and materials plus my labor. It is equivalent to any $3-5K bass out there. The problem I found is that if you don't have a name or reputation, no one will pay what it is worth. I have found that slapping pre-made parts together is less labor, is still good quality and you can make a small profit off the finished bass. So I call it a hobby that generates a little extra $$.
     
  20. William Shafer

    William Shafer

    Apr 25, 2017
    Denver
    Thumpin6string - You're right. If I was going to seriously pursue a full time+ career with lutherie you'd pretty much either become a tech and just assemble pre-made parts, or you'd need to get a full CNC setup to churn out the bodies and necks at a rate that would be profitable. In some cases even make all you own pickups and mill your own bridges.
     
    JAKeverline likes this.
  21. Primary

    Primary TB Assistant

    Here are some related products that TB members are talking about. Clicking on a product will take you to TB’s partner, Primary, where you can find links to TB discussions about these products.

     
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