hourly rate wrestling....

[JMAC]

So, I'm trying to make the most out of having a booth at a vintage guitar show in a couple of weeks. You can see my work at www.macdonald-marquetry.com (I'm not trying to sell anybody here) To try and maximize my efforts, I hired a life coach to help me prepare and organize effectively. So in the phone session, she picks up on the fact that I am tight with a buck, and have a low hourly rate. She says "Quick,what's the first number that comes to your mind for a good hourly rate". I quickly replied 62. She says "That's your new hourly rate, never charge less than that again!" Hmmmm.
That is roughly double what I have been charging. But is slightly less than the franchise Auto place would charge to put snow tires on my truck.

She said that over and over she has seen higher rates produce more clients and more work. In Central Maine it's a hard concept to grasp. But I don't have to sell my work in Central Maine. So who am I to say that I can't make $62.00 an hour work unless I try it?

On the plus side, I am very skilled at what I do, and work very efficiently. For $62.00 a customer gets me doing the work as opposed to a low wage flunkie. Which leads me to ask this- If a boatyard has a yard fee of $75.00 an hour, is that rate applied when their trained mechanic works on your deisel and also for the guy who slaps on bottom paint? Same rate for way different skills?

So, all you folks that don't live in Central Maine, is $62.00 per hour for high quality woodworking that is very creative seem outrageous? Reasonable? Too cheap? Thanks for your opinion, I value them all.

[Norman Bernstein]

It's a double-edged sword.

I've seen your website, and your work, and you're VERY highly skilled... and even $62/hr seems somewhat cheap.

On the other hand, at $62/hr, a custom guitar is going to be remarkably expensive.... and the market for extremely expensive custom guitars is necessarily going to be limited.

Still, there are guys who succeed handsomely at this sort of thing.... Jim Olsen, for example, who supplies guitars to James Taylor and a number of other professional performers. My understanding is that he's fully capacity limited, and the prices are sky high.

There are undoubtedly many approaches that could be taken to get into the market. Maybe a 'semi-custom' approach? Which part of the guitar is hardest and most time-consuming to build? The neck? If so, maybe a commercial neck on a custom body could reduce the price to the point where you can find a 'sweet spot' in the market for yourself.... I honestly don't know, just thinking out loud here.

[Bruce Hooke]

A few random thoughts:

The boatyard I worked at briefly almost 20 years ago charged the same rate for all or most types of work. However, I know of at least one customer who was rather ticked off by this, and not just when it was a matter of someone putting on bottom paint and someone else putting on varnish. There was also the issue of paying top rates for one of the "apprentice level" people to put on varnish while someone else paid the same rate to have the best varnisher do a much nicer job on their boat.

I've heard of more than one artist/craftsperson who increased their prices and found that this increased their sales, so this concept is certainly not out of the question, on the other hand it is certainly possible to price yourself out of the market. If people see your work as unique art they are less likely to comparison shop.

I assume you have done the math to figure out your overhead (including overhead for time spent doing things like office work that you have to do but that does not go directly into producing a product). This overhead figure obviously sets you baseline.

Do you know what your competition charges? Obviously you most likely will not know what hourly rate they figure on, but you can comparison price similar end products.

$31/hour does sound quite low to me for the type of work you do. One problem I see people falling into is trying to compare the hourly rate they might be paid by an employer with the hourly rate they charge a customer. First off, such a comparison ignores all the benefits an employer provides you on top of your hourly rate that need to come out of your hourly rate if you are self-employed. Second, it ignores overhead.

If you have established customers it obviously gets a little tricky if your prices suddenly double. I am not sure how best to handle this issue. If you do not have an estabilished customer base who knows your work and your prices then it gets a bit easier.

[Mrleft8]

Seems reasonable considering your skill.
I have the same problem. I just can't understand how I can charge "so much" for something that I already know how to do... So ya gotta look at it sideways. You're not so much charging for your work, as you are charging for all the time it took you to get to where you are now, that you didn't get paid for in the past.

[George Roberts]

$62/hr.

Are you twice as fast as the guy doing equivalent work at $31/hr?

Setting a price is difficult.

[Figment]

One caveat I might offer is that people who are willing to pay a top-notch price expect (rightfully) to get what they pay for.
If you're unwilling to do whatever it takes to make such customers happy, and do it with a smile, then you're better off pricing yourself for lower expectations.

Otherwise I agree with comments above. You're worth whatever the market is willing to pay, not a penny more or less. Determination of the market's willingness is pure trial and error, in my experience.

[P.I. Stazzer-Newt]

Excuse me, but I've only seen a few images of your stuff on the web.

Are you mostly a guitar builder who does some fabulous decorative stuff.

Or are you an artist whose work is sometimes done on a guitar - and sometimes on other furniture.

[Rick Starr]

Haven't we had this very discussion before?

Never EVER tell anyone your hourly rate. Quote a job based on a rate, sure, but never tell a customer you have an hourly rate. To do so instantly equates you, in the eyes of your customer, to the guy who changes snow tires above.

To echo lefty, I certainly wouldn't pay someone what I charge to do what I do. But then to me it's easy work, fun and rewarding, and most importantly very few people can do it and are willing to make a business of it.

Most average businesses charge considerably more than your rate for labor and pay their employees, including benefits, less than half. Your work and rate, considering your skill, represents far greater value for the buck because it all goes to you, after overhead.

Enough handwringing. Quit thinking of yourself as a perspective market, identify your customers and charge them what you can.

[JMAC]

Most of my work over the last 10 years has been making high end cabinetry for the new and oppulent homes going up on the coast. This was done through contractors that I have good relationships with so there was not a lot of selling necessary to get a full year's worth of work. Other projects came from word of mouth and collaborations with other woodworkers. This is about hand-wringing and about trust and about stepping outside of a pattern. I'm at the point now where I can have the wherewithal to make positive changes. I can't beat myself up for not reaching this point sooner. And this forum, no matter what anybody tells you, can offer good sound advice, which I sort through and hang on to the good stuff. To me this is a useful conversation and I appreciate all opinions and advice.

[Norman Bernstein]

Are you twice as fast as the guy doing equivalent work at $31/hr?

At the high end of the market, speed isn't relevant, it's quality.

[George Roberts]

"equivalent work" makes speed important.

---

[TomF]

Reputation for upper end work can be worth more even than speed in equivalent work.

High end musical instrument makers may bump up their prices by 50-100% after winning a major competition or two. Their workmanship or speed won't have improved overnight, but their reputation has.

[JMAC]

I've seen cases where speed, quality, efficiency, and investment in tools were not in place, but a big ego with audacity and the ability to BS were and a high wage was asked for and received. I have experience, proper tools, an eye for efficiency, and knowledge of when to stop and when to keep going with quality. So, what the heck, I'll go for a higher wage. It'll be a grand experiment. Maybe I'll make enough to be able to swing the ketch course at the woodenboat school.

[mmd]

My favourite story about the odd ways the public accepts the pricing of services involves a local mechanic. The guy had worked since vocational school graduation as a mechanic for the local dealerships, At age 45 he decided to hang out his own shingle and work out of his home shop. He didn't need a big income and wanted to give good work for a fair price, so his shop rates were among the lowest in the area. He made a decent laborer's wage and worked pretty steadily on a stream of old clunkers hoping to make it for another year.

After a few years (six, actually) he was frustrated with always working on junk cars for owners who always wanted what was best for their wallets and not what was good for the vehicle. Prepared to give up the business and going back to work for a dealership, he was advised by his accountant to try an alternative method of business suicide. (What has he got to lose, right? He's gonna fold the business anyway...)

Double his shop rate.

He stayed in business, has more work than he can handle, and generally works on newer cars just off factory warranty. One new customer got wind of the recent increase in shop rate and commented, "Oh, I wouldn't have come to you at your old rate - I'd have figured you were an idiot!"

Amazing.

[Paul Pless]

Lol!

[Paul Stohlman]

Your hourly rate is a reflection of your "self value". If your rate is low compared to your peers, you must wonder why. If your rate is higher, and you still have enough customers, that's OK. If your rate is higher, and you have no (or not enough) work, then your self value is higher than the market will bear, and perhaps you are in the wrong place, or time, or line of work.

A rule of thumb that I've heard is that if you are turning away work, or have a long backlog, then increase your rate until you can have a reasonable backlog (for whatever your line is). It seems a reasonable approach if used with caution.

The rate that I can charge here in Port Townsend is affected somewhat by the fact that there are so many good boatwrights here. (That in addition to my self worth...blah blah blah).

[botebum]

If some one here is even interested in buying one of your guitars then this may be an ad. If that is the case you should delete your thread.
I can state without doubt that my musical abilities preclude me from buying even a kazoo, let alone a guitar. Carry on.
Oh, BTW, damn you do nice work!

Doug

[JMAC]

But Botebum, if I was to ask if anyone was interested in buying one of my guitars before I posted the thread......Catch 22! This is a valid discussion among people who have solid advice about something that concerns me and my livelyhood. It's okay.....back away from the rulebook.....nice and easy.....keep your hands where we can see 'em.....

[Norman Bernstein]

But Botebum, if I was to ask if anyone was interested in buying one of my guitars before I posted the thread......Catch 22! This is a valid discussion among people who have solid advice about something that concerns me and my livelyhood. It's okay.....back away from the rulebook.....nice and easy.....keep your hands where we can see 'em.....

OK, out of curiosity, suppose I asked you to build me a custom guitar.. steel string flat-top, dreadnaught size, spruce top, mahogany sides and back, rosewood fretboard.... similar to a Martin...

How much?

The basis of the inquiry is this: some buyers want a custom guitar for the sake of clearly distinctive features that shout to the world that they own a custom: inlaid mother of pearl specialty graphics, maybe marquetry, maybe some unusual shape variation....

Others might be satisfied just knowing that it was custom-built for them

I'm curious to know what the price of 'personal satisfaction' is :D

[emichaels]

JMAC,

Very interesting question and the responses are thought provoking too. I make furniture pieces by commission and can only offer my experience to you. I tend, now days to stay with a group of repeat customers that no longer ask the price. They just want my work so they just write the check when I deliver. Your work is of that nature and quality.

Several years ago I asked myself if I wanted to continue making boring entertainment centers for people one right after the other ( because the price was good) or do I want to do much higher quality work and much less of it at a higher price.

It is essentially a supply and demand question for the consumer and for yourself.

BTW your work is very nice looking.

If I were you I would price new builds per piece, then your efficiency comes into play to help yourself. For repair work charge by the hour. 75-100 dollars an hour is appropriate for what you can do. Be fair about it and people will keep coming back to you.




Do you want to hand a customer a piece and offer a lifetime warranty and be paid for your skill and knowledge or do you want toil away and make a lot of stuff cheaper.

I point you to Moser in Freeport , ME He does good work, not the highest work possible, but very good. Better than most people are skilled enough to observe. He gets good prices for his stuff and I thank him for expanding the consumers minds and making more of his stuff available using his system. This is good for me because i can step a notch up from his stuff and get an even better price.

For me this is an ideal situation, working alone, not wanting the employee hassles.

[huisjen]

I keep seeing this thread title and thinking how I've never been attracted to that kind of woman.

Dan

[P.I. Stazzer-Newt]

OK, out of curiosity, suppose I asked you to build me a custom guitar.. steel string flat-top, dreadnaught size, spruce top, mahogany sides and back, rosewood fretboard.... similar to a Martin...

How much?

.....

I'm curious to know what the price of 'personal satisfaction' is :D

You want a martin-a-like just buy a martin, its just another production-line guitar.

What rate (per hour) might you pay a man to work on a Guarneri or Amati - the real "Big Ticket" stuff.

[Norman Bernstein]

You want a martin-a-like just buy a martin, its just another production-line guitar.

I think you might have missed my point.

At or above a certain quality level, there's no truly 'objective' measure of quality, and really no way to correlate to price.

For example, one of my favorite singer/songwriter/guitarists (with a heavy emphasis on 'guitarist') is Patty Larkin. She plays a 1946 Martin D-18, and a more recent Olsen custom single cutaway. She says that both the Martin and the Olsen provide superior bass, for their respective types. Both of these instruments are quite expensive; I'm not positive, but I believe an Olsen runs around $3K-$5K or more, and the Martin is certainly worth quite a bit. Yet the difference between her 1946 Martin, and a modern production version, is at least several thousands of dollars.... for a subjective difference in quality.

It makes no difference to Larkin, because she earns her living playing guitar, and the cost, even if extraordinary, is a tiny fraction of her annual gross... it's just a cost of doing business. She can easily afford to indulge in the small differences that she percieves between these instruments, and ordinary quality instruments costing much less. As a fan, I'm pretty certain I couldn't tell the difference.... with her skill level, she could play a $99 department store special and it would still be 100 times better than anything else I've ever heard. Incidentally, she also uses one of those Martin 'baritone' guitars, the little wierd-shped ones, and those are actually pretty cheap.

So, you can sell an extraordinarily expensive guitar to a profesional performer.... and you can sell one to a very rich non-performer. However, both of them can buy an Olsen, which, quality aside, has a name, a reputation, a cachet... something you can't create out of thin air.

So, market positioning is the problem. How do you build a reputation for quality that both justifies a high price, and attracts both professionals and well-heeled private individuals?

This is just a guess.... but my guess is that the 'entry vector' is somewhere in the middle, i.e., the ego appeal of a custom, tempered by a more moderate price than the Olsens of this world.

[TomF]

If you want a higher price point, you might change the instrument that you make.

I went to high school with a guy who's now an award-winning cello maker. When he won a couple of prestigious awards, his price for new cellos went from about $15K each to $35K each. His instruments were too expensive for me before he started winning awards ... but it's what the average orchestral cellist pays at the outset. Established violin makers typically sell for somewhat less - say, $10k-$25k. But they can make more of them, using less wood. There's no point for a custom maker to aim for a lower price point, because that slice of the market's already occupied by Chinese-made instruments.

Frankly, the violin-family maker serves quite a different market from the guitar maker. My daughter's current (chinese made) cello's worth about $4k, and it's considered a bargain ... playing much better than its student-level price point suggested.

But it would be expensive for a handmade guitar, and I've never quite understood why.

[Norman Bernstein]

A freind and former colleague of mine dropped me an email in response to an inquiry I made to him regarding custom guitars. My friend is a fair player, but a major league collector (and wealthy, to boot)... literally dozens of guitars of all stripes, including a number of custom-built ones. Here's his entire email, which you might find highly interesting:



Greets
Very complex subject!

Olsens are quite expensive - five digits - and he
actually makes them almost entirely by machine.
He's a big fan of programmable tooling, and
reportedly has a lot of it. Not bad instruments,
I hear, but his backlog is so long that I've never
seen one for sale (or tried one). A lot of his
appeal is a couple of high profile customers, eg
James Taylor.

The usual great hi-end "handmade" acoustic runs from
$3500 to $8K, plus more (possibly a lot more)if there
is a lot of decor and/or Brazilian. I don't think a
'46 D-18 would be a seriously high-ticket item (tho
really nice!) but you can pay $100K for some '30s
Martins.

For a little calibration on new-made, my latest, a Ryan
with no Brazilian (it's cocobolo, actually) was about
$7.5K as I recall. When I visited his shop in CA (he
is another guy who believes in serious tooling) he
had a two-year backlog, but when he showed up at the
Newport show he had a few instruments for sale on the
spot, one of which I bought. He's a well-known builder
(played by the likes of Lawrence Juber and Pat Donohue)
so he has a list and gets his price. On the other hand,
a really fine instrument from my friend Tom Williamson,
who is very little-known, runs about $5.5K with nice
Brazilian and hi-end spruce top.

There is a huge glut of builders out there today, and
I don't know how long it can stay that way. At the
Newport show this year there were 100 luthiers, and I
could easily name several who weren't there, including
the famous Wayne Henderson (the star of the book
"Clapton's Guitar", a fun read) who has a many-year
backlog, builds incredible instruments and sells them
for something like $1800. You need to read the book
to even begin to understand the guy.

[TomF]

Thanks Norm - very interesting.

t.