I’ll bet you’re forgetting to calculate all your hidden costs when you set your guitar prices. And that means you’re losing money on each guitar sale.
Here’s a free download of the Guitar Sales Hidden Costs spreadsheet so you can follow along.
Let’s break it all down, starting with costs directly related to having that guitar on your workbench. You’re probably going to put a new set of good strings to help show off all your hard work. The best price I’ve gotten on D’Addarios is $4 per set.
Parts are sort of a wildcard. Sure, you can have more expensive items – bridge, pickups, nut, etc. But you’re probably already accounting for these and this article is about hidden costs.
What about those stripped screws, missing bushings, missing or broken saddles, output jacks, etc.? They generally aren’t worth the extra bookkeeping to track individually, but they sure do add up.
Cleaning rags generally come from laundry room rejects, but I buy new polishing rags so I don’t risk scratching a finish.
And then there’s Naptha, Alcohol, Acetone, GooGone, all sorts of glues, sand paper, nail polish and other touch-up items, steel wool, decals for my branded items, etc., etc.
This idea of “Hidden Costs of Guitar Selling” didn’t really hit me until I was ordering one day when it seemed all my supplies had dwindled at the same time. It really started adding up.
And if you have to drive to buy your guitars, as I do, your costs go even higher.
I enjoy getting out of the shop on guitar buying trips. So much so that I often forget this is a business expense.
And honestly, I never realized just how costly travel expenses were, per guitar!
Aside from gasoline, you have depreciation, wear and tear, tires, occasional repairs (if not yet – they’re coming!), etc.
The IRS currently (well, last year – I haven’t checked for this year yet) allows ten cents per mile for depreciation and mileage expense averaging, so we’ll assume they’re correct.
I’m in the suburbs and usually have to drive ten miles or more to buy a guitar. Yesterday, I drove 22 miles (each way!) and didn’t think that was extraordinary, just to buy a Squier!
So in my spreadsheet, I figured an average distance of 15 miles each way. Thirty miles for each buy; thirty miles per gallon; three dollar gallons and it comes to three bucks per guitar. Add that to our ten cents a mile average expense for depreciation, tires, etc. and we get $6 of travel expense for each guitar.
What Can You Do With This Information?
Obviously, you’ll use this info (after adjusting for your own experience if different from mine) for pricing your guitars but “Wait – there’s more!”
What about when you’re negotiating with a seller? Knowing that it’s going to cost you six bucks or so – plus your valuable time, to go get that thing, you might offer a little more money to have the seller bring the guitar to you.
I usually make an offer for less than the seller’s asking price. If they come back with a higher price, I can counter by adding ten dollars to my initial offer, if they’ll deliver.
Actually, I try to get sellers to bring me the guitar anyway, but my “batting average” is only around 200 without sweetening the pot with an extra ten (which generally only brings it to maybe 300).
Add this $12 to the 8 percent, give or take, that your platform is charging (ebay, Facebook, etc.), add packaging materials costs (boxes, bubble wrap, tape, labels, etc.), add shipping costs and there may not be much “pie” left with all those slices taken out.
Coming soon –
- Cut guitar shipping costs 50% & more
- Where to get guitar shipping boxes cheap
- How to setup a Facebook Shop & why you should
- How to setup an Ebay Store
- How to setup a great website with online guitar shop
- ..and lots more help for your guitar business!