Tonewood Costs

[Simon Fay]

Okay, I'll bite. Here is what most of pay for your typical back/side sets (shipping not included). FYI, I'm referencing quality that I wouldn't hesitate to use in my guitars which have a current base price of $8,500. As a builder, I'm generally noted for using exceptional quality tonewoods. You can go on eBay and get cheap stuff but was it legally and ethically harvested - probably not.

Honduran Mahogany - $80
Figured Honduran Mahogany - $250
Indian Rosewood - $120
High-Figure Maple - $350
Koa - $250
High-Figure Koa - up to $500
Macassar Ebony, Ziricote, Malaysian Blackwood - around $375 to $450
Cocobolo - $450 (cheaper stuff is usually wild grain and non-quartersawn)
African Blackwood - $500 to $650
Brazilian Rosewood - $1,500 to $2,000 for decent quality sets. Amazing quality sets usually cost us significantly more.

If you know where to look and are constantly looking, you can find some great deals as well. But if I needed a high quality set of one of those tonewood species, that is roughly what I would pay. FYI, Mastergrade/Presentation grade sets are rare and sell quickly and are often several hundred dollars more expensive that the regular high-grade sets.

So that is actual material cost you are looking at above. Bear in mind, you need to subtract the cost of Mahogany or Indian RW to find the difference in price for the upcharge. Here are some other things that must be accounted for:

• Increased labor costs associated with difficult to use woods
• Replacement costs for issues during build process
• Future repair work crack-prone woods

I spent way more time sanding woods like African Blackwood that I do either Indian Rosewood or Mahogany, which are a pure joy to work with. Cocobolo dust is quite nasty stuff and Claro Walnut dust gives me nosebleeds if I forget to wear my respirator whenever I work with it. Some woods are also very crack prone, which can make certain parts of the build process more tedious or incredibly tragic if you something breaks. African Blackwood dulls tools at a mind-blowingly fast rate. I throw out about $50 worth of router bits after a couple sets of African Blackwood whereas I could probably go for 100 mahogany guitars before needing to toss the bit.

So those are the other things we mostly consider in terms of what using a set is actually going to cost us.

In terms of stockpiling inventory, consider stocking 20 sets of easily acquired Mahogany or Indian RW or 20 sets of difficult to find and special unique sets of the exotics.

20 Indian RW sets with no time investment to find = $2,400
Also bear in mind, that bulk ordering of sets can save you tremendous on the per item cost. The mindset of a luthier's clientele prevents this. We must source individuals sets or risk having ridiculous amounts tied in tonewood. Factories and small shops operate differently. They buy large quantities of a few different tonewoods and then built with those sets.

20 Exotic sets with significant time investment to locate and source = $8,000 ($400 per set)
Pretty much everything in my inventory is stuff that was a rare find and quite expensive. Most of us like to have sets that stay in inventory for several years before we use them.


Summary
So those are the facts we face in terms of increased material and labor costs with the tonewood options. In the end, I like to try and get at least double what the sets cost me plus whatever additional labor costs I think the wood will cost me. So a $500 set of Cocobolo costs $1,000 plus several hundred for labor and being a general PITA to work with. So $1,500 for a nice set of Cocobolo. But I don't personally charge that, I charge $2,000 for a set. Why? Because I don't make a ton of money building guitars and it is a way to pad the bottom-line. I also view Indian RW and Honduran Mahogany as a sort of discounted guitar. Those woods are fabulous to work with and a way for customers to get one of my guitars at a cheaper price. That's how I view it. I'm not rich - far from it. As the saying goes, if you want to make a million bucks building guitars, then start with two million . Nothing about a handmade guitar is practical or necessary. If you want a great deal, by used or buy a factory guitar from Martin or Taylor (they make excellent guitars).

I hope that sheds a bit of insight into the process of how some of us tackle tonewood upcharges.

Best Regards,
Simon

[Simon Fay]

Let me follow up by saying that there are a number of beautiful and affordable tonewood options that most luthiers offer. Most of those options tend to fall in the Mahogany/Koa/Walnut category in terms of tone. Most of these woods are easy to acquire, easy to work with, and very stable during the build process.

As someone mentioned earlier about the cost of food at restaurants, bear in mind that luthiers operate a business. So you have to accept the reality that tonewood upcharges are a way for luthiers to increase their profitability and you have to figure that on top of what the wood actually is costing us. Lastly, don't be afraid to ask if a builder will work with a set that you supply. I actually prefer that for high-value sets like Brazilian RW or the "Tree" Mahogany - I'm sure I'm not alone in that regard.

[Jabberwocky]

Simon, thank you for shedding light on the process. What happens when a client supplies a high value set like BRW and it cracks during the process and becomes unusable or less than what it could be? Are you as a luthier responsible for it? Or is it based on an understanding that the client provides the set at his own risk?

Restaurants charge a "corkage" when you bring your own wine. Unreasonable? It depends on whether you are a businessperson yourself.

[ManyMartinMan]

Originally Posted by ManyMartinMan

.... I would balk over a major up-charge between one wood and another unless there was some observable reason such as rarity.....

Originally Posted by charles Tauber

That's not entirely true. Some exotic and/or scarce woods are considerably more expensive than others. Quilted mahogany from "The Tree", for example.....

Charles’s, Charles, Charles>....... I covered that with the caveat of “ some observable reason”. “The Tree” certainly qualifies as rare.

[jojobean39]

Thanks for that I put, Simon. It gave me a great understanding of how you builders do your pricing. I realize it's different from one to another. But that was a good lesson.

[DenverSteve]

What Simon shows is that EIR is dollars different than Mahogany. Additionally, big builders (Martin, Taylor, Larrivee...) certainly don't purchase wood by "sets". They buy trees and large quantity purchases sourcing their wood in volume, storing it for years in controlled situations. I would be interested in other small-shop builders chiming in on their views (not that Simon, Charles and others aren't valuable) on wood charging philosophy. I certainly wouldn't mind paying a $1,500 up charge for a nice set of Brazilian but some companies seem to think that $5,000, or more, is justified. I find it better to wait 2-3 years if necessary and pick up that great Brazilian guitar used for far less than new. That's also the time one can visualize and hear that quality of the wood - post construction - without the mystery of waiting for a build to complete before knowing what the guitar will sound like.

[Joel Teel]

I approach building with the same mindset as Simon Fay stated earlier...I don't own, nor will I build with an ordinary or uninteresting set of wood. Not only do I strive to build the best sounding guitars that I'm able to craft...I want these guitars to be breathtakingly beautiful too. I don't buy in bulk, but instead spend countless hours looking through thousands of sets of wood for that one set that inspires me. I then pay a premium price for it and place it in my collection for a future build.

You can go eat a steak at Waffle House, or you can go eat a steak at Shula's Steak House. There is probably only a few dollars difference between the actual cost that the restaurants pay the vendors for the raw beef...but you'll pay a great deal more for the steak if you choose to dine at Shula's than you will at Waffle House...and the difference in quality (and experience) is quite tangible.

some people wouldn't consider spending the money that it takes to dine on a Porterhouse steak at Shula's.....though others wouldn't consider eating a budget steak at Waffle House. Neither is right or wrong, and both business models are working just fine.

Joel

Originally Posted by DenverSteve

What Simon shows is that EIR is dollars different than Mahogany. Additionally, big builders (Martin, Taylor, Larrivee...) certainly don't purchase wood by "sets". They buy trees and large quantity purchases sourcing their wood in volume, storing it for years in controlled situations. I would be interested in other small-shop builders chiming in on their views (not that Simon, Charles and others aren't valuable) on wood charging philosophy. I certainly wouldn't mind paying a $1,500 up charge for a nice set of Brazilian but some companies seem to think that $5,000, or more, is justified. I find it better to wait 2-3 years if necessary and pick up that great Brazilian guitar used for far less than new. That's also the time one can visualize and hear that quality of the wood - post construction - without the mystery of waiting for a build to complete before knowing what the guitar will sound like.

[T Texas]

Thank you to all the luthiers that have posted in this thread. I hope you all know that I certainly was not trying to vilify the industry. I appreciate the art and am very happy that you guys are out there and are able to carve out a living building these beautiful guitars. The OP was simply something I've often wondered about and decided to open a discussion on. I feel like I've got a better grasp of all that goes into it now and no, I don't think it's so crazy after all.

[nacluth]

Well I don’t know if I have anything substantive to add, but since Steve asked...

Boutique builders (one-man, small shops, even small factories) know they are building luxury items. A large majority of their operating costs are tied up in labor - though set up costs, space and power are not inconsequential either. Most of us are trying to eke our a living doing what we love, and we try to price in a way where we can keep doing it without having a second job (pretty rare in lutherie actually). While Simon has shown how material costs can be fairly priced, there is the aspect that builders also need a way to sell their product.

It takes a lot of effort to find unique sets, and it’s what draws a lot of boutique guitar buyers. Sure a base price Indian Rosewood set will sound pretty darn good, but tonewood is an area that we can upsell for some profit. Inlay and some other minor things have some markup, but honestly wood is just the easiest to sell. Kind of like the bigger engine or sunroof.

Like most wholesale to retail markups in many industries, the general rule most builders use is to start with 100% markup over wholesale. There are many reasons why this is probably too small for tonewood (another discussion), but I believe fair valuation is typically the prime motivation for most luthiers - not what is the most one can get out of it. In fact, I see tonewood upcharges that become ridiculous from factory instruments not the small boutique builder typically. One major company upsells Brazilian at $10k to start. Smaller builders have to charge more for labor, but bigger builders pad their materials. Market forces.

I would think it’s unfair to say that a back set sold for $300 from a sawyer should only be worth a $300 upcharge. For the most part I believe many builders fairly value their woods but there are always exceptions. Take the time to find the value.

[Simon Fay]

Originally Posted by Jabberwocky

Simon, thank you for shedding light on the process. What happens when a client supplies a high value set like BRW and it cracks during the process and becomes unusable or less than what it could be? Are you as a luthier responsible for it? Or is it based on an understanding that the client provides the set at his own risk?

Restaurants charge a "corkage" when you bring your own wine. Unreasonable? It depends on whether you are a businessperson yourself.

Hey Lewis C,
The set would have to meet my high standards first - for example, 75% of the Cocobolo out there I would never build with. If the set broke, the customer would be responsible for supplying another set (I use double sides so that is rare - in fact, I've never broken a side set thus far). If the back developed a crack, it would not be covered under warranty. So those are the caveats.

Also, I would include additional labor and shop material costs for certain woods like African Blackwood, Cocobolo. And I'm less interested in working with a client's set if it is something I have in stock - unless what they have is truly special.

[Simon Fay]

Originally Posted by DenverSteve

I certainly wouldn't mind paying a $1,500 up charge for a nice set of Brazilian but some companies seem to think that $5,000, or more, is justified. I find it better to wait 2-3 years if necessary and pick up that great Brazilian guitar used for far less than new.

I agree with buying used if you are trying to get the best value for your money. But all of this is a sliding scale and the more wealth an individual possesses the more they consider reasonable in terms of spending. Compared to others in third world countries, all of us live ridiculously lavish lifestyles.

However, I don't agree concerning the Brazilian. Here's my thoughts:
I have this set listed for $5k on my website (pictured shown below). I paid $1,400 for it 9 years ago along with about 10 other sets I bought at the same time. I think the current value on the wood market (i.e. the price a luthier would pay) is about $2k for a set of this quality. It is an incredible set, fully quartersawn with some light figuring and beautiful coloration. In short, it is top-shelf stuff. As a individual with modest financial means, acquiring those 10 sets was absolutely brutal but I did it to offer my customers options. Financially, I can say that it simply is not worth it to me to outlay that kind of money and maybe make a couple grand in profit. We aren't even talking about the many dozens of other sets I've acquired that were very pricey or the $5k Honduran Mahogany neck blank order I placed about 6 months ago, or the $3k order I did last year for some super nice Ebony fretboard blanks. Running this business is EXPENSIVE. I can guarantee that if you looked at my books and saw what it takes to run a solo luthier shop then the prices on my Inventory Page (http://www.fayguitars.com/Guitars/Prices/inventory.html) are incredibly reasonable.

There are a few builders out there who do charge exorbitant prices for certain woods, but truly, they are the exception. The vast majority of us have similar pricing structures for tonewood and there's a reason for that.

Normally, I'd never go into this kind of detail but I see this question posted so often that I thought it would benefit the community to understand a bit more about how we approach this issue. I can assure you - taking advantage of the customer is not something we are doing. Quite the contrary. When you start talking about outlaying many thousands of dollars as opposed to several hundred to stockpile materials, the effect is very noticeable for a small business like most of us run. Those $5k and $10k inventory purchases can be challenging. Seriously, I'd much rather be stocking Sitka Spruce and Mahogany and Indian RW. In the long run, I think I'd have a much more profitable business. In short, the upcharges that you all see for Koa, Cocobolo, African Blackwood, etc. are necessary and fair in the context of running a small business.

[iim7V7IM7]

I have paid a variety of upcharges for exotic hardwood back and side sets. In all cases I purchased well seasoned, quartersawn sets and in some cases with unusually beautiful figure (see below).

African Blackwood - $1,500
Australian Blackwood - $500
Brazilian Rosewood - $2,500 and $6,000 (had flitch matched sides)
Large Block Mottled Honduran Mahogany - $1,500
Koa - $750
Madagascar Rosewood - $1,500
Pernambuco - $2,500

[jojobean39]

Originally Posted by Simon Fay

I agree with buying used if you are trying to get the best value for your money. But all of this is a sliding scale and the more wealth an individual possesses the more they consider reasonable in terms of spending. Compared to others in third world countries, all of us live ridiculously lavish lifestyles.

However, I don't agree concerning the Brazilian. Here's my thoughts:
I have this set listed for $5k on my website (pictured shown below). I paid $1,400 for it 9 years ago along with about 10 other sets I bought at the same time. I think the current value on the wood market (i.e. the price a luthier would pay) is about $2k for a set of this quality. It is an incredible set, fully quartersawn with some light figuring and beautiful coloration. In short, it is top-shelf stuff. As a individual with modest financial means, acquiring those 10 sets was absolutely brutal but I did it to offer my customers options. Financially, I can say that it simply is not worth it to me to outlay that kind of money and maybe make a couple grand in profit. We aren't even talking about the many dozens of other sets I've acquired that were very pricey or the $5k Honduran Mahogany neck blank order I placed about 6 months ago, or the $3k order I did last year for some super nice Ebony fretboard blanks. Running this business is EXPENSIVE. I can guarantee that if you looked at my books and saw what it takes to run a solo luthier shop then the prices on my Inventory Page (http://www.fayguitars.com/Guitars/Prices/inventory.html) are incredibly reasonable.

There are a few builders out there who do charge exorbitant prices for certain woods, but truly, they are the exception. The vast majority of us have similar pricing structures for tonewood and there's a reason for that.

Normally, I'd never go into this kind of detail but I see this question posted so often that I thought it would benefit the community to understand a bit more about how we approach this issue. I can assure you - taking advantage of the customer is not something we are doing. Quite the contrary. When you start talking about outlaying many thousands of dollars as opposed to several hundred to stockpile materials, the effect is very noticeable for a small business like most of us run. Those $5k and $10k inventory purchases can be challenging. Seriously, I'd much rather be stocking Sitka Spruce and Mahogany and Indian RW. In the long run, I think I'd have a much more profitable business. In short, the upcharges that you all see for Koa, Cocobolo, African Blackwood, etc. are necessary and fair in the context of running a small business.

I'm no guitar maker, but I'd like to add this on top of your comment.

One thing to be considered is opportunity cost. If Simon pays $1500 for BRW as opposed to $200 for EIRW, there is $1300 of money tied up in inventory. And likely, that piece of BRW will sit in bus stash until the right person comes along.

I'm sure if those upgraded woods were selling as quickly as the base model, prices would come down. But consider that he laid out an extra $1300 that isn't making him any money. Add his normal ROI on top of inflation and you start seeing some real cost of purchasing that wood and holding it. And that doesn't even consider the cost of acquisition and working with a more difficult wood.

I see similar prices across most builders. Some are way out there. But most are around the same price, give or take a few hundred bucks. So there has to be some validity to it or some really clever price fixing among all builders.

And I don't get the impression that most of the guys building these high end guitars are just rolling up hundreds and smoking them. If you make 20 guitars a year at $10k a piece, a pretty hefty price tag, you bring in $200k before taxes, materials, labor, shop space, outsourced spraying or inlays, etc.

And if you're making $10k guitars, I bet you're not making 10/yr by yourself.

May I ask how many guitars per year some of you single builders make? If that's not prying too much, that is.

[justonwo]

Originally Posted by Simon Fay

I agree with buying used if you are trying to get the best value for your money. But all of this is a sliding scale and the more wealth an individual possesses the more they consider reasonable in terms of spending. Compared to others in third world countries, all of us live ridiculously lavish lifestyles.

However, I don't agree concerning the Brazilian. Here's my thoughts:
I have this set listed for $5k on my website (pictured shown below). I paid $1,400 for it 9 years ago along with about 10 other sets I bought at the same time. I think the current value on the wood market (i.e. the price a luthier would pay) is about $2k for a set of this quality. It is an incredible set, fully quartersawn with some light figuring and beautiful coloration. In short, it is top-shelf stuff. As a individual with modest financial means, acquiring those 10 sets was absolutely brutal but I did it to offer my customers options. Financially, I can say that it simply is not worth it to me to outlay that kind of money and maybe make a couple grand in profit. We aren't even talking about the many dozens of other sets I've acquired that were very pricey or the $5k Honduran Mahogany neck blank order I placed about 6 months ago, or the $3k order I did last year for some super nice Ebony fretboard blanks. Running this business is EXPENSIVE. I can guarantee that if you looked at my books and saw what it takes to run a solo luthier shop then the prices on my Inventory Page (http://www.fayguitars.com/Guitars/Prices/inventory.html) are incredibly reasonable.

There are a few builders out there who do charge exorbitant prices for certain woods, but truly, they are the exception. The vast majority of us have similar pricing structures for tonewood and there's a reason for that.

Normally, I'd never go into this kind of detail but I see this question posted so often that I thought it would benefit the community to understand a bit more about how we approach this issue. I can assure you - taking advantage of the customer is not something we are doing. Quite the contrary. When you start talking about outlaying many thousands of dollars as opposed to several hundred to stockpile materials, the effect is very noticeable for a small business like most of us run. Those $5k and $10k inventory purchases can be challenging. Seriously, I'd much rather be stocking Sitka Spruce and Mahogany and Indian RW. In the long run, I think I'd have a much more profitable business. In short, the upcharges that you all see for Koa, Cocobolo, African Blackwood, etc. are necessary and fair in the context of running a small business.

Most people don’t fully understand the costs associated with running a small business. It’s true. For most luthiers, cash is a real constraint, and so cash flow becomes a major issue. This results in massive over-valuation of the cost of capital. In a situation where you aren’t cash constrained, the money you need to front for back and side woods or neck blanks is much less of an issue. With businesses that are able to build up a decent amount of working capital or establish a credit line, the cost of capital is low and fronting money for tonewood becomes much less of an issue.

A small business with no access to working capital or credit will necessarily inflate the pricing of tonewood to quickly recover the working capital. The more capital that is used up, the higher the prices get because of the need to quickly recuperate working capital. The pricing is not driven by time or cost, for the most part. Given the nature of most small luthier businesses, pricing is driven by cash flow.

The actual costs of finding and purchasing the inventory probably aren’t THAT high. The cost of capital, if you have access to it, is low. It’s the cash flow hit that’s driving the pricing. That’s a different story. When you are just starting a business and have no working capital, cash flow is a major issue. With a long established business, the issue usually diminishes in importance.

As Charles Tauber says, however, it’s ultimately about the what the guitar buying public is willing to pay. I would assert that the prices have been driven to where they are, however, because so many builders have very limited access to working capital and not because of the actual costs of the materials. Plus, EVERYONE knows Simon Fay drives a Ferrari.

[Maryc-k]

Originally Posted by The Bard Rocks

It is naturally high in oils and that makes it difficult to glue.

Actually, the fine dust from it is highly toxic. Many builders have gotten sick inhaling it, and several that I know have gotten skin hives from it. One’s eyes became swollen shut after working with it