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Gibson Pricing

MSN001

New member
Joined
May 26, 2019
Messages
20
Just wondering if anyone from Gibson Custom marketing could post a breakdown of the costs in manufacturing a guitar and the profit margin, or provide a link to an annual report. I’d like to learn more about the KPIs and the planned direction given the global recession upon us post COVID19. The production of guitars that retail at over £3-4-5k (where does it end) just seems to make no sense going forward as consumer spending drys up. Whilst I’m sure there is a team overseeing cost savings to make the operation leaner, I’m wondering if it’s possible to produce, say a Les Paul Custom for example, with a lower RRP as at leaves the factory, can Gibson lean the operation any further to reduce retail prices? I fear consumer credit and low interest finance has reached a pinnacle and I’m concerned the retrace coming in this new time of hardship and unemployment for many will send Gibson back into administration ? I love this brand and hope that it can adapt with the change in the market. Unfortunately at this time I see the brand only going one way towards becoming more and more unattainable with the year on year price increases £££ for anyone aspiring to have Gibson on the headstock. I don't see how charging the same price as a car or a new bathroom suite for a new 59’ custom is sustainable. I’d love to hear others views. All the best and stay safe.
 

Jazzkat

New member
Joined
Jan 4, 2019
Messages
13
It's all relative. I think adjusted for inflation the cost of a typical R8/9/0 is similar to the original 58/59/60 guitar. I suspect that compared to incomes of the time they probably were, relatively, less affordable back then.

The answer would be, just buy a regular production standard, studio or even an Epiphone. There's a Les Paul for everyone's pocket.
There will always be a hierarchy of affordability and everyone has their own limits on what they can and want to afford. It's the reason most people drive around in Fords and not Bentleys.

I wouldn't have thought any company will publish it's profit margins on an individual item, but I'm a musician not a businessman so I may be wrong! They charge what the market will sustain, if sales drop then so will their prices (to a point).

I think a lot of companies will go through a streamlining and downsizing as we plough into this worldwide recession. Remember, there was a time when you didn't have a choice of 1/2 dozen colours with different hardware and neck sizes. Maybe that will happen again as people's spending power lessens.
What's left when we come out the other side, who knows.
 

MSN001

New member
Joined
May 26, 2019
Messages
20
I found this data on the forum out of interest,

Gibson Les Paul Standard RRP adjusted with inflation,
1959: $2197
1985: $2240

Around’ 86 Kalamazoo closed, I don’t know what happened in the 10years after but these were the approximate costs For a Les Paul Standard from mid nineties on:
1994: $1495

2000: $1799
2005: $2399
2008: $2799
2017: $2799

Its hard to draw any accurate comparison but the price has increased $1000 since the millennium, approx 35% in 20years. I’m not clever enough to work out the compound increase in the retail price index so I’ll leave it there!

A public company would but Unfortunately Gibson is a private company so I can’t find any annual report with the data on PBT etc. FMIC is private as well but there are some large manufactures that are listed on the stock exchange like Roland for example.

Andy Mooney says the industry is recession proof but he wasn’t sitting on a $500mil loss a couple years ago!
 

Big Al

Well-known member
Joined
Apr 24, 2002
Messages
14,537
I found this data on the forum out of interest,

Gibson Les Paul Standard RRP adjusted with inflation,
1959: $2197
1985: $2240

Around’ 86 Kalamazoo closed, I don’t know what happened in the 10years after but these were the approximate costs For a Les Paul Standard from mid nineties on:
1994: $1495

2000: $1799
2005: $2399
2008: $2799
2017: $2799

Its hard to draw any accurate comparison but the price has increased $1000 since the millennium, approx 35% in 20years. I’m not clever enough to work out the compound increase in the retail price index so I’ll leave it there!

A public company would but Unfortunately Gibson is a private company so I can’t find any annual report with the data on PBT etc. FMIC is private as well but there are some large manufactures that are listed on the stock exchange like Roland for example.

Andy Mooney says the industry is recession proof but he wasn’t sitting on a $500mil loss a couple years ago!

Gibson MI has always been profitable since Ted's second year. A few years ago it wasn't Gibson guitars losing money.
 

MSN001

New member
Joined
May 26, 2019
Messages
20
Where do you get your information on the profitability of parts of the company? I can’t find anything public?
 

Aloha_Ark

Active member
Joined
Apr 2, 2020
Messages
154
Gibson would put the hammer on a dealer who revealed their price lists. Suffice it to say, if you see the MAP on a custom shop guitar, then some dealer in the US will sell it for 30% off. I can't give you the name(s) of these dealers, but you can call 'em up and say you read this on LPF. This rule does not apply to limited edition guitars, or anything where demand is far in excess of supply. Some cork sniffing dealers will hang up on you if you even suggest that they should discount. Do not feel insulted. Tell them you own a Ferrari, and the reason you could afford one was because your mama did not raise a noob who pays the MAP.

Let's say that dealer price is 40% of MAP, and that Gibson needs to spend 40% of MAP in material/labor/overhead to break even. That tells me that their profit margin on a $10,000 guitar is $2000. It could be more, it could be less. There is a certain economy of scale in producing a lot of guitars, but mistakes and disasters can cost a company more money than they ever imagined. Don't worry about Gibson going under (again). PRS is always in the shadows waiting to gobble them up.
 
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somebodyelseuk

Well-known member
Joined
Jun 10, 2020
Messages
454
I always get irritated when people start whining about Gibson and Fender pricing.
In 1963, here in the UK, it cost my Dad 12 weeks wages for a Fender Strat. No options, rosewood and sunburst, take it or leave it.
In 82, I was lusting after Fender Strat in my local shop, rosewood, sienna sunburst, rosewood, about six weeks of the average wage at the time, alternate finish and maple board... okay, but you'll have to order one.
In 84, I bought a Yamaha SG1000S, with money saved from my part time job. I was a 17 year old student. It cost 10 weeks of average man's wages. 86, for the first time in a long time, a local shop had a brand new LP Standard and LP Custom, both cherry sunburst, gleeming and gorgeous. The Standard was £925, the Custom £995. Approx 7 and 8 weeks respectively.
Today, a LP Standars, in the UK costs about two grand. That's about four to five weeks wages here.
Based on average wages, a Gibson or Fender built like they used to, costs about the same as they used to.
The 'off the peg' models cost peanuts in comparison, about half what a budget guitar used to, they are much more readily available, and the options....
... Oh, and cases are included in the price, today.
 
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