Thinking about consignment...

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Thinking about consignment...

Postby Ryan Mazzocco » Thu May 05, 2016 6:58 pm

I know what this forum's FAQ says about consignment and I totally agree with everything covered in that section. That is why I have hardly even entertained the thought of showing my guitars on consignment and as much as I would love to avoid that I see myself at a very pivotal point in my luthiery career. I have guitars that I feel very good about and can in good conscience put a price tag on that I feel fairly compensates me for my time and materials. But I live in a relatively small market and find I'm having trouble getting much exposure. I have created an online presence (website, social media) but don't seem to gaining much ground other than friends and family (and then their friends and family) I'm not expecting to become a household name, especially not overnight, but I would like to create brand awareness and start getting orders, or even selling the guitars I have in stock. I have 3 right now that I can't get rid of and I believe it's because I'm not reaching the right people. I hate the idea of losing at least 20% to the dealer, but I'm also not making any money with them in their cases taking up space in my kitchen. I have a lot of money (for me) tied up in them as well as tools and material I've purchased to make more guitars. This is a problem for cash flow. It's kind of hard to justify starting more when I can't get rid of the ones I have now. I'm not full time (yet) so I may be able to take the consignment hit for now. I definitely don't want to think of it as a long term business model, but just starting out maybe it's a way to at least get my name out there and get people to see my product, create the brand awareness and hopefully even sell some guitars. Then when I eventually start getting orders I can deal with the customers directly and keep every penny I earn.
I don't really want to do consignment, but I almost feel I have to right now. Or perhaps I'm doing something else wrong?
I just feel that I'm ready to go to the next level and I don't exactly know how to do that.
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Re: Thinking about consignment...

Postby Bob Gramann » Thu May 05, 2016 7:34 pm

When you consider other marketing costs like advertising and show attendance costs, 20% for a consignment fee doesn't seem like so much. Your instruments have to be good enough that you can price them high enough to pay the marketing costs and still have enough left to make building worthwhile. I am very lucky to have an active, respected music store, where the staff respects and believes in my instruments, selling for me. They provide sales and referrals for me and I gladly pay them for that. I also go to shows and conventions (but I'm very picky about which ones), advertise minimally, and maintain a website. My sales are sporadic, unpredictable, and often unexpected. I build because I love to build, I love music, I love happy customers, and I love the attention I get for doing something well. I sell because my house would be full of instruments if I didn't. I don't expect this will ever get me rich, but I sure enjoy it.

In short, consignment can be good in the right shop with the right conditions, but the wrong shop will just wreck your instruments. (And the shop staff has to understand humidity.) A shop that primarily sells imported plywood instruments probably won't do much for you. Good luck.
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Re: Thinking about consignment...

Postby Chuck Tweedy » Thu May 05, 2016 7:43 pm

exactly every word Bob said ... +1
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Re: Thinking about consignment...

Postby David King » Thu May 05, 2016 9:17 pm

I'd say get to whatever local shows and jam sessions you can and try to build local awareness in the music community and spread it out from there. Talk to guitar teachers and let them keep an instrument for a week or two to get their feedback. This can be especially effective if they have adult students looking to upgrade. Going national in this day and age is almost unthinkable with so much competition, especially the hundreds of younger luthiers willing to give away guitars "just to get them out there". "Local" doesn't always work in your favor. In my market locals can't seem to believe that a local instrument could be as good as one from New York or San Fransisco that costs 3 times as much but luckily I don't need to depend on my local market anymore.
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Re: Thinking about consignment...

Postby Mark Swanson » Thu May 05, 2016 9:36 pm

My experience mirrors Bob's. I could have written his post. Having a good music store to work with is such a godsend to me. I do repair work for them as well, and they will take in any guitars that I manage to build that are not yet sold.
    Mark Swanson, guitarist, MIMForum Staff
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Re: Thinking about consignment...

Postby Ryan Mazzocco » Fri May 06, 2016 4:03 pm

Wow. Thanks guys. I have to say that the response so far have been very informative and somewhat surprising. Based on this forums FAQ, the basis from which I have formed the bulk of my opinion on the subject, I figured I would get slammed with cautionary tales of the horrors of consignment. Instead, 3 out of 4 of the first post speak rather favorably. So, who wrote that FAQ? I know it's been there since I first joined back in the old forum, but doesn't really seem to be a consensus view anymore, or perhaps it never was.
Also, I want to jump on this before Perry sees it because I can already hear him screaming from down under. Bob says 20% doesn't seem so much compared to all the other marketing and advertising fees... I don't know... Let's say you sell an instrument for $2000, $400 goes to store for commission, you sell 20 instruments in a year through them that ends up costing you $8000. How much advertising and marketing could you do for only half that amount and then be $4000 richer? But the problem is I don't have that kind of capital to spend on marketing right now. When I do I don't think I'll still be doing consignment anymore.
Btw, I now have an appointment with a the manager of a store on Monday. I guess we'll see, he may just turn me away after seeing my guitars and then all this will be moot.
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Re: Thinking about consignment...

Postby Bob Gramann » Fri May 06, 2016 4:44 pm

But, if the store sells your instrument for $2500 and keeps $500, you still have $2000. If you need to keep $2000, your instrument has to be worth at least $2500. The diffference between a $2000 and a 2500 handbuilt instrument is not in the materials but in the execution. Make it worth $2500. There's no way you can compete with importedd factory instruments on price. Yours have to be clearly superior.

Also, I don't know how deep into this you are so far. It used to be a common maxim that you ought to have a dozen or more guitars completed before you start selling. My own experience bears this out. I'm working on 115 right now. There were issues in my first dozen or so that didn't become apparent for a while. The experience that I got from those early guitars helped improve practices and designs so that I made much more reliable guitars after that. I made special deals on the first few that I gave away or sold and repaired everything that went wrong, but I'm glad they are in the hands of friends.
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Re: Thinking about consignment...

Postby Matthew Lau » Fri May 06, 2016 7:39 pm

These guys are way more experienced than me, but I'll add my $2.

Some consignment stores (Dream guitars, Gryphon, and Guitar Solo SF) may be worth consigning to for the online exposure.
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Re: Thinking about consignment...

Postby Randolph Rhett » Sat May 07, 2016 11:51 am

Ryan Mazzocco wrote:But the problem is I don't have that kind of capital to spend on marketing right now.


Exactly. The store owner has put a lot of capital into owning and running that store (and keeping it open in the face of Guitar Center and Musician's friend). 20% may seem steep, but honestly I would not be surprised to hear someone ask for 50%. The only common sense things I could suggest is:

1) Build a nice but not overly precious guitar for consignment. Something that showcases your talent, but that you won't be devastated when it gets dropped, or badly scratched, or warped by temperature changes.
2) Assume the guitar is as much a marketing piece as something you actually expect to sell and make money off of.
3) Offer to pay a commission to the store for any custom orders that come from them.

When you have a waiting list six months long and a good reputation you can forget the help of a reputable store.
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Re: Thinking about consignment...

Postby Simon Magennis » Sun May 08, 2016 11:12 am

If you are in the Art business, 20% would be an absolute gift. Art galleries take 40%-60%. Some may even charge more. Only top "stars" n the art market can do any better than that but even then it is probably 30%+.

Bob Gramann wrote:…. There were issues in my first dozen or so that didn't become apparent for a while. The experience that I got from those early guitars helped improve practices and designs so that I made much more reliable guitars after that. I made special deals on the first few that I gave away or sold and repaired everything that went wrong, but I'm glad they are in the hands of friends.


Darren Hippner still sometimes gets some bad publicity about some early instruments he built which he sold strongly discounted, but publicly, pointing out the defects which were basically just cosmetic in any case. He is probably at the 600+ instruments at this stage but the bad rap comes back.
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Re: Thinking about consignment...

Postby Ryan Mazzocco » Mon May 09, 2016 5:30 pm

well it's on. I met with the store manager today and he took 3 of my guitars for my full asking price at 20% commission. Now let's hope they sell. Thanks for all your advice and suggestions. I took everything that was said here under very serious consideration as we negotiated. Thank you!
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Re: Thinking about consignment...

Postby David King » Mon May 09, 2016 10:09 pm

The last time I tried a consignment, I sent a friend into the store after a month or so and discovered that they had added an extra $600 to my price which they were clearly not going to tell me about if it had sold. The oldest and largest music store in a town might just be the most crooked as well.
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Re: Thinking about consignment...

Postby Perry Ormsby » Tue May 10, 2016 9:28 am

So what? If the retailer gets more money, he will sell more product... We have a dealer that buys at full price, and adds 30-50%. People still buy them.

At 20%, there isnt much skin in the game for a retailer. If they arent outlaying their hard earnt dollars to stock your guitars, they prioritise already purchased instruments.

If you had a choice of selling an in stock guitar, already built and paid for, or take the same amount of money for one that needed materials purchased, and then built, which would you rather sell? One you'll pocket all the cash... one you'll fork out 80% and give it away...

We are entering the retail market PROPERLY for the first time this year. What we have found is that even just 5% extra is a massive incentive for a retailer. Example: our dealers were looking at placing the minimum orders of 8 guitars. 5% extra discount at 20x, was enough encouragement to order 20+. We are then more proactive in assisting them, which then relates to more sales...

Example: One store took their first order on Friday at 4pm. It's tuesday evening and they have sold 70% of the order already.
Another store went for the extra 5%, which then gave them 5% towards marketing, and that saw an influx of sales. Their second order was for 44 instruments, and third order 97.

Remember also, an in stock guitar should be more expensive than the exact same instrument that has to be built over 3-6-12-24 months. People pay a premium for getting it "NOW". So put your consignment price up 10% and give the dealer 30% all up. Watch them sell.
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Re: Thinking about consignment...

Postby Peter Wilcox » Tue May 10, 2016 2:14 pm

Perry Ormsby wrote:We have a dealer that buys at full price, and adds 30-50%.
This doesn't sound like consignment - it sounds like you sell him the product for a price (he buys it - he owns it), and then he can market it however he likes, without payment to you being contingent on sale.
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Re: Thinking about consignment...

Postby Perry Ormsby » Wed May 11, 2016 12:59 am

Peter Wilcox wrote:
Perry Ormsby wrote:We have a dealer that buys at full price, and adds 30-50%.
This doesn't sound like consignment - it sounds like you sell him the product for a price (he buys it - he owns it), and then he can market it however he likes, without payment to you being contingent on sale.


Correct, it was a reply to David's claims of retailers being crooked. I never claimed it was a consignment.
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Re: Thinking about consignment...

Postby Peter Wilcox » Wed May 11, 2016 1:52 am

I think David's point was probably that his consignment was for an agreed upon percentage of a set price, and the dealer raised the selling price, possibly to try to profit the entire difference without passing along the percentage of the increased price.

It sounds like there are lots of ways to market a product, (and I speak from ignorance, as I've never sold anything except my own skills and expertise), but if it were me I'd agree on a monetary price, and let the dealer or consignee get what he can above that, and leave percentages out of it.
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Re: Thinking about consignment...

Postby Perry Ormsby » Wed May 11, 2016 2:58 am

And my point was "who cares"? David thinking he's getting scammed, when ultimately he gets the dollars he was after, and the dealer gets a higher percentage, meaning he is more excited to sell more, is a win win.

You want dealers, either on wholesale or consignment basis, to be excited, encouraged, and proactive in selling YOUR product over anyone else.

Alternatively, you could tell that dealer to get lost, and lose those sales for no reason other than you're bitter you cannot sell yourself.
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Re: Thinking about consignment...

Postby David King » Thu May 12, 2016 11:55 am

Perry I have to admire your power of positive thinking but in my case the guitar sat for nearly a year and never sold at the over inflated price. I'd hoped to sell it quickly and turn that capital into something useful for my budding company. I ended up giving the instrument away because it was trashed after a year of shop handling. Had I gotten my money I would still be annoyed that the 25% store commission would have become a 40% commission. Call me shortsighted but I have come to respect written contracts. If you choose to deal with crooked dealers who have a bad reputation in the local area but who can draw in out of town tourists who don't know any better then be aware that these dealers probably won't back you up later if there's a problem and your reputation will also suffer. All I'm suggesting is that you know who you are dealing with.
One reason for a dealer to overprice instruments that cost them nothing is to make their own instruments appear to be a bargain. The high-end consignment stuff is simply the eyecandy that brings in the more sophisticated clientele.
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Re: Thinking about consignment...

Postby Chuck Tweedy » Thu May 12, 2016 2:58 pm

My experience with the condition of instruments on consignment is different that others. So far, I have been shocked at the pristine condition that they remain in.
I had a guitar at Buffalo Brothers for 2 years before it sold, and the last time I saw it, I swear it looked better than when I gave it to them. It has an FP finish! That place was kinda special though - they did take care. Too bad it is gone.
I only hope that SBGB will be as good.
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Re: Thinking about consignment...

Postby Randolph Rhett » Fri May 13, 2016 2:17 am

Not to high jack, but as a San Diegan I'm curious what SBGB is? I've been waiting to see who will fill Buffalo Brothers' void.
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