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Thread: Pickup Pricing

  1. #1
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    Pickup Pricing

    I'm not sure this is a question so much as a conversation starter. I've been making pickups for a short four or five years. It started as a hobby and then, as I got better, progressed to me making pickups for friends at cost. Then, I started selling some at a fairly low cost. Now I am at a point where this low pricing has (as Lollar has predicted for all such businesses) become a hindrance.

    How is everyone setting their pricing? Right now I am primarily trying to compete with Duncan, in that they are very well known, very well liked, discussed ad infinitum online, and are affordable.

    But mine are handwound and mostly custom.

    Anyway, I'm hoping a little discussion will help me.

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    I'd probably set my prices at least at what the major manufacturers charge. Is that enough for you to make money? I expect to pay $70-100 for a pickup and am happy to pay that to get what I want. If your custom winds offer a better sound I would be willing to pay more but I am confident I can get a pickup in that price range that I like so you are offering primarily a more personalized experience which adds value. I say this as someone who likes to swap pickups, not a winder or retailer. Realistically the raw cost is probably under $10 for a major manufacturer so the majority of what I pay for is reputation and selection and expertise.

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    Quote Originally Posted by Richard View Post
    I'd probably set my prices at least at what the major manufacturers charge. Is that enough for you to make money? I expect to pay $70-100 for a pickup and am happy to pay that to get what I want. If your custom winds offer a better sound I would be willing to pay more but I am confident I can get a pickup in that price range that I like so you are offering primarily a more personalized experience which adds value. I say this as someone who likes to swap pickups, not a winder or retailer. Realistically the raw cost is probably under $10 for a major manufacturer so the majority of what I pay for is reputation and selection and expertise.
    Thanks for your insight. I think one of my new concerns is that, while the major manufacturers can charge an affordable price, they can do so because of their incredibly low "raw" cost.

    It costs me quite a but more for materials, packaging, etc. The obvious solution is to raise prices but there's a point at which I leave the world of affordable and enter the world of "at that price I mine as well buy ...."

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    Retail pricing is usually between 5 and 6 times the burdened cost of production. That's for a manufacturing environment, though. Your final figure may be a different calculation depending how much you pay for raw materials and other overheads. If you're selling direct then that helps you to maintain profitability.

    I doubt whether you're actually competing with Duncan, just like if I build a few pedals I'm not competing with Electro Harmonix. A lot of my customers here in the UK buy pickups from small-scale producers in the US. Generally cost is not a barrier - we have shipping, import duty and sales tax (VAT) which bumps up the price way beyond what mainstream producers are selling pickups for via worldwide distribution. Identify what the primary selection criteria are for buying a pickup and I bet cost is not the main consideration, other than for someone replacing a damaged pickup in an imported budget guitar.

    If cost is the primary factor in your sales model, then that's a downward spiral and you'll always be scratching round at the low end of the marketplace. If your margins are too slim, you lose incentive and diminish the prospect of growing your business.

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    ToneOholic! big_teee's Avatar
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    That is a big dilemma with hand made pickups.
    If you nearly give them away you can stay busy.
    If you charge what the retail is for name brand pickups, a lot of customers will buy the name brands.
    At first it is fun, but then without much compensation it becomes a chore.
    I live in an economic depressed region, not much money here.
    IMO you can make more money doing nearly anything else, paper boy, mowing grass, etc.
    T
    Last edited by big_teee; 04-27-2017 at 02:48 PM.
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    It also depends on your business model. Selling directly to customers (usually e-commerce) is different from selling through dealers and music shops. Dealers and music shops buy at a discounted price (-40%/50% I guess), so in order to have the same mark-up you have to almost double your prices.

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    There are a lot of people winding pickups, like there are a lot of people making jam at farmer's markets. Other than cost, what would make someone buy yours?
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    Quote Originally Posted by Mick Bailey View Post
    Retail pricing is usually between 5 and 6 times the burdened cost of production.
    Is this a standard of some sort?


    I doubt whether you're actually competing with Duncan, just like if I build a few pedals I'm not competing with Electro Harmonix.
    I obviously didn't mean competing in this sense. I meant price point.

    If cost is the primary factor in your sales model, then that's a downward spiral and you'll always be scratching round at the low end of the marketplace. If your margins are too slim, you lose incentive and diminish the prospect of growing your business.
    Right. That's kind of the premise of the post.

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    Quote Originally Posted by Mick Bailey View Post
    There are a lot of people winding pickups, like there are a lot of people making jam at farmer's markets. Other than cost, what would make someone buy yours?
    Quality alone. And I'm lucky to be in this position.
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    Quote Originally Posted by big_teee View Post
    That is a big dilemma with hand made pickups.
    If you nearly give them away you can stay busy.
    If you charge what the retail is for name brand pickups, a lot of customers will buy the name brands.
    At first it is fun, but then without much compensation it becomes a chore.
    I live in an economic depressed region, not much money here.
    IMO you can make more money doing nearly anything else, paper boy, mowing grass, etc.
    T
    It is a big dilemma. Yuge.

    I'm absolutely charging enough to stay in business and stay solvent at the level of business I am at. But I am also stalled as a business. The ideal situation is to charge enough that I can afford to get custom baseplates made, bobbins molded, etc. But even that seems like a middle ground that is far away.

    And maybe that is how it will remain and so be it. But it's definitely more profitable and far more fun than mowing grass or throwing papers!

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    Supporting Member eschertron's Avatar
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    Quote Originally Posted by Mick Bailey View Post
    There are a lot of people winding pickups, like there are a lot of people making jam at farmer's markets. Other than cost, what would make someone buy yours?
    Quote Originally Posted by jrdamien View Post
    Quality alone. And I'm lucky to be in this position.
    So you have an effective marketing strategy that persuades potential buyers that this is true? If so, you are very lucky!
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    Quote Originally Posted by Steve Conner View Post
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    Quote Originally Posted by eschertron View Post
    So you have an effective marketing strategy that persuades potential buyers that this is true? If so, you are very lucky!
    Is word of mouth considered a legit marketing strategy?

    There are a TON of custom pickup makers. I hear from a lot of people who have bought a custom pickup and hate it/think custom pickups are a waste of money/wish they'd bought something more well known. I tell them I'll give them one of mine for free and if they don't love it they can just give it back. If they do love it, they pay me.

    A lot of this, I think, is psychological. I know it is.

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    The production-to-retail is rule of thumb, not a standard. It's something I came across early on in business development seminars.

    A lot of people do buy custom pickups and dislike them, often from A-list winders. But then again, people buy from mainstream manufacturers and dislike those as well. It is psychological - but then again, that's the whole basis for music. I have some customers with an endless churn rate for pickup replacement; I fit pickups one week and swap them out a month later for something else. These are pickups from reputable makers, too.

    Within the parameters of a specific design, there's only so much variation unless that particular format has some innovative aspect. I think many players expect too much with a pickup swap. I have one guitar that's had three sets of Strat-type pickups in succession. Apart from the labels on the boxes they could have all been made by the same person, and they all sound pretty similar. But the customer is endlessly seeking some indefinable improvement.

    The killer for me was I got sent a set of Strat pickups, hand-wound in China. I still have them fitted on one of my guitars and have no intention of swapping them out. The trade price on the set was £17 and they sound as good as anything. Now I just do rewinds for a few regular customers.

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    Quote Originally Posted by jrdamien View Post

    Quote Originally Posted by Mick Bailey View Post
    There are a lot of people winding pickups, like there are a lot of people making jam at farmer's markets. Other than cost, what would make someone buy yours?
    Quality alone. And I'm lucky to be in this position.
    Totally agree. . .

    From my limited experience as a very small time boutique winder (doing local area sales only), I find if you are a small guy, reputation and world of mouth are king.

    My favourite Luthier and best customers once told me he had a set of mine he had just put in a customer Strat and he also had a Strat with a set of Abigail Ybarra Custom Shops. He told me preferred the tone of mine better, all day long. I think I sell more pickups to this one luthier/guitar tech than any other. He's a very driven and talented young guy. He's in the midst of having a MONSTER spray booth installed so he can do Nitro. He also has one of the 3 Plek machines in Canada and is the tech rep for maintenance and installation on all Canadian Plek installations going forward. Talented enthusiastic youth and half my age. Arghhhh. . . But hey, I can get out fishing any day I want now.

    I've thanked him many times for the complement, but told him I wasn't reducing his dealer pricing because of it. Tone is a very personal thing.
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    Supporting Member eschertron's Avatar
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    Quote Originally Posted by kayakerca View Post
    I think I sell more pickups to this one luthier/guitar tech than any other. He's a very driven and talented [snip]...
    That's the kind of business relationship that can lift both parties! Congrats!
    Quote Originally Posted by Steve Conner View Post
    If it still won't get loud enough, it's probably broken.

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    I'm on the consumer end and my opinions are mine aloneñ compared to the guys here that have seen many pickup purchases.

    How many pickups do you want to make and how much money do you want to make? Divide money by number of pickups and that's your price per unit.

    Sometimes I read it good review of a pickup and want to use one in a guitar. Sometimes I look for a replacement. I can safely say I won't be buying the Seymour Duncan Zephyr pickups any time soon but if I was looking to replace the bridge pickup in an Esquire I would have a bigger budget per pickup than for a Stratocaster.

    Do you have a website with GOOD soundclips? Seymour Duncan used to have a bunch but their current website does not. Eminence and Jensen have excellent soundclips. If you have that your chances of selling me a pickup is no longer zero.

    I buy DiMarzio a lot because you can compare the sounds of the pickups and I know what they sound like. I also like their wire color code.

    If you make something that most people don't, if I need that makes me buying your pickups a possibility.

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    Quote Originally Posted by jrdamien View Post
    Quality alone. And I'm lucky to be in this position.
    The word 'quality' is often misunderstood. From a manufacturing perspective it simply means that the product meets a set of acceptance criteria or standards. Within the public realm it's used as a term of excellence. However, quality is related to function and a perceived higher quality item may not necessarily perform as well as a lower quality one. I'll use the Arion chorus pedal as an example; in my mind this was always a really good pedal from day one - it sounded good, is well constructed and does an excellent job. But it was always seen as a cheap pedal - people saw the plastic case as a sign of low quality (it isn't - it's superbly designed and durable). Every provincial music store had these sitting in the window along with the dead flies and bleached-out packaging. But more recently a few celebrity guitarists have started to use them and the original models are ridiculously expensive. So now the cheap pedal is a 'quality' one.

    So, if you're selling on quality alone, what does that mean to a customer? Regardless of construction, if that pickup meets that individual's acceptance criteria for a 'quality' product, then surely that's a successful outcome. In a row of 10 sets of pickups from different makers, what would make yours stand out enough to be selected? If you're saying it's the quality alone, then exactly how are your pickups superior?
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    Senior Member Jim Darr's Avatar
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    If you sell based on a low, or a very competitive price point, you are at the mercy of the next guy with a lower price. If you have a truly GREAT sounding pickup you should be positioning yourself as the source for THAT sound...that way price point is much less of an issue. The problem is that there are few "great sounding" pickups being made...yes, there are many good sounding pickups, but do they really stand out as GREAT???

    Another question related to pricing is consistency...you have to be consistent in your build process in order to get that reputation of being a top "shelf builder".

    Also, I'd rather be GREAT at a few pickup types than "GOOD" with many!!!

    Frankly, I see some of the prices being charged and cannot figure out how these guys are profitable or still in business. It seems like many winders are just close to trading dollars and you can't sustain that very long.

    Anyway, my two cents...
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    Supporting Member eschertron's Avatar
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    ...primarily trying to compete with Duncan, in that they are very well known, very well liked, discussed ad infinitum online...
    You bring up some good points here. known, liked, discussed all orbit around the central core of marketing: getting the product out to where potential customers can be - and are - made aware of the product. There seem to be a lot of 'magic bullets' out there. Social media, email marketing services, business card and other printing services are all available to give the polished professional edge to any startup venture. The good news is that I don't have to buy full-page ads in Guitar Player to get exposure, flip side is there's a lot of time and savvy needed to make effective use of the modern tools, if I'm not going to spend a lot of money for someone else to do it for me.

    Conversationally, then, what are some personal strong points that you rely on get the exposure you want?
    Quote Originally Posted by Steve Conner View Post
    If it still won't get loud enough, it's probably broken.

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    Quote Originally Posted by eschertron View Post
    You bring up some good points here. known, liked, discussed all orbit around the central core of marketing: getting the product out to where potential customers can be - and are - made aware of the product. There seem to be a lot of 'magic bullets' out there. Social media, email marketing services, business card and other printing services are all available to give the polished professional edge to any startup venture. The good news is that I don't have to buy full-page ads in Guitar Player to get exposure, flip side is there's a lot of time and savvy needed to make effective use of the modern tools, if I'm not going to spend a lot of money for someone else to do it for me.

    Conversationally, then, what are some personal strong points that you rely on get the exposure you want?
    I would say that 75% of my business is purely word of mouth. There's likely nothing better. And 25% is people just randomly searching in which case I rely upon appearance of the website and reviews online.

    My primary concern with even beginning a dedicated marketing campaign is fear of becoming too busy. I have a "day job," perform quite a bit, am otherwise busy, etc. I wouldn't have enough time to commit to a sudden onslaught of orders if only because I understand those orders will wax and wane and the income will be unreliable.

    But it would be nice to make that transition some day. And this line of thinking is towards that.

  21. #21
    Woodgrinder/Pickupwinder copperheadroads's Avatar
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    Pricing is demand ,plus if you have put everything into your product you will be rewarded =tone over every thing else .
    I see winders that have only wound a handful of pickups that are asking outrageous prices with the aid of advertising everywhere .
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    Quote Originally Posted by copperheadroads View Post
    Pricing is demand ,plus if you have put everything into your product you will be rewarded =tone over every thing else .
    I see winders that have only wound a handful of pickups that are asking outrageous prices with the aid of advertising everywhere .
    As do I. Lots of them.

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    Woodgrinder/Pickupwinder copperheadroads's Avatar
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    My philosophy that I incorporate from my Family's business is .I'm not trying to sell you A set of pickups .I'm trying to sell you ALL the pickups you need till the END .
    Keep in mind I repaired hundreds of vintage pickups for free to gain this confidence .. not snake oil . not advertising .......only facts
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    One of the uncomfortable aspects of manufacture is that mainly the producer gets the least profit out of the value chain in a regular supply model. Most manufacturers (of anything) sell to a distributor. If this distributor is non-domestic then there can be considerable shipping/export costs. The distributor sometimes sells to a wholesaler, then sells to a retailer, then to the consumer. In retail it's not uncommon to see 40%-60% final markup.

    For the likes of SD I imagine the cost of producing a pickup - the 'factory gate price' - to be just a few dollars, but they make thousands and sell them worldwide. A small producer selling directly to a limited market is able to subsidise (relatively) inefficient production rates and costs by cutting out the supply chain. Pitching the correct price can be quite difficult, but it doesn't always influence the sale - one of the rules of sales is to remove price as a barrier and focus on the hidden need.

    If you were to consider the reasons for buying any pickups, maybe the following selection criteria (in no particular order) could apply;

    Sound good
    Easy to fit
    Look good
    Price
    Someone I know uses them
    An artist I like uses them
    Quality
    Well-known supplier
    Good warranty
    Technical specification

    Now, The OP mentions quality as a key selling point, and we're discussing price. But personally I don't think either of those are at the top of my list of selection criteria.

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    Quote Originally Posted by Mick Bailey View Post
    So, if you're selling on quality alone, what does that mean to a customer? Regardless of construction, if that pickup meets that individual's acceptance criteria for a 'quality' product, then surely that's a successful outcome. In a row of 10 sets of pickups from different makers, what would make yours stand out enough to be selected? If you're saying it's the quality alone, then exactly how are your pickups superior?
    The only honest answer to this question is that my pickups are not 'superior' to most well made pickups. They're just my pickups. Knowing what we know about the human mind and marketing, what first and foremost makes any one thing stand out in a line of 10 things is the name on that thing.

    If you have 10 wines the one you expect to be superior is the one with the name recognition. If you taste all 10 and afterward are told that the one you most liked happens to be the $8 bottle, guess what? You still buy the name brand 9 times out of ten.

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    Quote Originally Posted by Mick Bailey View Post
    One of the uncomfortable aspects of manufacture is that mainly the producer gets the least profit out of the value chain in a regular supply model. Most manufacturers (of anything) sell to a distributor. If this distributor is non-domestic then there can be considerable shipping/export costs. The distributor sometimes sells to a wholesaler, then sells to a retailer, then to the consumer. In retail it's not uncommon to see 40%-60% final markup.

    For the likes of SD I imagine the cost of producing a pickup - the 'factory gate price' - to be just a few dollars, but they make thousands and sell them worldwide. A small producer selling directly to a limited market is able to subsidise (relatively) inefficient production rates and costs by cutting out the supply chain. Pitching the correct price can be quite difficult, but it doesn't always influence the sale - one of the rules of sales is to remove price as a barrier and focus on the hidden need.

    If you were to consider the reasons for buying any pickups, maybe the following selection criteria (in no particular order) could apply;

    Sound good
    Easy to fit
    Look good
    Price
    Someone I know uses them
    An artist I like uses them
    Quality
    Well-known supplier
    Good warranty
    Technical specification

    Now, The OP mentions quality as a key selling point, and we're discussing price. But personally I don't think either of those are at the top of my list of selection criteria.
    You could have added an additional sentence as to what's at the top of your selection criteria...

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    Ah, yes.

    For me, they have to sound good above any other consideration.

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    ToneOholic! big_teee's Avatar
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    Tone above everything else.
    You'll notice I go by ToneOholic!
    If a pickup doesn't sound good to me I won't offer it!
    I've turned down biz, cause I know what the customer wants, won't sound right.
    But, then again. I'm retired and I don't need the money, or the aggravation!
    T
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    Quote Originally Posted by Mick Bailey View Post
    Ah, yes.

    For me, they have to sound good above any other consideration.
    Well...yeah.

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    For some, artist endorsement sits there right at the top. It doesn't do it for me, though. For others, tone doesn't matter but originality does - the pickup has to be identical to the original regardless of how it could be improved.

    Then there's the fact that for some pickups there is little choice - you have a very limited fitment (some Parkers, for example).
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    Supporting Member eschertron's Avatar
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    Tone
    For the sake of discussion, I'd say each user knows what they want in terms of tone, but may not be able to communicate that 'ideal' to the winder. Also, each winder rates their own pickups - and tries to optimize its tone - by how they hear them in use. How do makers who pride themselves on tone communicate the perception of the pickup's sound to the user? At some point, the prospective buyer can't audition the pickup (or amp, or speaker - almost anything in the music biz!) and then must rely on words or pictures or expert witness to be convinced to buy.

    I've read the horror stories of customers who return set after set of pickups because they need to get something that matches the tone in their heads. How do you make money at all when you have a drawer full of returned 'custom' pups?
    Quote Originally Posted by Steve Conner View Post
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    Quote Originally Posted by eschertron View Post
    For the sake of discussion, I'd say each user knows what they want in terms of tone, but may not be able to communicate that 'ideal' to the winder. Also, each winder rates their own pickups - and tries to optimize its tone - by how they hear them in use. How do makers who pride themselves on tone communicate the perception of the pickup's sound to the user? At some point, the prospective buyer can't audition the pickup (or amp, or speaker - almost anything in the music biz!) and then must rely on words or pictures or expert witness to be convinced to buy.

    I've read the horror stories of customers who return set after set of pickups because they need to get something that matches the tone in their heads. How do you make money at all when you have a drawer full of returned 'custom' pups?
    It's a huge problem. I think most customers fall into one of two categories. In the first is the player who understands the limitations of a pickup in the grand scheme of 'tone.' Or they understand it after you explain it to them.

    In the second is the player who thinks that the reason they don't sound more like Hendrix is because they don't have reverse stagger strat pickups with a particular color flatwork. There is little ground to be met with such people and I only make pickups for them with the express understanding that, yes, I will create such a pickup to your exact specifications but they are non-refundable. That's a game that only works (I think) at a certain price point.

    It's also a reason I stopped putting up sound clips for all of my pickups. It's kinda-sorta false advertising. I can hire a players who is so f-ing good that he could make a wire strung from my radiator to the floor and amplified through a pickup suspended in mid-air sound so good you'd have no doubt it's a great pickup.

    At the end of the day I think the best way to do it is to explain your pickups sound like your pickups and that goes for every makers' pickups. I very literally and seriously tell people that, if what they want is a P90 that sounds exactly like a 50's P90 from an ES125 (or whatever) than they need to find it on Ebay, spend whatever they have to to get it, and be happy.

    I KNOW I have talked myself out of business with this truth telling but I have only had one return in hundreds and hundreds of pickups. And I do consider it truth telling. I think there is endless bs in this business in particular and the guitar/amp business in general and I'd rather just be as straight with people as I can even if it means losing business.

    This very literally happened this morning. I got a call from someone who wanted an aggressive but chimey and airy humbucker. He's very picky, he says. He knows he can get exactly what he wants from BK but doesn't want to spend the money but how much would it cost for me to do the best knock-off of BK's pickups? So I tell him I don't know how to make that pickup, haven't heard the BK he's referring to, and that I can either make an aggressive pickup I know how to make which will be amazing or a vintage pickup with chime and air for days. I even tell him I'll make something like the BK pickup based on specs but that it will not be guaranteed and can't be returned. At this he got upset and told me he can't believe I wouldn't stand behind my work with a return guarantee and hung up.

    I lost a customer for certain but I also avoided endless hours in addition to the time it takes to build a humbucker and a possibly bad review/forum s**t talker.
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    ToneOholic! big_teee's Avatar
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    [QUOTE=jrdamien;454048]

    I KNOW I have talked myself out of business with this truth telling but I have only had one return in hundreds and hundreds of pickups. And I do consider it truth telling. I think there is endless bs in this business in particular and the guitar/amp business in general and I'd rather just be as straight with people as I can even if it means losing business.

    This very literally happened this morning. I got a call from someone who wanted an aggressive but chimey and airy humbucker. He's very picky, he says. He knows he can get exactly what he wants from BK but doesn't want to spend the money but how much would it cost for me to do the best knock-off of BK's pickups? So I tell him I don't know how to make that pickup, haven't heard the BK he's referring to, and that I can either make an aggressive pickup I know how to make which will be amazing or a vintage pickup with chime and air for days. I even tell him I'll make something like the BK pickup based on specs but that it will not be guaranteed and can't be returned. At this he got upset and told me he can't believe I wouldn't stand behind my work with a return guarantee and hung up.

    I lost a customer for certain but I also avoided endless hours in addition to the time it takes to build a humbucker and a possibly bad review/forum s**t talker.[/QUOTET]

    That is exactly why I don't care if I make pickups for customers, or not.
    I love winding as a hobby, and I dig making a pickup for a particular guitar?
    It's the picky cheap-skate customer that gets too me, that I don't miss.
    I get enquiries frequently for one off pickups, but they want them to sound great, guaranteed, and cheap.
    I tell them good luck with that!
    GL,
    T
    Last edited by big_teee; 05-01-2017 at 11:04 PM.
    Technicians Run the World, but Bankers, Lawyers, and Accountants, Take All The Credit!
    Keep Rockin! B_T
    Terry

  34. #34
    Supporting Member
    Join Date
    Dec 2009
    Location
    UK
    Posts
    2,403
    In the music industry it's very difficult to break the herd mentality that locks people into buying a certain product. The motivations seem to be centred around either artist endorsement, peer pressure or the local movers/shakers. In every location there are respected musicians who form the hub of a radiating family tree and those individuals influence the purchasing decisions of others. I find it intriguing that creativity is locked in a straight-jacket of self-imposed narrow choices. It ought to be the opposite, that creative people seek out products to differentiate their sound from the masses, to create an identity and signature.

    I've found it immensely valuable to attend free business development seminars. In particular, there's a guy named Malcolm Gallagher (Biz Vision) and I've been to a couple of his events and previously subscribed to his free newsletter. Regardless of the product, he has immensely valuable information that's easy to put into practice. Maybe there are similar events in your area. He has a lot to say about pricing, discounting etc.
    jrdamien and eschertron like this.

  35. #35
    Senior Member
    Join Date
    May 2006
    Posts
    126
    Big_teee ,in a case like this,placebo effect counts a lot.I show my intruments to my costumers telling them the pikups are Aero,Nord or Delano and they sound awesome.After them knowing the truth it become just ok.

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