Understanding my fee structure and pricing

Thank you for your interest in learning more about my fee structure and pricing. I'm hopeful the response here will help you better understand the foundation for my pricing structure.

For context, I am the son and grandson of small business owners. I have been a small business owner for over 25 years in multiple fields. During my time in and around small businesses I have learned that the single most important aspect of a business relationship with a customer is to make sure that the customer is a good fit for my shop.

"Fit"

The most crucial factor when determining the congruity mentioned above is that the customer and the shop owner must agree on the value of the work being done. I have learned from experience that the customer must agree, and fully believe, that the price being charged is fair and reasonable. If they do not agree, then they are not a good fit for the shop and the job should not be done. If the customer does not believe they are being charged a fair price, then they will be resentful and perhaps angry, which is a very bad scenario for all involved.

When there is a disagreement on whether the pricing is fair or reasonable it does not mean that one person is right and the other is wrong. It simply means that they each hold different values for the job that is being discussed. There is nothing wrong with that, and I routinely (and nicely) tell prospective customers that they would be better off seeking work at a shop that charges less than what I charge.

Pricing

Professional guitar repair is a professional trade, requiring high levels of skill, training, experience and expertise. My rates are based on the rates of local skilled and specialist-level tradespeople: electricians, plumbers, carpenters and HVAC technicians with similar levels of experience as mine. Tradespeople in these professions with 10+ years of experience are typically master-level technicians. Although there is no master-level certification for guitar repair, I have acquired skills and knowledge equivalent to the master-level of other trades.

"But Al, I still don't understand why other shops charge less than you do. Doesn't that mean that you are charging too much and should lower your prices? I mean, come on, how much expertise does it require to do a set-up for goodness sakes?!?!"

Good question! Many shops offer set-ups at lower prices, and one would think that a set-up is a set-up. That would be true if all technicians did set-ups the same way, with the same understanding of the importance of measuring the specs for repeated success, using precision tools to attain those measurements and following the correct order of operations. Set-up specs are measured to the thousandths of an inch. Small variances lead to vast quality differences in the end result. Also, knowing how to diagnose and address problems that reveal themselves during a set-up is a critical skill that not all technicians possess.

Another part of the answer lies in the math of each job. I have a set hourly rate, and in order to actually make that amount I need to charge my time accurately. If I know that a job takes 10 hours start to finish, then I need to charge $1,000 in labor for that job if it's done in my standard queue. If my customer tells me that the shop they talked to charges $500, then I know that shop is either billing at half the hourly rate that I do, billing for only their time at the bench and not for other time spent on the job away from the bench, or they are doing the job in half the time.

It is possible that they work much faster than I do. It's also possible that they are doing less detailed work and/or lower quality work than I do, or are providing less customer service than I do (shorter and/or fewer interactions, longer response time to emails, texts, and phone calls). Either way, I've decided not to concern myself with the fees that other shops charge.

The other part of the answer to the question of why shops charge different amounts is that there are many different business models that repair shops utilize, including no business model at all. I've talked at length with many shop owners around the world, and I've learned that some shops see their business as mostly a support to the local music scene, or operate as a not-for-profit or non-profit business. Other shops don't always depend on their shop to produce a sustainable income and/or are willing to work excessive hours. There are some shop owners who are simply willing to live on a much lower income, often with seriously problematic financial results. Many shop owners only consider the actual time spent at the bench on each job when calculating their pricing, without consideration for time spent on the job away from the bench (emails and phone calls to the customer, time spent researching the job or ordering parts, etc.).

"Over-charging"

At this point I'll say a few words about the topic of "overcharging." This term is frequently used in the context of price comparison between shops. If one shop charges more than another shop, it does not mean that the higher priced shop is "over-charging." Rather, it means that the higher priced shop has calculated a higher price based on that shop's needs and on economic principles such as cost of living, inflation, and other factors listed here.

"Over-charging," when used correctly, refers to fraudulent behavior. Typical examples include charging more than the agreed-upon or contracted hourly rate, or inflating the amount of hours worked on a job. The distinction between fee differential and "over-charging" is critically important, because an accusation of fraudulent behavior is very serious.

My business model

In the past 4 years I have joined and become active with an international professional organization for luthiers called The Looth Group. Through that group I've gotten to know some of the most recognized and respected builders and repair people in the world. I've learned a tremendous amount from this group. My repair skills have grown exponentially as a result, and I've also learned much about the business aspect of running a repair shop, which in turn has greatly informed my own business and customer relations model.

The specific business model that I have developed for my shop has been extremely well received within The Looth Group, as has my model for care of self within the small business context. I regularly contribute written articles that are published on The Looth Group website pertaining to these and other related topics, and I lead a bi-weekly online interactive video discussion group that focuses on these topics as well.

From this experience I have come to learn much about the business and customer practices of dozens of shops worldwide, and I've heard and discussed the concerns and problems of many shop owners. I have been asked by many in that organization for consultations on how to better develop a productive and healthy business and workflow model. The most common situation I see in my discussions with my peers is that many shop owners don't know how to accurately analyze the value of their work on the open market, or are not comfortable charging fees commensurate with that value. I also have met and talked to shop owners who intrinsically believe that guitar repair work should be inexpensive. Many have not raised their prices in 10–20 years.

Consequently, I have watched many shops fail and close, and — even more sadly — I have watched many shop owners struggle in their efforts to enable their shop to produce a viable income, overworking themselves in the process at great cost to their mental and physical health. Many of them incur severe economic misfortune, excessive physical pain and discomfort, and in more than a few cases have had to leave the business altogether; in other cases, have died an early death. Fortunately, I have learned how to run my business in a way that produces a fair income for myself and allows me to enjoy good mental and physical health, and hopefully a long and enjoyable life.