How much does it cost to open a guitar store?

July 18, 2007 1:09 PM

How much does it cost to open a guitar store?

Background: The area I live in is pretty much devoid of good music stores. There's one a few towns over with knowledgeable staff and good prices, but they don't do any sorts of repairs or deal with any used equipment and they don't really have a varied string selection. All the other stores have terrible prices and deal in beginner or knock-off equipment, and I like to daydream during my boring times at the office (read: all the time at the office) about opening my own and cornering the repair/resell market. Problem is, I have no idea how much it actually costs to open a music store.

Rent should be fairly low--I'm more interested in knowing how much it would cost to get inventory for a store with what you would consider a "good" selection, and if it would be better to start out as a repair shop instead.

posted by Benjy to work & money (12 comments total)

More than you'll recoup.

It's almost impossible to run a profitable guitar store, especially now that musiciansfriend.com exists.

Simply put: If you charge low enough prices to compete, you will not be profitable. If you offer great customer service, the people buying the guitars won't care enough to pay more for the product.

Now, if you're an outstanding luthier with a fantastic reputation and the ability to turn around repair jobs very quickly, you might be able to make enough to stay in business, if you're in an area where there will be plenty of work for you.

Sometimes I, too, dream of such things. But I have enough friends who have tried and failed to know better than to do it.
posted by The World Famous at 1:41 PM on July 18, 2007

I get the impression that a lot of music intrument shops are authorized dealer showrooms, in other words the guitar manufacturers loan floor models to the shop owner and the shop owner sells them on consigment basis.
posted by StarForce5 at 1:42 PM on July 18, 2007

All the other stores have terrible prices and deal in beginner or knock-off equipment

Well, there's a reason for that. These companies, like Crate, will front you equipment without you purchasing them. They'll give you a PO (or whatever the proper terms are) for the stuff with an due date of 360 days. If you dont sell the inventory you can return it. Its no risk. And its no money. This is why you see crate stuff everywhere.

Nicer brands dont have to do this. Korg or whomever just says "Buy our stuff and sell it. Good luck!"

In the small business game you need "terrible prices." There's no way youre getting the volume discounts and promotions Guitar Center is getting. Thats why these small shops sell close to MSRP. They need that money to stay afloat. They dont sell in volume. They need to make money off each purchase.

The economics of small business isnt very forgiving. I think you'll find that it will be hard to compete with these stores. Your pricing will look a lot like their pricing.

Repairs are a different market entirely. Youre not selling a product, youre selling a service. Youre saying "We are experts in repair and charge x amount per hour." This means no inventory. You can do this with only qualified labor. This is probably a lot easier to run.
posted by damn dirty ape at 2:18 PM on July 18, 2007

There's two questions here--how much does it cost to open a retail business in your area, and how much does it cost to open a guitar shop. So, approach two (or more) people; an owner of a local business that approximates your ideally-sized storefront, and an owner of a guitar shop that you admire. Ask them if they can sit down and chat with you. More often than not, they'll really enjoy the opportunity to talk about their businesses and give you advice.
posted by fletcher at 2:25 PM on July 18, 2007

I think it depends if you're selling new or vintage. You mention the resell market so I guess it's the latter.

I agree it would be difficult to compete on new stock but if you're stocking great used guitars and know your stuff, I think you could pull it off. There's a guitar shop near me in London that's sells both and I think they do pretty well. The vintage stuff is all sold on consignment and they get a nice chunk of the selling price. And when I sold my old Rickenbacker there, I got much more through their shop than I would have gotten on eBay (reserve never met). And their stock is always changing.

If you're passionate and knowledgeable about guitars I think the fans of vintage will check you out. And you could also make money on repairs, set ups, etc.

As for how much it costs, like I said, sell on consignment and it shouldn't cost much to build up a good inventory.
posted by gfrobe at 2:39 PM on July 18, 2007

For what it's worth, I've known several musical instrument repairers as friends. They have great lives - they set their own hours and manage themselves and gain a lot of satisfaction from their work. Unlike a music shop, they don't have to carry any inventory and their entire capital outlay is for their tools.

Every now and then, they sell instruments on behalf of others, or fix up instruments to sell, but in those cases their inventory cost is low.

I would be looking hard at the repair shop. If you think you can do it, then build out a small retail arm around it (strings, accessories, tchotchkes).

Over my lifetime I've seen all the great music shops dwindle. Bluntly, not so many people want instruments, and thanks to falling prices, you can get playable instruments cheaply. Nobody makes out great when demand is dropping and margins are shrinking. That's why all your local shops are peddling as much cheap crap as they can -- except for the boutique end for rich old people and genuine professionals, that's the only way they can stay afloat.
posted by i_am_joe's_spleen at 2:49 PM on July 18, 2007

There is a local guitar shop in my hometown that is an interesting case study. They are on a busy street, in a densely populated town of 40,000 affluent 20 somethings right across the river from NYC. Exclusively vintage/used, with a repair business. They are also directly next door to a competing guitar store that also sells used guitars and offers repairs, strings and lessons.

Yet there is almost no-one in either store, ever I asked the first store's owner a couple of years ago what gives, he said his business is almost 100% internet/eBay based, the storefront acts as a place for inventory, repairs, and the occasional purchase. He seems happy enough and even has some employees, though I think most of them work for free just to hang out.
posted by remlapm at 2:59 PM on July 18, 2007

That fascinates me, remlapm. Who are these people who buy instruments without playing them first?
posted by i_am_joe's_spleen at 3:28 PM on July 18, 2007

Me, joe's_spleen. Been over it. I know perfectly well that I can set up almost any guitar to my liking. I also keep enough of an eye on ebay guitar sales that I know what the going price for things is, so I know if I really hate the instrument I can make a few value-added mods to it and turn it around for enough of a profit to cover the shipping.

I wouldn't open a guitar shop in 2007 without a fantastic internet presence.
posted by ikkyu2 at 3:56 PM on July 18, 2007

I would say if you get into repairs, you really ought to get into modifying guitar effect pedals... There is a bunch of info on the net about it and if you get good at it you'll generate some buzz for your store... It's a rare service to find locally.
posted by magikker at 4:23 PM on July 18, 2007

Thanks for the answers everyone, I had suspected it would be a losing business in almost any form. I'll look into the online repair/resell route though, as I'm pretty good at fixing wiring and setup issues.
posted by Benjy at 5:11 PM on July 18, 2007

Hold on a sec. There must be a way to make it work. In my small neighborhood there are multiple guitar stores and at least two drum stores, and as far as I can tell, they all make money. One of them (the awesome one) just moved to a super huge space, which I can't imagine they would do if they were slowly going out of business. Their prices are reasonable and they sell awesome stuff at every price level (not just super boozhy boutique/vintage stuff, though they do sell like hand built $500 distortion pedals), both new and vintage and consignment-style (they take 30% on consignment). It might be because they are friggin awesome. They always have the coolest crap and they have the best service. I called them last wednesday _after they closed_ to ask when they closed cause I needed some more trs patch cables for an emergency and they stayed open while I went over there. The repair dudes are awesome too. They seriously make your broken crap better than new. MAIN DRAG YOU ARE THE EFFING BEST!

Anyway, just trying to provide a contrary data point to the naysayers. I think it's probably one of those things where yeah most half-assed guitar shops are going to get run out of business by GC, but if you are really, really kick-ass you can still do fine. I go to GC for commodity stuff sometimes, but my local shop is close enough on most stuff, besides stocking better stuff and doing WAY, WAY better repairs, and I go to another small guitar shop (Ritchie's) for guitar setups and stuff because its better and cheaper than GC.

What everyone is saying in this thread could apply to basically any business. The big guys have more market power than you do, so you can't compete on price. Increased market efficiency has reduced the margins on highly tradeable or commodity goods. No crap. You have to add value somewhere, but you definitely can find a place to do it. So do it but do it awesomely.
posted by jeb at 6:05 PM on July 18, 2007