Exactly. The hands-on aspect is huge. I just started playing bass with my church group. This is after playing guitar only for over 60 years (I'm 73). So I recently bought a new, unopened Fender Rumble 500 bass amp from my local GC. I got a 15% discount and I was OK with that. I may go back and buy a P-Bass or other bass instrument to supplement the used Mustang bass I currently own. I'll give GC the business as I want to do my part to help keep them alive and well! 🙂
Plus you can look at the thousands of used gear and actually use your gear card to buy them sometimes getting 2 to 4 years to pay it off ... vs sweetwater with 24 months on only certain models.... plus you can't buy the used gear with the sweetwater card....
Historically my interactions with Guitar Center have been a mixed bag but I will say that my recent experiences have been more positive and I appreciate it
Phil, I’ve been watching you almost since the beginning to see you grow, and you have really carved out a unique niche for yourself on GuitarTube as the premier educator. Your insight separates & differentiates you from the rest of the pack.Great follow up video. Appreciate your effort!
I was thinking through most of the beginning of this video, "yeah, but they still have to sell your 3 guitars to make anything". But as you went on, it put the whole thing into perspective. They dont have "anything" in those guitars so whatever they sell them for is profit - and - you are absolutely right, they will sell something else with those guitars. In all my years of going to Guitar Center, I have never walked out empty handed, and certainly never after I purchased a guitar. There is always something to be bought even if its just picks, a strap or strings. Great video! Things that make you go hmmmm.
You can make more money reselling on Reverb over trading in at Guitar Center… however; you have to wait for someone to buy your guitar and that might take a while (it varies pretty wildly, I sold a bunch when my wife lost her job… but then I had a Reverend from that batch up for 8 months before it sold! I actually sold the case for $200 before I sold the guitar.)
I don't love Guitar Center but they can have killer deals in person. I just got a brand new Gibson Les Paul Standard in bourbon burst for $600 off as a Black Friday deal. It's set up beautifully and has nothing wrong with it. It's always worth a stroll through there just to see what your individual stores might be up to.
My nephew just bought a new Fender Custom Shop reliced Strat with case and all the case candy and certificate of authenticity for $2k on clearance. It was originally $4999. It was a custom order, and apparently whoever ordered it backed out. He scored a great deal for that guitar.
@@mr.smithgnrsmith7808 I promise you I did. It was marked down to $2239, so a little shy of $600 off but it and a '50s Standard in heritage cherry were both marked down to that price.
You have to factor in overhead and taxes. I'm sure that if they weren't making any money they wouldn't be doing the deals... It's all good though, I wish them all the best. and it also sounds like you both were happy, so it's a win win, and the world keeps spinning!
I've bought lots of guitars over the past 10 years from GC and always found their trade policy better than everywhere else. This is the Clearwater Florida GC I'm speaking of and i've always been treated pretty well.
Guitar Center has started getting my business lately because of three things that was better than online. I am a keyboard player and a home recording enthusiast. 1: I bought a used synth from GC because they ship for free, you can return the synth if it doesn’t work and they will offer a warranty for it. 2: You can try it out and listen to gear. I needed to upgrade my mixing headphones and I upgraded my monitors and I could listen in the store from my phone source. 3: They match or are lower than Amazon or SW prices. So far I have been pleased with them.
Philip-this is fascinating. I hadn't really thought of it that way, despite having bought and traded years for many years. BUT-here's part you didn't address, but I wish you would comment on: 1) when GC takes in 3 guitars in trade for one guitar plus cash, they are taking on the storage/upkeep/maintenance costs of three guitars, rather than one. 2) whether you prefer cash vs. inventory depends on your financial situation. If your business is constantly running "close to the bone" with minimal cash reserves (as many small businesses do), the increased liquidity of cash on hand nay be more valuable to you than a large inventory that takes up space in your building. Further, having more cash liquidity makes a business less vulnerable to a major negative event. Whereas a large corporation like GC has some degree of self-insurance because of its size, that is rarely the case for a mom and pop shop. 3) (and you touched on this) What if the market goes flat unexpectedly? And those three guitars just sit on your walls for weeks or months, not generating any revenue. A small business can become insolvent even as it has significant inventory sitting on the shelf. Thanks again!
Just to clarify, you refer to Profit when it’s Margin. Profit takes into account overheads, wages etc. BTW would the used guitars go through a setup before being sold? This would have to be factored into the margin as well.
Box store overhead costs dramatically drop the profit margin. If you take all the overhead into account one can understand why Guitar Center and any other music store is struggling to keep the doors open. Support local music stores even if they are a big box store.
Sadly, I walked into guitar center 3.5 months ago and told the manager I was going to build a guitar collection of 10 to 15 guitars in the 2k to 3k range over the next 3 to 4 months. I tried everything to buy my first guitar for my collection that night. They would not move off 10 percent off. I asked for an additional 50 bucks off the ten percent. Long story short, it's 3.5 months later and I have bought 14 high end guitars and not a single one came from guitar center. I have no sympathy for them as they act like robots who can't make a deal outside their little algorithm. Tried to support GC locally but they did not want the business. They are doomed to fail.
And the manager knew you were a tool right off the bat trying to claim you wanted to "build a guitar collection of 10-15 guitars in the 2-3k range...".
I’ve dealt with Guitar Center for over 20 Years now, bought and sold gear from them and they were always very helpful and friendly service. The place doesn’t seem to be negotiable on used gear like they use to do but they are still a good place to shop and I’m not thrashing them at all… I’ve gotten some decent deals buying used gear from them… My best deal was buying a used snare drum by Pearl, had the snake skin wrap and was a signature series Vinnie Paul that had new heads put on it…I paid $100. for it plus tax. Also bought a 4x12 Randall cab, straight cab loaded with Jaguar drivers, paid $250. for it plus tax. Same store that I bought from them over the years, seen the same manager there forever, I’ve bought used Paiste Signature series Cymbals from them for under $200. each for a 17” and 16” crash cymbals… Really good prices too and I’ve also bought a couple used guitars from them and also a New 2013 Les Paul studio deluxe for $1300. with case and all the stuff thrown into the case by Gibson.
There was a drum set at Guitar Center that had not been sold in almost a year they originally had it for 400 They had reduced it down to 350 I offered them 3 While casually stating they probably only in it for 200 in store, credit they took it.
I bought a new SG online from Guitar Center for $900 ( not discounted) . I returned it to the store as I was looking around they printed out a new tag for $1100 and hung it on the wall. I never understood how that worked.
Does this only work with guitars? Does it make sense for guitar center or a mom and pop storm to do trade deals on several cheaper pedals or amps for the customer to get one nicer pedal or amp?
In the UK at least, the rule of thumb is that shops generally offer 33% of what they sell it for (what they sell it for includes 20% VAT). Not just guitars, electronics too.
It may seem minuscule from certain perspectives,but operating/personal costs on both sides I feel are significant factors not accounted for here. In layman’s terms, things like restock fees….
The idea of retail is to turn inventory into cash. Part of the cash pays the lights, rent, and help, and the rest is profit. It takes 3x the time, lights, and payroll to sell 3 guitars than it does to sell 1. GC broke even on the guitars, might make some money on the swag. I'm rather surprised they offered you 50% on the trade-ins, every time I've tried to trade at GC I've left offended by what they offered.
Nice episode for a CPA by trade. I would add, the longer the guitar sits in the store the more overhead they have to pay to keep the lights on and guys tuning up the instruments. You can have too much inventory and the overhead expense is going to go up. That’s why we probably see Chicago music exchange and others going to a different model. I’m in Northern NJ. I saw quite a few super stores like Victor’ House of music get absorbed into AMS. The thing I don’t understand is why are the same used guitar listings on the sweetwater and the guitar center website?
Music Go Round just closed in San Antonio and it sucks. They were a great option and even referred to other mom and pop shops around town for specific items. They really helped and could pay attention to customers, GC needs more help on that. Overall I love to feel the product. Dave Grohl guitar feels great and I know thanks to GC so I can’t in my mind buy from Sweetwater for that help on knowing the feel. When possible help your neighbors by supporting local.
MAP pricing dissappeared at the same time as small local shops. An amazing coincidence! Now all guitars are listed at MSRP and you have to beg for 10% off. I wonder if anyone saw this coming. Hmm...
Much like the used car business... trading stuff makes it a shell game. Remember that you must consider the "wholesale" price for your trade gear is what it is worth, not the "retail", or sales, price. Trading only works when you negotiate with extreme prejudice. Extreme prejudice? Extreme... Prejudice!
What about what those accessories cost them? That has to be taken into in consideration too. I don't think this is really accurate. I've bought guitars and other gear at Guitar Center, I have always felt the deals were OK.
Last time I went into a GC the experience was less than good! Looked at a pre owned Gretsch guitar they selling for $50 less than a new one and needed extensive repairs. They wouldn’t budge on the price. Avoid them as much as possible.
Is it reasonable to expect 50% of the retail value for a trade-in, in most cases? I have a number of items that I'm entertaining trading, one being a large 212 cab. I hate to haul it across town without having some kind of expectation.
Hey Phil did you see my question the other day about trying to trade my Dingwall to my local GC for a Fender Jazz ultra American ? How does this video apply to my question ?
There has to be a mathematical formula that they work with for most of the instruments they touch. There might be some outliers, high quality, or low quality, that don’t fit the formula.
guitar center must survive, just imagine all the millions of musicians that have started their musical journeys there, huuge karma and they will turn it around, be honest without them its a very big loss to society,
I hate that MF bought Guitar Center because now sometimes when you order a "new" guitar, they send you one people have played in store and its missing original box. I have no choice but to buy from them because they offer 48mo zero interest financing but Sweetwater rarely does. I dont live near any stores so its my only option. My last custom shop had a short in the neck pickup despite being new and it was shipped from a GC even though i ordered it from MF. You can hear the neck pickup loss on the Tele on my latest Strat vs. Tele video
General formula for sales is 50% of the price the manufacturer sell to retail, retail double this + tax. There are different margins for different products or industries but this was for many years the golden rule.
" my loyalty is to my addiction "...that hit deep...cause I'm the " what about the mom and pop shop" guy... Ill need to reconsider my stance because of that statement
also they converted your shiny guitars into cash a lot easier - it's easier to move three low end guitars everyone's looking for than one mainstream 1k guitar everyone's seen already. I'm not a pro but the odds are good if they paid low enough that they'll make even more by the time the guitars are released for sale after 21 days - they do have to pay for storage but that's a different line item that they already budgeted in for operations. Empty storage space is money lost, if they can fill that with easier to move inventory and keep all the higher end stuff on the racks at the store with the leader low end instruments racked underneath them - this get people buying both types because they can keep show ponies on display as well (they've opened up room by going, say, 3:1 on low end vs more expensive instruments when swapping into storage - but they can continuously fill the lower racks from that storage space, opening up more room for low cost stock being held/releasing).
Also, though your guitars are probably ok, many new and used guitars need a proper setup. That could run around $75-$150. So it's a nice snowball effect all the way around.
Seeing as how you have laid out the scenarios, GC will make more money on the entry level guitars rather than the high because, as you have shown, you don’t need an amp, you don’t need, cables, picks, straps….. because you already have these things.
GC didn’t make $500 profit. That $500 doesn’t take in consideration regular business expenses involved in reselling that product. Taxes, insurancs, employee expenses etc.. guitar center realistically profited close to $300
I notice that you keep optimizing their sales and failing to mention the enormous downsides and costs of a store like that. Good sales month, bad sales month...they pay employees, they pay federal taxes and unemployment insurance etc on employees, they pay rent, they have to stock the shelves, package up sales and btw, the money they fronted you was a loan they pay interest on. Plus after all that, they pay substantial federal taxes on their own revenue. And that’s just the tip of the iceberg...ranging from training your employees to the extreme requirements of being a licensed dealer of the various brands. There’s a reason Guitar Center has been balancing on a bankruptcy blade for years.
These numbers are way off. They have a store, employees, lights, insurance, shrink, taxes and fees to the city, advertising, damaged gear not covered. They are not flipping guitars for anywhere near 50 percent after all their costs. Teachers get a cut of those lessons, the square footage of those studios are not free. Think about the real math here.
Problem is liquidity, and the gamble. Sure they have more assets in theory. But they have to wait to sell those guitars, gamble that someone wants them, and pay for all that overhead in the meantime. Platforms like sweetwater and reverb don't have such large overhead, and this is playing out in the real world. There's a reason sam ash went under. There's a reason guitar center is struggling to pay interest on their debts. The market says these ponzi scheme shaped businesses are going under. The only thing they have is play before you buy. That's it.
Did the store at 8223 Cooper Creek Blvd. Universitypark close? I live in Illinois but my in-laws live in Sun City Center, I visited this store last year, it was a nice store.
I'm done playing "mommy's and daddy's" or "playing house". I am a happy lone wolf. Not dating, not looking, ignoring the attention; But, wasn't that the plan?
They didnt double their money. They have overhead. Rent, utilities, payroll, insurance etc. They probably made 200 bucks on the 1000 dollar sale. Im not defending them, im just explaining how businesses work.
Sure but then ya gotta factor in that they aslo had to buy all those items plus pay rent, electric and employees etc etc so they barely made just under the amount they need for their unfortunate heroin & or phyntenol addictions lol
Not a good video to watch after having just medicated with some killa bud, I'm sitting here with my mouth hanging open listen to Phil rattle-off numbers...I want my guitar!
Exactly!! Its not at all treating the guy who walks in the door good, in the hope of a repeat customer, as Phil is telling us in this video. But to rob him blind, those few minutes the guy is on your store.
You have just taken the simpleton approach, which is not a good look for an older guy. Yes, the young, dumb people probably buy into what you say. Yes, suppose to be a money-making business. Why else would any company survive? But a brick and mortar establishment requires a lot of money for all the expenses. More money than most could imagine.
Phillip one of your worst videos ever.... So you basically gave them your 3 guitars for 0 dollars. And gave them the potential to make $500 - $1002+ - possibly $1300. So effectively you paid them $1502 for that USA Tele, That they traded for $500. $1000+ profit in that trade/guitar used sale. Instead of just a $500 profit on, marked price with a cash only sale.
I honestly hope the best for guitar center. I like putting my hands on instruments and being able to return an item without paying to ship back.
Agree. GC is not near perfect but its one more option to touch product. I rather support Brick and morter stores.
Rumors of GC's demise have been around for 15 years. They just built a new store near my house, so I'm not all that worried about viability.
Exactly. The hands-on aspect is huge. I just started playing bass with my church group. This is after playing guitar only for over 60 years (I'm 73). So I recently bought a new, unopened Fender Rumble 500 bass amp from my local GC. I got a 15% discount and I was OK with that. I may go back and buy a P-Bass or other bass instrument to supplement the used Mustang bass I currently own. I'll give GC the business as I want to do my part to help keep them alive and well! 🙂
Never had not one issue w Guitar Center. They’ve always been reasonable & have price matched, accepted all my trade-ins, & take care of their guitars.
Plus you can look at the thousands of used gear and actually use your gear card to buy them sometimes getting 2 to 4 years to pay it off ... vs sweetwater with 24 months on only certain models.... plus you can't buy the used gear with the sweetwater card....
Historically my interactions with Guitar Center have been a mixed bag but I will say that my recent experiences have been more positive and I appreciate it
Phil, I’ve been watching you almost since the beginning to see you grow, and you have really carved out a unique niche for yourself on GuitarTube as the premier educator. Your insight separates & differentiates you from the rest of the pack.Great follow up video. Appreciate your effort!
I was thinking through most of the beginning of this video, "yeah, but they still have to sell your 3 guitars to make anything". But as you went on, it put the whole thing into perspective. They dont have "anything" in those guitars so whatever they sell them for is profit - and - you are absolutely right, they will sell something else with those guitars. In all my years of going to Guitar Center, I have never walked out empty handed, and certainly never after I purchased a guitar. There is always something to be bought even if its just picks, a strap or strings. Great video! Things that make you go hmmmm.
Guitar center may not be the best but i am glad they are there.
I agree!
There is a truck load of positives about GC, they do not get enough credit IMHO
I like my local GC , they have kept same employees long term, that's a very smart management idea. You get a good sales crew that way.
You can make more money reselling on Reverb over trading in at Guitar Center… however; you have to wait for someone to buy your guitar and that might take a while (it varies pretty wildly, I sold a bunch when my wife lost her job… but then I had a Reverend from that batch up for 8 months before it sold! I actually sold the case for $200 before I sold the guitar.)
I don't love Guitar Center but they can have killer deals in person. I just got a brand new Gibson Les Paul Standard in bourbon burst for $600 off as a Black Friday deal. It's set up beautifully and has nothing wrong with it. It's always worth a stroll through there just to see what your individual stores might be up to.
My nephew just bought a new Fender Custom Shop reliced Strat with case and all the case candy and certificate of authenticity for $2k on clearance. It was originally $4999. It was a custom order, and apparently whoever ordered it backed out. He scored a great deal for that guitar.
@@nellayema2455 Wow that's an insane deal.
No you didn’t
@@mr.smithgnrsmith7808 I promise you I did. It was marked down to $2239, so a little shy of $600 off but it and a '50s Standard in heritage cherry were both marked down to that price.
@@nellayema2455 Highly doubt your story.
I appreciate Guitar Center more than I used to, and hope that they survive.
When I was moving overseas, I hauled 22 guitars down to Guitar Center and unloaded them. They had used guitars for months.
Interesting video! Beyond that, I'm drooling over that Stu Hamm Urge Bass over your left shoulder!
Love this channel! Relatively new sub but have been subbed to the other channel for years. Thx Phil! You do good work!
You have to factor in overhead and taxes. I'm sure that if they weren't making any money they wouldn't be doing the deals... It's all good though, I wish them all the best. and it also sounds like you both were happy, so it's a win win, and the world keeps spinning!
I’m enjoying the business breakdowns you have been showcasing. I’m just a player but the economics of the gear business is interesting/entertaining.
The GC in my area closed a few years ago. I miss walking in and checking out used gear at reasonable prices.
I've bought lots of guitars over the past 10 years from GC and always found their trade policy better than everywhere else. This is the Clearwater Florida GC I'm speaking of and i've always been treated pretty well.
Guitar Center has started getting my business lately because of three things that was better than online. I am a keyboard player and a home recording enthusiast. 1: I bought a used synth from GC because they ship for free, you can return the synth if it doesn’t work and they will offer a warranty for it. 2: You can try it out and listen to gear. I needed to upgrade my mixing headphones and I upgraded my monitors and I could listen in the store from my phone source. 3: They match or are lower than Amazon or SW prices. So far I have been pleased with them.
Always get the protection plan they actually work!
Philip-this is fascinating. I hadn't really thought of it that way, despite having bought and traded years for many years. BUT-here's part you didn't address, but I wish you would comment on: 1) when GC takes in 3 guitars in trade for one guitar plus cash, they are taking on the storage/upkeep/maintenance costs of three guitars, rather than one. 2) whether you prefer cash vs. inventory depends on your financial situation. If your business is constantly running "close to the bone" with minimal cash reserves (as many small businesses do), the increased liquidity of cash on hand nay be more valuable to you than a large inventory that takes up space in your building. Further, having more cash liquidity makes a business less vulnerable to a major negative event. Whereas a large corporation like GC has some degree of self-insurance because of its size, that is rarely the case for a mom and pop shop. 3) (and you touched on this) What if the market goes flat unexpectedly? And those three guitars just sit on your walls for weeks or months, not generating any revenue. A small business can become insolvent even as it has significant inventory sitting on the shelf. Thanks again!
Just to clarify, you refer to Profit when it’s Margin. Profit takes into account overheads, wages etc. BTW would the used guitars go through a setup before being sold? This would have to be factored into the margin as well.
I've had horrendous experiences in South FL but I hope that they stick around
Box store overhead costs dramatically drop the profit margin. If you take all the overhead into account one can understand why Guitar Center and any other music store is struggling to keep the doors open. Support local music stores even if they are a big box store.
Sadly, I walked into guitar center 3.5 months ago and told the manager I was going to build a guitar collection of 10 to 15 guitars in the 2k to 3k range over the next 3 to 4 months. I tried everything to buy my first guitar for my collection that night. They would not move off 10 percent off. I asked for an additional 50 bucks off the ten percent. Long story short, it's 3.5 months later and I have bought 14 high end guitars and not a single one came from guitar center. I have no sympathy for them as they act like robots who can't make a deal outside their little algorithm. Tried to support GC locally but they did not want the business. They are doomed to fail.
lol. Yep. Because you didn't buy strictly from GC, they are doomed.
Only sensible real comment here.
😂😂😂@@jritechnology
And the manager knew you were a tool right off the bat trying to claim you wanted to "build a guitar collection of 10-15 guitars in the 2-3k range...".
@pandaman1968 Ikr who just randomly decides that
I’ve dealt with Guitar Center for over 20
Years now, bought and sold gear from them and they were always very helpful and friendly service.
The place doesn’t seem to be negotiable on used gear like they use to do but they are still a good place to shop and I’m not thrashing them at all…
I’ve gotten some decent deals buying used gear from them…
My best deal was buying a used snare drum by Pearl, had the snake skin wrap and was a signature series Vinnie Paul that had new heads put on it…I paid $100. for it plus tax.
Also bought a 4x12 Randall cab, straight cab loaded with Jaguar drivers, paid $250. for it plus tax.
Same store that I bought from them over the years, seen the same manager there forever, I’ve bought used Paiste Signature series Cymbals from them for under $200. each for a 17” and 16” crash cymbals…
Really good prices too and I’ve also bought a couple used guitars from them and also a New 2013 Les Paul studio deluxe for $1300. with case and all the stuff thrown into the case by Gibson.
There was a drum set at Guitar Center that had not been sold in almost a year they originally had it for 400 They had reduced it down to 350 I offered them 3 While casually stating they probably only in it for 200 in store, credit they took it.
I bought a new SG online from Guitar Center for $900 ( not discounted) . I returned it to the store as I was looking around they printed out a new tag for $1100 and hung it on the wall. I never understood how that worked.
Does this only work with guitars? Does it make sense for guitar center or a mom and pop storm to do trade deals on several cheaper pedals or amps for the customer to get one nicer pedal or amp?
In the UK at least, the rule of thumb is that shops generally offer 33% of what they sell it for (what they sell it for includes 20% VAT). Not just guitars, electronics too.
Sweetwater! No where else. Learned the hard way. Gear exchange works well. Free shipping, etc. No fees if you use credit.
It may seem minuscule from certain perspectives,but operating/personal costs on both sides I feel are significant factors not accounted for here. In layman’s terms, things like restock fees….
The sku codes will likely have the break even price hidden inside it
Does tax not play a tune in there somewhere?
The idea of retail is to turn inventory into cash. Part of the cash pays the lights, rent, and help, and the rest is profit. It takes 3x the time, lights, and payroll to sell 3 guitars than it does to sell 1. GC broke even on the guitars, might make some money on the swag. I'm rather surprised they offered you 50% on the trade-ins, every time I've tried to trade at GC I've left offended by what they offered.
@@alexanderthesk8 Good info. My offense over low offers was at least a decade ago, and I'm sure things change.
This was a great video. Lot of food for thought offered up
Probably the most important thing they do on the backend is get a happy customer beating a path to their door again.
Nice episode for a CPA by trade. I would add, the longer the guitar sits in the store the more overhead they have to pay to keep the lights on and guys tuning up the instruments. You can have too much inventory and the overhead expense is going to go up. That’s why we probably see Chicago music exchange and others going to a different model. I’m in Northern NJ. I saw quite a few super stores like Victor’ House of music get absorbed into AMS. The thing I don’t understand is why are the same used guitar listings on the sweetwater and the guitar center website?
Music Go Round just closed in San Antonio and it sucks. They were a great option and even referred to other mom and pop shops around town for specific items. They really helped and could pay attention to customers, GC needs more help on that. Overall I love to feel the product. Dave Grohl guitar feels great and I know thanks to GC so I can’t in my mind buy from Sweetwater for that help on knowing the feel.
When possible help your neighbors by supporting local.
MAP pricing dissappeared at the same time as small local shops. An amazing coincidence!
Now all guitars are listed at MSRP and you have to beg for 10% off.
I wonder if anyone saw this coming. Hmm...
Much like the used car business... trading stuff makes it a shell game. Remember that you must consider the "wholesale" price for your trade gear is what it is worth, not the "retail", or sales, price. Trading only works when you negotiate with extreme prejudice. Extreme prejudice? Extreme... Prejudice!
Nice breakdown
I always felt like a pain in the butt when I brought gear to trade...not any more...thanks Phil
What about what those accessories cost them? That has to be taken into in consideration too. I don't think this is really accurate. I've bought guitars and other gear at Guitar Center, I have always felt the deals were OK.
Mumbo Jumbo! All I know is that if you walk into a Guitar Center to sell an instrument you’ve ALREADY lost big time!
Last time I went into a GC the experience was less than good! Looked at a pre owned Gretsch guitar they selling for $50 less than a new one and needed extensive repairs. They wouldn’t budge on the price. Avoid them as much as possible.
Another heads up comment!! Thanks Dave.
So what I’m taking from this is that GC is paying 50 cents on the dollar to people that want to sell.
$500 for an American Tele Deluxe…
I bought a couple of Firefly’s from Guitar Garden and sold them to the Guitar Center and I made $200.00😅
Is it reasonable to expect 50% of the retail value for a trade-in, in most cases? I have a number of items that I'm entertaining trading, one being a large 212 cab. I hate to haul it across town without having some kind of expectation.
I love guitar center. And I can now walk in, pick up and play an expensive brand name with no fuss
Hey Phil did you see my question the other day about trying to trade my Dingwall to my local GC for a Fender Jazz ultra American ? How does this video apply to my question ?
you have to assume those 3 guitars will be bought with no issues from the buyer (returns for refund or some other snag).still a risk for them
There has to be a mathematical formula that they work with for most of the instruments they touch. There might be some outliers, high quality, or low quality, that don’t fit the formula.
Hi Phil, would u consider selling your Steve Vai Jem?
Before people find another reason to be aggravated at GC, remember the have a lot of overhead to keep the lights on, forgive the pun.
Phil really needs to dress up like Dr. Evil and say "Why make hundreds, when you can make...thousands?"
Exactly.
guitar center must survive, just imagine all the millions of musicians that have started their musical journeys there, huuge karma and they will turn it around,
be honest without them its a very big loss to society,
this money example is the same as why the insurance company make big profits when they "total" your car,
In the end they’ll only make about $350-400 after all of the overhead associated with retail sales.
I hate that MF bought Guitar Center because now sometimes when you order a "new" guitar, they send you one people have played in store and its missing original box. I have no choice but to buy from them because they offer 48mo zero interest financing but Sweetwater rarely does. I dont live near any stores so its my only option. My last custom shop had a short in the neck pickup despite being new and it was shipped from a GC even though i ordered it from MF. You can hear the neck pickup loss on the Tele on my latest Strat vs. Tele video
General formula for sales is 50% of the price the manufacturer sell to retail, retail double this + tax. There are different margins for different products or industries but this was for many years the golden rule.
" my loyalty is to my addiction "...that hit deep...cause I'm the " what about the mom and pop shop" guy...
Ill need to reconsider my stance because of that statement
Direct to consumer sales is most likely breathing down guitar centers neck
I call that rule the "Pawn Stars" rule. Took ALL the guesswork out lol
also they converted your shiny guitars into cash a lot easier - it's easier to move three low end guitars everyone's looking for than one mainstream 1k guitar everyone's seen already. I'm not a pro but the odds are good if they paid low enough that they'll make even more by the time the guitars are released for sale after 21 days - they do have to pay for storage but that's a different line item that they already budgeted in for operations. Empty storage space is money lost, if they can fill that with easier to move inventory and keep all the higher end stuff on the racks at the store with the leader low end instruments racked underneath them - this get people buying both types because they can keep show ponies on display as well (they've opened up room by going, say, 3:1 on low end vs more expensive instruments when swapping into storage - but they can continuously fill the lower racks from that storage space, opening up more room for low cost stock being held/releasing).
They made more !? They don’t pay much for instruments !!
Also, though your guitars are probably ok, many new and used guitars need a proper setup. That could run around $75-$150. So it's a nice snowball effect all the way around.
...even more money you are behind....before you open your wallet at the end.
a relative worked the music business decades ago...he said everything is 100 percent markup.
guitars are about 35 to 45 percent mark up.. fact
Interesting. Thanks! :)
Seeing as how you have laid out the scenarios, GC will make more money on the entry level guitars rather than the high because, as you have shown, you don’t need an amp, you don’t need, cables, picks, straps….. because you already have these things.
Great Video
Not to mention Rent wages taxes utilities that have to come off the top and take all the risk
GC didn’t make $500 profit. That $500 doesn’t take in consideration regular business expenses involved in reselling that product. Taxes, insurancs, employee expenses etc.. guitar center realistically profited close to $300
It’s much less than that when you factor in net vs gross.
Advanced Gear Math
Sam Ash is back as an online store in late 2024.
You sound like my accountants at an undisclosed Fortune 500 company. Wrestle those numbers.
Hey, but at least you’ve got that American tele 👍
Be a musician they said… and they said there’d be no math. What the hell is this!? 😂
Does Guitar Center hire vocal coaches?
Yes.
They're a business.
I notice that you keep optimizing their sales and failing to mention the enormous downsides and costs of a store like that. Good sales month, bad sales month...they pay employees, they pay federal taxes and unemployment insurance etc on employees, they pay rent, they have to stock the shelves, package up sales and btw, the money they fronted you was a loan they pay interest on. Plus after all that, they pay substantial federal taxes on their own revenue. And that’s just the tip of the iceberg...ranging from training your employees to the extreme requirements of being a licensed dealer of the various brands. There’s a reason Guitar Center has been balancing on a bankruptcy blade for years.
These numbers are way off. They have a store, employees, lights, insurance, shrink, taxes and fees to the city, advertising, damaged gear not covered. They are not flipping guitars for anywhere near 50 percent after all their costs. Teachers get a cut of those lessons, the square footage of those studios are not free. Think about the real math here.
"They sale for $1,000."
Huh?
Problem is liquidity, and the gamble. Sure they have more assets in theory. But they have to wait to sell those guitars, gamble that someone wants them, and pay for all that overhead in the meantime. Platforms like sweetwater and reverb don't have such large overhead, and this is playing out in the real world. There's a reason sam ash went under. There's a reason guitar center is struggling to pay interest on their debts. The market says these ponzi scheme shaped businesses are going under. The only thing they have is play before you buy. That's it.
There is no longer a Guitar Center here in Sarasota Florida, nor any retail music store as far as I know.
Did the store at 8223 Cooper Creek Blvd. Universitypark close? I live in Illinois but my in-laws live in Sun City Center, I visited this store last year, it was a nice store.
Let's keep in mind that the new beginner may get G.A.S. down the road and will want another guitar or a better amp.
I'm done playing "mommy's and daddy's" or "playing house". I am a happy lone wolf. Not dating, not looking, ignoring the attention; But, wasn't that the plan?
What deal
So, you are saying flipping guitars is a great business model!?!😂
If you consider buying used guitars at 50% of market cost flipping, sure. I'd just say that's buying and selling used gear.
They didnt double their money. They have overhead. Rent, utilities, payroll, insurance etc. They probably made 200 bucks on the 1000 dollar sale. Im not defending them, im just explaining how businesses work.
They did double the money. Do they have overhead expenses? Of course. They made what they made. Obviously they have to pay bills.
@synnysterzero7387 you have no idea how expensive it is to run a business, do you?
@@oddoutdoors You obviously don't understand the context of this video, do you?
After you said flush, i went to my guitar dealer and lost another 525 dollar.... why? 🤤
I hate guitar center
Guitar Center is ehhh, theyre definitely going uphill from the past recent years I will say though.
Sure but then ya gotta factor in that they aslo had to buy all those items plus pay rent, electric and employees etc etc so they barely made just under the amount they need for their unfortunate heroin & or phyntenol addictions lol
Not a good video to watch after having just medicated with some killa bud, I'm sitting here with my mouth hanging open listen to Phil rattle-off numbers...I want my guitar!
People make the world go round. You think anything else, you're delusional. Great video mate.
This is why I don’t like their lowballing. That guy who got $500 for that tele got hosed, especially if he needed the money.
Exactly!! Its not at all treating the guy who walks in the door good, in the hope of a repeat customer, as Phil is telling us in this video. But to rob him blind, those few minutes the guy is on your store.
2:30 ... Squier.
Of all the things you could've put your energy towards, you chose this
You have just taken the simpleton approach, which is not a good look for an older guy. Yes, the young, dumb people probably buy into what you say. Yes, suppose to be a money-making business. Why else would any company survive? But a brick and mortar establishment requires a lot of money for all the expenses. More money than most could imagine.
Phillip one of your worst videos ever....
So you basically gave them your 3 guitars for 0 dollars. And gave them the potential to make $500 - $1002+ - possibly $1300.
So effectively you paid them $1502 for that USA Tele, That they traded for $500. $1000+ profit in that trade/guitar used sale. Instead of just a $500 profit on, marked price with a cash only sale.
I would never buy a guitar from them 😊
Could you please make yer videos about half as long? They are pretty good but too time consuming. Thanks.