OLD AND BUSTED: Keynes Versus Hayek.
The New Hotness? Milton Friedman Versus Jimmy Page! Guitar World readers get a crash course in the basic laws of economics: “The higher end the guitar, the more robust the demand is:” Why are guitars getting more expensive? We spoke to the world’s biggest guitar companies to find out.
Why have prices risen so much?
Let’s start with the background. Economics 101 teaches us that when supply is low and demand is high, then prices will rise. The past few years have offered a perfect storm in this sense.
The pandemic throttled supply chains around the world (as workers isolated and manufacturing slowed), while at the same time governments handed-out stimulus checks (ie, free money) to large swathes of the population.
Those who were fortunate enough to have the basics covered started looking for other ways to keep occupied during lockdown. As such, during Covid, the guitar industry enjoyed its biggest sales boom since The Beatles first invaded these shores. People had spare time and spare cash, retailers couldn’t supply guitars fast enough – and, as such, prices started to slowly creep up.
That was just the start, though. As the world moved out of the pandemic, other shocks have hit global supply chains and, in turn, the guitar industry.
Like most manufacturing in the 21st century, guitar firms are dependent on a complex network of suppliers based all over the world. Even a handmade US instrument needs electrical components, plastics and tone woods – and most of these will come from foreign suppliers.
In a recent conversation, Fender’s Justin Norvell related to GW the issues the firm had faced just procuring tubes for its amp builds at the time.
“During the supply chain [crisis], it would be like the factory could make tubes,” explains Norvell.
“But the glass comes from Germany, and they couldn’t get the glass. And then that goes back up the tree, to [issues sourcing] the silicon that makes the glass. It was really problematic, because there could be one small thing that was preventing us from getting anything.”
Fender’s tube supply is, we’re told, “pretty dialed” at this point, but it’s a neat illustration of the nightmare scenario that faced all manufacturers.
Fast-forward to 2024 and war in Ukraine and the Middle East, crumbling relations with China, increasing piracy on the world’s oceans (as the US pulls back on the world stage) and all manner of other fun-things-that-you-don’t-want-to-read-about-on-Guitar-World – continue to affect global manufacturing/shipping costs.
The guitar industry has some sizeable players – from Fender and Gibson, to PRS, Yamaha and Ibanez – but they are all at the mercy of these global forces.
Milton Friedman and Leonard E. Read smile:
And at the other end of the financial spectrum:
Scooping off the cream
Of course, the effects of inflation have not been felt equally across society, or the guitar industry.
Talk to an economist (oh OK, don’t) and they’ll tell you that luxury goods sales remain weirdly stable during tough economic periods. This seems counterintuitive at first – why would we keep buying luxuries when we have less spare cash in our pockets?
It is because the wealthy are not so exposed to the effects of inflation. Take a look at the slew of record-breaking prices at the Mark Knopfler guitar auction last month and you’ll see the vintage and high-end guitar sales sector remains in good health.
“In terms of the really huge-dollar, vintage stuff, still trading hands, you have to realise the people who play in that market are really not hit by the price of milk and eggs,” Gibson’s Director of Brand Experience – and vintage guitar expert – Mark Agnesi, told us last year.
“I’m sure Ferrari is not having any trouble with new releases sitting on the lot for a while, and Rolex doesn’t have any problems – you still can’t get one of those. It’s a different market, with different players.”
Fender’s CEO Andy Mooney also made a similar point to us in 2023: “We still get very high demand for Custom Shop guitars,” said the Fender chief. “Generally, in some ways, it’s almost as if the higher the end of the guitar, the more robust the demand is.”
This explains the raft of ultra-pricey, limited-edition models that have rolled out since the pandemic. To us average Joes, it might seem a little wild when the likes of Gibson launches the $20k Murphy Lab Aged With Brazilian Rosewood Les Pauls, Martin drops its $50k anniversary build, or another Bitcoin guitar or Manson debuts a $17,500 Matt Bellamy-inspired mirror mask model, but these products are designed to cream the market – to charge top dollar from those that can afford it.
Including Gibson’s latest reissue: 50 hand-signed clones of Jimmy Page’s iconic doubleneck EDS-1275 for $50k each, modeled after the six and 12-string twin-necked electric guitar he used throughout the 1970s to play songs such as “Stairway to Heaven,” “The Song Remains the Same,” and “The Rain Song” on stage:
Plenty of “Blues Lawyers” and “Blues Doctors” will likely snap this run up fast.