Guitar Prices are Increasing Faster Than Ever: The Real Reason Why.

As a guitarist, you may have noticed something lately – guitar prices are going up, fast! Even entry-level models aren’t as budget-friendly as they used to be. It makes buying your first instrument more daunting.

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So why are guitar prices rising exponentially right now? Let’s analyze the key economic factors driving this trend.

Prices Outpacing General Inflation

First, how do guitar price hikes compare to inflation rates in general? Well, since 2017 guitar prices have increased approximately 15-20% on average. Meanwhile, inflation has risen about 8% in that period. Clearly, guitar costs are rising much quicker than broader consumer prices.

This disparity indicates fundamental factors specific to the guitar industry are making production and sales more expensive. General rising costs of goods explain some but not all of the guitar price inflation.

Just look at Fender’s Stratocaster, a popular model. The standard version increased from $650 to $750 since 2019, a 15% jump. Applying the average 8% inflation rate should only bring the price to around $700 today. Instead, it’s $50 higher and rising.

Across all major guitar manufacturers and retailers, we see this pattern of significantly outpacing inflation. Guitar Center recently reported an 18% price hike on many guitars over the past year. The question is why?

Guitars in a rack in a music store

Soaring Production and Transportation Costs

One significant factor is ballooning production costs. Building guitars requires substantial material and labor expenses, which have increased over the past decade. Key components like wood, metal hardware, and electronics have become pricier to obtain.

For example, rosewood fretboards, commonly preferred for their smooth playable feel, have tripled in cost due to rareness and import regulations. Manufacturers now explore alternative woods like laurel and maple.

Additionally, many major guitar factories are located overseas to reduce costs – mainly in China, Indonesia, and South Korea. However international shipping and transportation fees have skyrocketed, causing headaches for the supply chain.

Getting instruments from Asia to American and European markets is vastly more expensive today. These transportation costs inevitably raise retail prices. Companies must decide whether to take a profit hit or pass expenses to customers.

Fender telecaster guitar

New Import Duties and Taxes

Another clear price driver is the recent imposition of import tariffs on goods from overseas, including musical instruments. Since 2018, the US and Europe enacted up to 20% extra taxes on guitars and accessories coming from China and other Asian countries.

For American companies like Gibson and PRS which manufacture domestically, no issue exists. But Fender, Ibanez, and many other huge brands producing abroad have been forced to raise prices significantly to account for the tariffs.

Smaller companies unable to absorb these taxes may need to change their manufacturing bases. Larger corporations can negotiate to share the hit. But undoubtedly these import duties have contributed to today’s inflated guitar costs.

High Demand While Supply Chains Faltered

Piling on to production struggles, guitar-buying enthusiasm has only increased over the past decade. 2020 saw the highest sales in 15 years as people picked up hobbies during lockdown. Beginners flooded the market creating massive demand.

Yet due to factory disruptions during COVID, supply chain issues arose preventing sufficient inventory production to match spikes in demand. Manufacturers are still catching up today, with buyers eager to purchase the continually limited guitars coming to market.

This perfect storm of high consumer appetite and insufficient supply has enabled retailers to raise prices to balance it out. Low inventory signals to customers that prices may rise further, pressuring buyers to purchase now before it’s too late.

Widening Profit Margins

Finally, the elephant in the room is whether rising costs fully justify today’s inflated guitar prices, or if growing corporate profit margins also play a role. The truth is likely a mix of both.

Big guitar companies generate significant revenue from their most premium and expensive models. However, increasing prices across the board grow profits further, aimed at protecting shareholder returns and executive pay.

Of course, profit hunting has limits, as excessive price hikes will turn away customers. But economic theory says firms will charge the maximum prices the market can bear all else being equal.

Guitar manufacturers today seem to be strategically toe-ing this line – raising prices just enough to capitalize on surging demand but not deter the average buyer…yet.

FAQ About Today’s High Guitar Costs

How much have guitar prices increased in the last 5 years?

On average, guitar prices have gone up 15-20% since 2017, more than double the rate of broader inflation. Specific models have seen even greater jumps depending on materials, features, and brand. Budget guitars increased the most proportionally.

Are guitar price hikes affecting beginners most?

Yes, cheap low-end models aimed at newbies have been raised closer to 20% typically. This makes buying your first instrument more painful. However, the entire market is impacted, with premium guitars up 10-15% across the board lately.

Will guitar price inflation continue in the coming years?

This depends on whether production costs and supply chain disruptions stabilize over time. But expect at least gradual 1-3% price hikes annually for the foreseeable future barring any major economic shifts. Get used to slightly higher guitar costs as the new normal.

The Future of Guitar Affordability

Rising guitar prices certainly make the barrier to entry less inviting for beginners today. While costs may plateau, returning to 1990s prices seems unlikely given fundamental market shifts. Players may need to manage expectations on affordability going forward.

That said, opportunities exist to score deals through patience and diligence. Consider used instruments that depreciate in value quickly. Opt for budget models like the Yamaha FG800 acoustic or the Fender Squier Classic Vibe 70s Stratocaster electric as well as lesser-known brands. Seek out sales, discounts and financing promotions from major retailers.

The key is managing your budget carefully, but not abandoning your musical dreams. Where there’s a will, there’s a way. With some savvy shopping, you can still begin your guitar journey without breaking the bank.

Don’t let price inflation discourage you. The most inexpensive guitar that enables you to practice and have fun is still worth it. Stay focused on your passion for playing – the gear will follow. Here’s to keeping guitar lifers shredding on regardless of market conditions!

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