I was thinking the other day about the escalating costs of guitars and why there were no affordable USA guitar manufacturers... Even if you wanted to start up a shop with a few friends and build locally. The price of equipment and raw materials just makes it difficult to build something for less than $700 - not including labor.
I'm starting to understand why it costs so much for USA guitars...
Basic cost of building using pre-fabricated parts (we'll use a Telecaster as the starting point since they are the cheapest to manufacture):
Pre-finished body (Warmoth): $250
Pre-finished neck (Warmoth): $300
Tuners (Grover): $35
Electronics (pots, switch, wire): $40
Pickups (USA Texas Specials): $100
Bridge (Gotoh Modern): $45
Misc (neck plate, strap pins): $15
Ok, that is $785 (no case) for a guitar and we haven't even assembled it yet!
So... let's assume that we become a manufacturer start to build our own bodies and necks...and we get 40% off our other hardware.
Wood for body and neck (blanks): $50 per guitar (total guess)
Tuners (Grover): $21
Electronics (pots, switch, wire): $24
Pickups (USA Texas Specials): $60
Bridge (Gotoh Modern): $27
Misc (neck plate, strap pins): $9
Finishing supplies (filler, sealer, stain/paint, lacquer): $40
$231 (again, no case) and we haven't paid ourselves yet for the hours of work to build the guitar! Not to mention the costs of machinery and tools to get the guitar made correctly.
Oh - and that is for a Tele! No binding, no set neck, no MOP inlays...
It truly is amazing that you can get a really nice playing guitar for $400 now-a-days...
Feel free to update my numbers or challenge this, just off the top of my head anyways...