I had a fascinating and very enlightening conversation on the phone yesterday with a customer who was shopping for an alto. This guy (who is a regular poster on Sax On the Web, BTW) told me I needed to reduce the selling price of the Super 400 he was considering because “everybody knows you can buy those for $300 a piece in China and you’re really gouging us on the price”……in your dreams, fool……in your dreams….I wish I COULD get Super 400’s made to my specifications for that sort of cost, but unfortunately, $300 per unit cost is light years away from reality.
First, the Super 400 is NOT made in China…..not that there is anything wrong with making horns (or anything else, for that matter) in China……but the fact of the matter is that the Super 400 contains components made in seven different countries, and China is not one of them, and no assembly or manufacturing on this model is done in China.
Well, there are more than a few things that this customer needs to learn about the high end/low production volume saxophone manufacturing business, and I thought I would take this opportunity to share a few facts with you and try to get you back to reality. Before you get too excited, I’m not going to reveal proprietary business information to you or our competitors!
It takes a LONG time to develop one of our new models, since we don’t buy “off the shelf” horns. Unlike the vast majority of our competitors, we don’t go to manufacturers who are making a Selmer or Yamaha copy and just have them engrave our logo on it. Our horns are acoustically different, with unique tone hole placement, bores, and keywork. In order to develop these unique features for you, once we have completed the design process (which takes a while, and yes, I insist on being paid for my creative time and efforts), we have to construct prototypes (often multiple versions) by hand…..an extremely time consuming process. These prototypes have to be shipped to the factory (it’s a long ride, with the meter running the whole time) so tooling can be made. Tooling is stupid expensive. Big bucks. And you gotta have it.
After the factory is tooled up, they build a sample for us and send it over (the meter is running on this ride, too) so we can be sure that everything works the way we planned and that our instructions have been faithfully executed. If there are any changes, we make them (by hand) and return the prototype to the factory (the meter is running on this trip, too) to serve as a reference for production. Sometimes we have the same horn built in different alloys in order to evaluate the sound of each, and this significantly multiplies the cost of prototyping.
We provide the factory with quite a few of the components used to produce our horns, including Saxgourmet black kangaroo leather pads, solid copper custom made resonators, special blued needle springs, extra large Saxgourmet thumbrests, deep water abalone shell key touches,neck enhancers, and 3 ring strap hooks. All of these items have to be shipped to the factory (yes, that air freight meter is still running!), and an import duty paid when they arrive at the destination. Depending on the size of the shipment, there may be international freight brokers fees as well.
On the Super 400 series and the Category Five series, we license the design of the never stick G# mechanism (no, Keilwerth does not now and never did own the patent) and pay a fee for every one to the holder of the patent.
Once we’re ready to actually begin production, there is the small matter of paying for the horns. Sharon and I do not ask for credit from our factories, nor do we borrow money from banks or outside investors (we bought out all the outside investors five years ago), running the business strictly out of our back pocket. This may not be the most efficient way to run a business like ours, but we sleep a lot better knowing that our corporation doesn’t owe anybody a dime. In order to make payment, we use an international bank wire, and there are significant fees involved with doing this.
At this point, the factory gets to work. It’s well worth mentioning at this point in the discussion that we don’t “cheap out” when having saxophones built. Most of our horns come with multiple necks. We don’t do lacquer finishes on anything except the Bon Fils student model. Everything else is heavily copper plated to give our signature “new penny” look. And then there’s the engraving…..our horns have more HAND CUT engraving than any others on the market. We don’t machine engrave or laser engrave our horns: all of the work is done by a master craftsman totally by hand. We don’t make any of our horns except the Bon Fils series from “regular” brass. Every horn is made of either rose brass or solid copper. We also take the extra step of clear coating the plated finishes electrostatically.
Once you get the horns made (and understand that making just a few is not an option. You have to buy them in fairly significant numbers if you want them made to your original design and specifications), then you have to get them here. We ship by sea, and have to employ a freight broker to weave a path through all the customs regulations and fees. Our horns have to change ships when they get to the Port of Los Angeles, so they have to go through customs twice (yes, I even have to pay to get them X-rayed twice, among other fees), and then when they arrive in New Orleans, I have to pay a big import duty, as well as pay for a bonded warehouse until they clear customs. Then we have to pay a trucking company to pick them up at the bonded warehouse and deliver them to us. The trucking company and the bonded warehouse are not free. We also have to pay for insurance covering the shipment while it is in transit.
When the horns arrive at our warehouse, which Sharon owns (no, it wasn’t free….she had to pay for it, have racks and a lift built, pay utilities on it etc.), we then set them up. No matter how carefully they are packed. they always have to be adjusted and somebody has to do this, and I have yet to find anybody who can do this correctly who will do it for free….there’s also a huge amount of customs and other paperwork involved in each and every shipment, and somebody has to be paid to deal with that, and an office and supplies provided to them in order to enable them to do this work.
Of course, we have to provide a building for all of this to take place in, along with the necessary equipment, computers, metal fabricating gear, a showroom, shipping facilities and the like. Sharon owns this building, and rents it to the company.
We’ve got a fair number of support people working for us, all on a contract basis, including bookeepers, attorneys, CPA’s, set up technicians, and others. None of these people work for free. Of course, there’s a huge amount of expense involved in maintaining all our different websites and forums. This stuff doesn’t just happen on its own. We also have to budget significant amounts of money for advertising (I’ve yet to be able to persuade Karen, who does our print ads with such skill and humor that we’re a worthy charity) and the expenses related to our staff of endorsing artists. These artists are not just for promotional use. They are all involved in giving us invaluable feedback and helping us with product development. There’s plenty of expense involved in getting this sort of top flight professional advice, particularly when buying lunch for Paul Coats or Breeze Cayolle is involved! Seriously, the role of the endorsing artists is critical to us. They are out there using the product on tour every day, and they let us know what is working and what is not.
Yes, you can probably still buy a cheap saxophone from China for $300, but you have to spend far, far more than that in order to manufacture what we sell and actually get it to the customers.
In an effort to hold down costs, we dismissed our dealer network several years ago and now only sell direct to the end user. The internet reaches customers all over the world, and United Parcel Service delivers to any address on the planet. It works for us!