$850 - time paid to have it checked in and inspected - 6% sale commission to ebay - time paid for a standard adjustment - time paid to have it packed and do the paperwork - [guess] $40 shipping + interest paid on floor plan. Net? $50? If you want to call that profit on an $850 sale you're not in this business or any other. There is no money in these cheap guitars which is why only warehouses can sell them at that. Nobody ever looks at it or touches it coming in or out.
The retail price for these is $1000, but that's not the price you and every business that sells them, got them for. In a way, you, musicianfriends, sweetwater, guitar center, etc, etc are middlemen, like car dealers. We can't buy directly from Toyota or Nissan, just like you we can't buy directly from Ibanez. How do car dealers make a profit with all these discounts they seem to give you?
They bought these cars from the manufacturers at a fraction of the price, similarly, instrument dealers bought these guitars from the guitar manufacturers at a fraction of the price.
You sell most of your guitars at a lower price point than the big guitar stores and with an extensive setup included, which takes time to do and we all know time is money and free shipping? How can this possible? The only way it can be possible is if you bought these guitars at a much lower price point, so even with the labor and time of doing a setup, packaging, shipping, you're still making a decent profit, otherwise, how is a business like this sustainable?
The difference is that the bigger guitar stores are greedier, but they are probably getting these guitars for the same price as you do, but they're charging the full retail price as they have employees, advertisement, warehouses, overhead, etc. Even if they give those occasional 15% discounts, with the amount of gear they sell, it pays off.
In your situation, you are a one or two-man operation, your focus is on building a word of mouth family of people who trust you, so you are able to charge a bit less than the big stores in exchange for that good reputation that will come and spread among the interwebs, of someone who will look out for your instrument, a "friend" rather than a cold buy and ship transaction. A more personalized experience so to speak.
So even though you're charging less than the big stores and doing more than them (full setup), since you're a one-man operation, you don't need to charge the full retail price like the big stores do, as they have employees and overhead to pay. You could charge the full $1000 Genesis price for example, but then the appeal of buying from you is reduced, even if a setup is included.
By offering both, a lower price point and an included bonus, a setup, the consumer receives more bang for their buck, at least in their mind.
Its up to the consumer to decide if is worth paying the full retail big store price or the Ibanez rules lowered price point or wait for a sale and get the instrument, untouched for a lower price than the first two options.
Some people just want to click add to cart, pay, and receive the item in a few days rather than sending an email, even if that means paying full retail price, a lot of people don't care about saving money, they'd rather have convenience and ease of use. Most people buy their instruments through the big stores. Sweetwater being the most popular one.
Other people are cheap or better said "frugal", and just wait for a big sale or buy used, even if it doesn't come with a setup or has imperfections, they're looking for the lowest price possible they can get, even if the guitar doesn't come with a full setup that checked every corner of the guitar, most of these people are not professional and just playing at home, so they don't really care, those $100 they probably saved, could be used towards more gear, another guitar, an amp, etc
I got my rg550 $650 used with a paint chip on the back, I don't care, not a professional just play at home, no band, nothing. This time I wanted to buy something new and nicer, but since I'm cheap I looked for the cheapest price I could get $850 and again, just a home player, no need to spend more money in my case. I'm not rich to spending thousands of dollars on guitars, especially when I won't making any money off them.
