The price of silver
 

The price of silver

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The price of silver    08:57 on Monday, October 30, 2006 Vote for this post Vote against this post 0 votes

Leporello
(152 points)

I'm curious.

The silver price today stands at about $12.1 per troy ounce, which is about 31 grams or 1.1 ounce avoirdupois.

The price difference between for example a Yamaha 200 series and a 300 series flute, (which are supposed to be the same except for the material of the headjoint, I think the same applies to other makes) is about $300, because the headjoint is made of silver. Now this should buy me roughly about 25 troy ounces or about 750 grams of pure silver. My entire flute doesn't weight that much! And I haven't even taken into consideration the price difference between sterling and pure silver, the cost of the material in a plated flute/headjoint, or the cost of plating itself. The same calculation holds (I think) for a lot of other flutes with silver body, mechanism etc. It gets harder as you move up in price range as other factors begin to apply more and more.

I am of course aware that more expensive models often feature a lot of hand-finishing and details like gold springs, straubinger pads, etc. but that doesn't really apply to a lot of the intermediate models with silver bits. I also don't think that it is the case that silver is harder to work, as it is the material of choice for cheap jewellery the world over.

Are we being conned because silver is a so-called "precious" metal like gold or platinum ("Wow! The headjoint is like made of solid silver!"), despite the fact that gold sells at 50 time the price of silver at $600 per ounce? Is it just that the silver price is very low right now (do NOT sell your grannies tea service, worst time for it...), and that that fact hasn't made it through to flute manufacturers yet? Did I get my figures wrong (this is a very rough-and-ready calculation), or am I just missing something?

In other words, is there any reason other than marketing that (for example) Yamaha could just sell their 300 range for $50 bucks more than the 200 range, and pack in the 200 altogether? Maybe sell the 400 for another $100 or so more? (Azumi don't even come with a plated head in the US, although they do in Europe, with a considerable price difference I should add.)

I'd appreciate your views/comments,

Leporello




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Re: The price of silver    13:16 on Monday, October 30, 2006 Vote for this post Vote against this post 0 votes

Tibbiecow
(480 points)

Leoporello,
I would say that the 300 series flute costs more $$ than a 200 not because of the cost of the silver, but because they CAN charge more. (A basic premise of marketing- if you CAN charge more, you will.) I would guess that having a sterling silver headjoint adds prestige, and prestige always adds to a price tag! In fact, some people won't buy something if it doesn't come with some sort of prestige. A silver CY Yamaha headjoint can be bought retail for around $200 to $250, but my understanding is that they can be bought used, wholesale for about $75.

Another bit of reasoning on the price difference, this time from my bean-counting father's wisdom: Silver values fluctuate. You need to charge a consistent amount for the flute (at least by year sold), so you build the high, low, and average costs of silver into your pricing so that you can cover the expense of sterling in a high-silver market.

The rest of the price difference will have to do with costs of production, craftsmanship, and prestige. Any mass-produced flute using robotic technology will cost less to make than an item that requires a seasoned craftsman to make. Then, even if a master craftsman made the flute from silverplate, the flute will command a higher price because of the prestige of the maker. A silver-head, plated body Muramatsu costs a LOT more than a Yamaha 300.

Yamaha has tried to get a grip on this 'budget-pro' flute market with the 500 series. 500 series flutes used to be all-silver, now they have a silver head and plated body, but the hand-cut pro headjoint and pointed key arms, etc. put it into the 'better craftsmanship' market.

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Re: The price of silver    13:22 on Monday, October 30, 2006 Vote for this post Vote against this post 0 votes

Flutist06
(1545 points)

Well I'm not a flutemaker, but it seems to me there are plenty of reasons why it costs more for silver than the basic math would account for. As a business owner, you're out to make a profit. Considering the cost of premises, utilities, materials, tools, taxes, and the like, they have to charge a good bit to make it into the black. Then there's the fact that you're not just buying silver. Normally they buy it already formed into tubes of the appropriate size and thickness, as well as in sheets of certain dimensions, while the base silver price (if I'm not mistaken) generally accounts for unworked raw silver. You're paying for the expertise it took to work the silver into the form the makers receive it in. Then there are the factors of hand work involved in producing a good quality flute that you mentioned. It may be that we are paying more than the sellers absolutely need to sell at, but as with any business transaction, they are out to make money, and as long as we are paying those prices, there's no reason for them to drop, as the company will continue to pull in the cash.

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Re: The price of silver    14:42 on Monday, October 30, 2006 Vote for this post Vote against this post 0 votes

JButky
(657 points)

Well I'm not a flutemaker, but it seems to me there are plenty of reasons why it costs more for silver than the basic math would account for. As a business owner, you're out to make a profit. Considering the cost of premises, utilities, materials, tools, taxes, and the like, they have to charge a good bit to make it into the black.


Yes but Leporello is talking about two flutes being made with production costs and profit already accounted for. Take a nickel tube and run it down a production line. Take a silver tube and run it down the same production line. The only difference there is the cost of materials (nickel vs silver) which yields a huge difference compared to the minimal cost difference of materials.

That's his point...(and you have to plate the nickel tube adding to its production cost)

Joe B

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Re: The price of silver    03:04 on Tuesday, October 31, 2006 Vote for this post Vote against this post 0 votes

le_koukou
(47 points)

The same reasoning would apply to grenadilla wood heads. The makers are charging at least as much as for a silver head when the cost of grenadilla is really only a fraction of the cost of silver. Grenadilla wood cost less than $1 per troy once...

But the point is that the cost of an item is simply what someone is ready to pay for.




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Re: The price of silver    05:01 on Tuesday, October 31, 2006 Vote for this post Vote against this post 0 votes

Leporello
(152 points)

Indeed. You cannot compare Grenadilla in quite the same (simplified) way, because the production processes are so different, and besides, there is a lot more material lost than if you are working in metal.

What Joe said is exactly what I mean. The price differential when the only difference is the actual material, (although that is hard to establish.)

The price of silver dropped dramatically in the the early 1980's (I've done a bit more research in response to Tibby's comments), reaching an alltime low of less than $5 per ounce in 1992, although it has risen since. You'd think that would be low enough for long enough that the manufacturers could account for it in their pricing.

I hope that the 300's (and equivalents from other makers) do indeed have higher production standards.

I'm guessing that in Yamaha's case at least, the 200s have such a massive production that costs are lowered and the margin on them is probably minimal, and that they possibly warrant having their own plant. That is assuming that the 300s don't just roll of the same line, with the only difference being the head they drop in the box. I understand that the lower production flutes need a bigger margin, but this just seems excessive.

Again, it's not about the price difference between a beginners Gemmy and an Aurumite Powell, but between two pretty much similar flutes but where one has a head that happens to be made of silver.

Hm, maybe I should send this enquiry on to Yamaha, but there probably wouldn't be much point, and besides they are not the only ones doing it.

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Re: The price of silver    06:31 on Tuesday, October 31, 2006 Vote for this post Vote against this post 0 votes

le_koukou
(47 points)

Good points Micron,

I must admit I have no idea if a wooden head would requiers more or less work time than a silver head. My understanding is that it easier to hand cut a wooden embouchure than a metal one and I suspect that the tooling to turn the wood is more basic than the one to shape a metal tube but I might be wrong.

In any case the real cost of a flute is far away from the cost of the materials that are making that flute. I think there is no more than $250 worth of silver in an all solid silver flute (keys and mechanism included). The rest of the price is in wages, design, tooling, shipping, marketing, waranty, distribution, margins etc.... At the end it is impossible to tell what is the exact cost of a flute but if it makes its owner happy that is probably what really counts.







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Re: The price of silver    07:27 on Tuesday, October 31, 2006 Vote for this post Vote against this post 0 votes

JButky
(657 points)

"The 200 series has significantly non-level tone holes, which affect the instrument's performance and reliability, whereas in the 300 series, we attend a LITTLE more to this issue. However if you want us to do the job as thoroughly as we are prepared to, then you will have to get at least the 600 series."


Ha-ha! I needed that this morning...

How about

the 200 has non-level tone holes
the 300 well, we tried...
the 600 well, we did try....

Micron, you're better at marketing than me.

Joe B


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Re: The price of silver    11:13 on Tuesday, October 31, 2006 Vote for this post Vote against this post 0 votes

Tibbiecow
(480 points)

Hi Leo,
The price of beef fluctuates a LOT, and one thing that stays consistent is the pricing response of sellers: When the price of beef goes up, the supermarkets charge more for steaks ($ other cuts) immediately. When the price of beef goes down, the supermarkets have a significant delay in lowering their consumer prices. Point being, anytime a higher price will be accepted by a buyer, there is no reason to lower the price.

Another major marketing difference in the Yamahas, especially in the U.S., is that the 300 series usually is sold with open holes and a B-foot. Marketing has done such a number on the U.S. market that it's easier to sell a Yamaha 381H with open holes and a B-foot than a Yamaha 561 with closed holes and a C-foot- even at the same price.

Unfortunately the 'standard' for an upgrade flute is- silver head, open holes and B-foot. People are beginning to think, now, that a pro level flute is solid silver with pointed key arms. And a B-foot with open holes! The upside is that you can buy a really nice flute for a lot less $$ if you don't mind a c-foot, or open holes. Crazy!

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Re: The price of silver    12:08 on Tuesday, October 31, 2006 Vote for this post Vote against this post 0 votes

jose_luis
(2365 points)

This has been taken to the point (for Yamaha in USA) that there is no reasonable way of buying a YFL600 with C foot. Unless you can wait for 12 months delivery, as happened when I inquired in Flute World for a C foot model, YFL 600.

The fact is that almost nothing of reasonable quality in our real world that is paid proportionally to the cost of the raw materials.

That is what marketers are paid for, to sell us brands, prestige and enough arguments to convince us that a model or series is better than another.

But there must be something true in their arguments, they know what they do in their factories and the results (between a low student flute and an intermediate or higher flute) are (normally) evident to the eyes ...and more to the ears, at least to trained ones.

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Re: The price of silver    01:29 on Wednesday, November 01, 2006 Vote for this post Vote against this post 0 votes

Leporello
(152 points)

So basically, the reason they charge a lot more for identical flutes where the only difference is in a small amount of material, is that they CAN...

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Re: The price of silver    06:06 on Wednesday, November 01, 2006 Vote for this post Vote against this post 0 votes

jose_luis
(2365 points)

I think I could not convey the whole idea in my previous post. I try again:

Musical high quality instruments manufacturing (in general) has a bit of black art.
This is can be named as craftsmanship and know-how and are, in fact, industrial secrets.

I think Yamaha was the first (or one of the first) to introduce modern mechanical engineering and automated machines in the manufacture of long series of flutes. This allowed them to offer a high quality instrument with a quality comparable (well, not always, but often) to handmade instruments - if we talk of a similar price level, while keeping high production levels.

But there are still lots of details, more or less "secret" that they are not willing to put all together in just one "universal model". So they grade those details, be it improvements, higher qualified labor, etc in different models with different prices.

They also assign different raw materials to different models, i.e intermediate models are made of silver, at least the headjoint or the complete instrument, depending of the model).

But it does not mean that the price difference is due to these raw material or to the relative difficulty of machining a tube made of different metals.
Different models contain, apart from different metals, different quantities of know-how and improvements, including increasing levels of mastership for the technician that makes the final adjustments and testing (for those models where this step is performed by hand).


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Re: The price of silver    09:47 on Wednesday, November 01, 2006 Vote for this post Vote against this post 0 votes

StephenK
(395 points)

Do keep in mind that the Boston handmade makers employ everyday metal workers for their flutes at salaries as low as $13/hour. In and Out Burger workers make $9/hour.

Only small flute makers make flutes within their family, larger makers have to bring in outside people and the quality of your flute is determined by Bubba Smith with a certificate of metal work from Fish and Chips community college.

Flutes are now largely machine made and allows for this. So your Bubba Smith flute will come out beautifully even if he was slightly intoxicated while making your flute.

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Re: The price of silver    09:51 on Wednesday, November 01, 2006 Vote for this post Vote against this post 0 votes

StephenK
(395 points)

Hmm... couldn't edit my post, but here is a video tour of the Haynes factory:

http://youtube.com/watch?v=3UdmslOyWgo

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Re: The price of silver    08:14 on Saturday, November 04, 2006 Vote for this post Vote against this post 0 votes

Dennis
(587 points)

Also keep in mind that with any business (as I have owned one) you need to calculate for a certain percentage of loss, whether it be theft, waste or what-have-you. That on top of operating costs requires the price to go up. When I had my hair salon it only COST ME $2.00 in product to do a full head of highlights. Then you have to factor in a portion of the rent, the 45-60 minutes that it takes to put the highlights in...the washing (including cost of shampoo/conditioner)...the blowdrying...the electricity I needed to see what I was doing, and to style your hair...Part of the phone bill for the time you were there...a little bit to defray the costs of you paying by credit card, and me not being able to access that money for 2-3 days...and when I do I don't get what you paid as they take out fees...the costs of the magazines you looked through to find what color you wanted...the bottled water you drank there...and the water/sewer that was used when I shampooed you, and you went to the restroom. There are lots of costs when you are in business that most people don't realize, and the only way you can stay in business is to make a profit. Why work so hard to stress yourself out, and be crabby to everyone if you're not going to make a profit? That's why my $2.00 product cost actually cost you $75.00 plus tip for your highlights.

-Dennis

   





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