Cheap Electric Guitars - what's the deal?

This is a common question that new guitarists have. Can a cheap electric guitar do the trick?

This question has a short answer and a long answer. The short answer is "Yes, sometimes."

The long answer is, naturally, somewhat longer. There are a few things that go into making a cheap electric guitar cheap. The first is that the manufacturer will not be spending a great deal of money on the materials. The second is that they won't be spending a great deal of money on the work that goes into putting them together. And the third is that they won't have an incredibly well known brand name that allows them to charge a huge markup on the price.

Your standard solidbody electric guitars is made mostly from wood.  Contrary to what some people might try to tell you, cheap timber can sound awesome.  Some sorts of timber that have since become expensive and highly sought after for their appearance and tonal properties were originally selected for use in guitars because at the time they were cheap, and plentifully available - the mahogany used in Gibson Les Paul guitars is probably the best example of this.  The very cheapest timbers though, such as plywood, MDF or chipboard, tend to sound rather awful on musical instruments.  These materials are best left for making speaker cabinets, or flat pack furniture.  Some of these guitars have super thick finishes to disguise what wood has been used.  If you see a guitar for sale and they won't even tell you what sort of wood they use, then be wary.

Cheap guitars tend to use cheaper hardware too, and often there is nothing wrong with it.  The only caveat I'd add to this is that I am yet to play a cheap Floyd Rose-style double locking tremolo that didn't suck.  Often people with cheap electric guitars decide to upgrade the pickups later.

Inexpensive guitars are also made by cutting costs on labor.  There are two ways to save money on labor - use cheaper labor, and use less of it.  Technologies such as CNC routers allow wood to be shaped automatically.  A CNC router is actually quite an expensive piece of equipment, and programming it to cut a complex shape is an involved and time consuming process, but if it is then used to produce a very large number of standard shapes then economies of scale can make this a much cheaper way of producing bodies and necks than making them by hand.  Guitars made by this technology are as good or better as those mand by hand, and indeed high end manufacturers use this technology for many of their more expensive models.  For unique, custom guitars the technology is no longer cost effective, meaning they have to be made by hand, which costs more.

An electric guitar's finish, on the other hand, can't be automated to anywhere near the same extent.  This means that finishes that need many layers of paint, long drying times, or other time consuming or difficult processes can cost more.  Cheap electric guitars tend to avoid these things.

The biggest difference to the cost of the labor generally comes from the country of manufacture.  Guitars made in China tend to be cheaper than those made in Korea, while those made in Japan are more expensive again.  Guitars made with cheaper labor can suffer from poor quality control, although it needs to be said that the same thing is often true of guitars made in the good ol' US of A.