this is the first price jump I've seen on fender guitars but it's not as shocking as the epiphone & gibson price jumps, the epiphone standard went from $399 to $549. The MIM went from $399 to $449, so it's survivable.

Quit your b*tching.
These are some of the finest precision instuments being produced in the world. Fender is a huge company with hundreds of millions in overhead and production costs. I doubt they are boosting prices so the CEO can buy his own Island in the Agean.
If you want a $500 strat, buy a MIM or get a time machine.
The made in USA strat is worth every penny and more.

I posted this under one of the multitude of similarly themed threads....

Two main reasons likely....

First, Fenders component prices have likely risen. Commodity prices, while volatile, have generally risen over the last year. The cost of steel, wood, and other commodities have increased and Fender will pass along the cost. Also, the US $ has fallen vs. many other major currencies, especially the Japanes Yen. This has the affect of raising the cost of products we import from other countries like Japan.

Second, as many have noted, the sum of the cost of the parts of a Strat on Ebay, for example, is higher than the cost of a new guitar. This is technically called an "arbitrage" situation. Fender will certainly study these price dynamics and act accordingly by raising their prices of finished guitars.

Its also possible that Fender routinely raises prices every so often and we are simply due.

CV....I understand your logic here. In a purely "cash" business, your thought progression is perfectly reasonable and logical. It would be correct in a "cash business". However, there are few, if any "cash" businesses out there. I can almost guarantee you that Fender uses relatively strict "Generally Accepted Accounting Principles", or GAAP accounting.

Usually, under GAAP, inventory is valued at the lesser of cost or current market value. But they arent required to adjust their inventory valuations until its absolutely clear they may not be able to sell it. Thus, your thought of lower current inventory values generating excess profits is correct, except that they would have to declare an offsetting loss on the inventory they paid for last year at higher prices. Convesely, and more likely, they would pass the higher costs through to consumers as higher "Costs of goods sold". Typically, companies account for their inventory on a "first in-first out" basis. Meaning they use their inventory in the order they purchased it and account for that inventory price change in the cost of goods sold. Thus, as older and more expensive inventory is used in production, their profitability per guitar falls unless they raise their prices. Hense the current price increase to maintain profitability ratios. Further, once the average inventory cost falls again, for example as they restock inventory today at lower prices, their profitability per guitar would increase substantially (next year), assuming they dont then lower their prices to consumers.