Hey Martin,
The ultimate setup depends alot on the player and the basic geometry of the guitar in question. As you mentioned, adjusting action involves tradeoffs between sound and playability. My personal preference is generally to have the action slightly on the low side of median factory specs (I use Martin specs, since that’s mostly what I play). Many bluegrassers prefer very high or very low action.
There are some things that you can do that help playability without hurting tone. One of those is adjustments made at the nut. The actual height of the string at the nut will depend on the height of the frets on the guitar in question. You can measure the fret height and add some thousandths to get a number, but my current favorite way is a way described by Frank Ford here:
frets.com/FretsPages/Luthier … wnut3.html
In essence, you lower the nut action until pressing down on the string between the 2nd and 3rd frets will result in a very tiny clearance showing between the string and the first fret (a sliver of light type of clearance). I used to measure and use stacked feelers as a stop, but Frank’s method has resulted in far better job. I have only done one of my guitars this way, but there is almost no difference in playability when I have a capo at the first fret versus no capo. I think the nut is basically as good as it can get. If I could suggest one thing to start with this would be it. Getting your nut right is a great way to increase playability, and I don’t notice any loss of tone or volume.
My guitars fall somewhere between just under 5/64 to just over 6/64 (3/32) measured on the low E string at the twelfth fret. The high E string is of course a bit lower, but the only time I pay close attention to the high E is when I am shaping a radius on a saddle (not common). My one that has just under 5/64 (low E)is a bit too low for flat picking. I flatpick on it anyway, but it does get a wee bit buzzy when I dig in. I was going to raise the action a smidge, but it’s fun to play as it sits, so I haven’t done it. I might be able to remove the buzzing with a fresh fret level and crowning. The way that one got a bit low was I set it up with mediums, but didn’t like the way the belly looked. When I dropped to lights, that was enough change to make a noticeable difference.
I generally set up with very little relief. I start out my setup by setting it flat and generally end up with 5 thousandths or so. I measure relief by putting a capo at 1st fret and hold the string down at 12 and measure the clearance at the 7th fret. I used to always “measure” it accurately , but now I generally do it by feel (and eye) and only measure it if something raises a question. I am not looking for a number, but rather the least amount of relief I can do with the other parameters as they sit.
As far as saddle adjustments, this is where I seem to experience the greatest sacrifices in tone when lowering the action. I have seen guitars that sounded great with a very low saddle (and low string break angle). However, how they do that is a mystery to me (and it makes me wonder how good those guitars would sound with a better string break-over angle). As I progressively lower action at the saddle, at some point, I do notice a decrease volume and tone… that’s when I know I might have gone a bit too far.
I am happy to share my thoughts but certainly don’t take my measurements as the “ultimate” setup. I am neither a great guitarist nor a great luthier. My picking attack has been changing since I started into flatpicking last year. My setup preferences from my fingerstyle playing before that is certainly different, but not as much as you might guess. Generally a little tweak of relief and I am happy. Some of guitars are set up higher than what I think is ideal, but their tone is great, so I am hesitant to change it. Setup for me is a journey. I will make large adjustments when I first get a guitar, but then I slowly creep up on what I want over time.
My current favorite strings for flatpicking are martin lifespan 7200 (medium phosphor-bronze). I use lights on smaller guitars.
Have fun finding the ultimate setup for you.