Wax potting describes the process of dipping the pickup into a pot of hot wax to seal and hold the components in place to prevent squealing when playing at high volume or with lots of gain.
A lot of people will say that a pickup being microphonic in any way is bad thing, and if you are gigging or playing in a high volume/high gain situation, this can lead to undesirable squealing. However, in other situations, like for recording, playing at home, or if you are able to control it, then not potting the pickup can add another dimension to your tone - it becomes more touch responsive, sounds more "open", and allows some of the acoustic qualities of the guitar to come through. Don't forget, none of those much sought after original PAFs were wax potted!
While I construct my pickups to reduce the
chance of unwanted microphonics, I understand that in high volume/high
gain situations wax potting can be desirable, so I can pot them at the
time of purchase if requested, or will happily pot them for you for free
within 30 days of purchase if you decide you'd prefer them to be potted after
trying them out (AU$25 per pickup after the 30 days has expired).
I use a paraffin/beeswax mix to pot my pickups and offer three options for potting them:
Unpotted: As mentioned above, this will give a more "open" tone, and is suitable for playing at home, recording or maybe smaller, quieter gigs.
Light Wax Potting: This is just a quick dip to allow the wax to get in between the main components, for example between the bobbins and the baseplate or cover (where most microphonic squealing occurs), but not into the coil windings. This reduces the chances of microphonic squealing at higher volumes, but still retains some of the good microphonics that give you a more open and responsive sound. This is definitely recommended for many Fender-style pickups and Filtertrons where the wax will essentially hold all the components together.
Full Wax Potting: This is a good long soak to allow the wax to penetrate further into the coil itself. It will further reduce the chances of microphonic squealing at very high volumes, but will "deaden" the sound a small amount and reduce some of the harmonic content of the pickup tone. If you're gigging, you like to crank your amp, or ramp up the gain, then I'd definitely recommend this level of potting.