Pricing your knives

[Mace]

[With all due respect Mace, I don't feel the $50 less concept is a very good marketing philosophy...]


That must be why I have no $$$$$


At the time it was good advice for me. In hind sight it was kinda sage advice, it wasn't so much an answer to a question but more of a subtle push down the path of making and selling knives. It made me find a place in the market. By trying to find someone that had a product with the same grade of craftsmanship as my work it made me see a lot of things. It made me realize how much my work needed improving, it let me see what others were making and selling, it made me look at other peoples craftsmanship, it helped me grow as a maker, and hell, it even helped me sell a knife or two. It amazes me sometimes when I go to a show and pick up a knife and look at the price. What a knife sells for is what a customer is willing to pay. How to price that knife? Well I guess thats why we are all here.
I will sometimes look at one of my knives and ask myself what I would pay for it.

Just my two cents.
Mace

[Tim Adlam]

I don't believe in any "one" standard of pricing...too many variables involved.

As an engraver, there's definite parallels here.

To go from hobby to full-time status requires a business plan.
That "plan" requires you to take an honest look at your strengths and weaknesses.
An unknown maker will have a hard time competing price-wise with a known maker
with comparative talent.

I'm assuming that you want to be "competitive".

Re-read Buddy's post...there's a lot of "meat" there.
Especially about...goal setting, invested time and building a basis for trust.
Dennis's point about not selling yourself short or undervaluing your work deserves
equal consideration.

If you take Jerry's advice to heart...get your ducks in a row before you approach a dealer.
They'll respect you for making the effort towards developing an honest assessment about where
you fit into the marketplace. Pay attention to the gift they give you.

Your marketing goals should include convincing the buying public that you're in it for the long haul...
...and that you intend to see the demand and value of your product increase.

Compare yourself to your competition only when regarding the market.
Your work is unique to you...be confident in yourself and your ability.
Exude that enthusiasm when dealing with the public.

Lastly...give better than you get...for whatever that may mean to you.

Hope to see you out there!

Tim

[Les Robertson]

This is always a great thread.

The biggest pricing mistake among makers is:

They price the knife at what they think it should sell for....not what it should be sold for.

Way too many makers overcharge for their work.

Dennis, I have to disagree with your approach to pricing. You feel a maker who sells a custom knife for $100 has no self-respect? WOW.

What if the knife is a basic hunter with no guard and a micarta handle? If that is a new maker, why would you pay more than $100?

The goal initially should be to sell your knives at what a makers work should sell for at an entry level.

Collectors and buyers are getting more savy every day. As such they know what is value for the money. Many have learned through the forums that a "name" does not necessiarly equate to a knife holding it's value in the aftermarket.

I know, many makers have told me that the aftermarket is no concern of theirs. Some of these same makers have seen a steady decrease in sales over the last 4 years. Of course this has nothing to do with the collectors loosing between 50-75% when they sell one of those knives. Oddly enough they don't buy one to replace it.

Yes, the truth is that if your position is better in a particular market, you can ask more money then your fellow knife makers.

Remember it is easy to raise your prices. However, it is almost impossible to lower your prices (especially if you have sold several of that particular style of knife).

Buddy and Gib have good formula's. Ultimately each maker will figure out the best pricing structure.

[J.Arthur Loose]

The biggest pricing mistake among makers is:

They price the knife at what they think it should sell for....not what it should be sold for.

Way too many makers overcharge for their work.

I'll be honest and say that this is the reason I'm moving away from knives as my primary source of income. I'll always make them; they are my passion, but there are a lot of folks out there who don't make knives and think they can assess a maker's overhead & pricing scheme. The market value of the handmade knife is also affected by the fact that many makers are part-time or retired with an external source of income. Simply put, until you make it to the very top of the heap you aren't being paid what you are worth... and yet I know some pretty dang respected makers who aren't making a decent living... not because of their lack of business savvy, either, but because the market really doesn't bear very many full-time, one-of-a-kind handmade bladesmiths. I know of one very revered maker who states that having multiple income streams is the only way to make a living in knives. I know another former maker who had very decent shows at the Art Knife Invitational but still wasn't earning a decent living. Now he's a successful artist-jeweler... so the difference clearly isn't his business acumen. Handmade knives are simply undervalued.

It's long been my observation that most handmade ABS quality blades sell for too little... knowing firsthand the education, experience, labor, blood, tears and overhead that go into them. I'm surprised, Les, that you repeat the notion that knives are overpriced so often. I would think it would be in your interest to educate the public and encourage collectors to understand why a handmade "custom," knife should be worth more, not less.

[Osprey Guy]

Les-

I have a lot of respect for your knowledge, and the amount of time you've spent immersed in the knifeworld. However I do strongly disagree in this case about the $100 knife.

Please correct me if I'm wrong about this, but unlike almost any other product in the world, knife prices have remained mostly unchanged for 20 years, with only a few exceptions. Many if not most of even the top makers have only doubled their prices in the past 20 years. Funny how factory knives can keep raising their prices...but then they have to. How many decent factory knives can you find for under $100 to compare with a well made, custom hunter?....even an "entry level" hunter? (If it's not at least a well made knife, then maybe it isn't ready for public sale and shouldn't be part of this discussion.)

I've only been around the custom knifeworld for about 2 years. At the time, the very first thing that struck me was the pricing...I was astounded by the cheap prices with which talented knifemakers were willing to let go of their hard-made knives. I do know a little something about marketing, and it seemed to me that prices were mostly dictated by a few "old school" dealers, and those makers afraid of raising their prices. In the past 2 years I've seen some wind of change, but nowhere near enough.

There is a mindset here that has remained firmly entrenched for at least 20 years...It is a mindset that can be changed through education and the will to elevate this craft...Unless of course you think that in another 20 years, perhaps in the year 2014, that same custom hunter should still be priced at $100.


Dennis Greenbaum

Yeah Baby!

[Les Robertson]

Hi John,

I didn't say all knives are overpriced. As you pointed out, many people view the ABS knives as "underpriced".

A lot of this is due to Mr. Fisk. As Jerry understands what it takes be competitive in today's market.

I feel Jerry's influence on the makers in the ABS has helped helped the forged blade market to become one of the dominate markets in custom knives today.

This was done through education and business savy.

John, as you know I do spend a lot of time edcuating custom knife buyers. More so than any other custom knife dealer in the US. However, I am only one person. Ultimately, it is up to the makers to edcuate the buying public.
Most have decided this is not in their job description.

What annoys me is to hear and read makers write about their "art". The blood, sweat and tears that go into making them.

Then they work with those who devalue their work. Those who do not feel their knives are good enough to stand behind them with a trade in policy. Those makers who flaunt the fact they don't care about the aftermarket, because they deal in the "primary market". ETC>>>>>>

Those makers who blame everything and everybody else for their lack of sales. When it is up to them to establish what their position is in a particular market. Then forumlate a plan as to how to improve their position and implement it.

John, you are a talented maker who, because it appeals to you. Have chosen a style of knife that has a limited market here in the US. The good news is that you are in a position that you can be the "pied piper" for this type of knife in the US. You can own this market.

All knives and those who make them are not created equal.

I agree with you that it is very difficult to be in custom knives full time. This is true whether you are a maker or a dealer.

Easily 85% of all those involved in custom knives are part time. If you want to include those who's wives have great jobs/benefits, a great pension plan, or some other source of income. That number would probably go up to 95%.

Generally, those like me who do this full time with no other source of income (April 1st will be 9 years as a full time custom knife dealer). Were part-time for 5-10 years before going full time.

In my case I was part time for 9 years.

If I had tired to make a living at selling custom knives any time within the first 7 years. I have every confidence I would have not been successful or successful enough to make a living at it.

The mixture of art and business that is necessary for makers to go full time and have their art provide their sole source of income is difficult to aquire. It may be even more difficult to put it into actual application.

[J.Arthur Loose]

What annoys me is to hear and read makers write about their "art". The blood, sweat and tears that go into making them.

Will you come to the next ABS hammer-in? I'll take you step-by-step through the process... there might even be some blood!

Kidding aside, you do make some good points. I'm fully aware that I've chosen a difficult road, one that will pay off in the long run. I'm really addressing the unique, "art-knife," market. It works very differently for those who do limited production or target, say, the tactical market... but in most cases I do feel that the knife market in general caters more to the buyer than it does to the maker; and the craft itself suffers for it... as for example, when a new maker can't compete and has to find another vocation. Of course there should be some healthy culling, but it's in all of our interests to get as much as we can for each knife.

[Les Robertson]

Hi Dennis,

Current estimates are that there are over 4,000 custom knife makers in the US.

As such the competition is the highest it has ever been.

I have always held the best way for a maker to come into a new market is to sell their knives for as little as they can and still turn a profit.

This is done for a couple of reasons:

1) Those who buy knives routienly in that market will take note of your knives as "good value for the money".

2) Those who may not know your name, but recognize quality. Will buy one of your knive based solely on the value per dollar.

3) Those who are new to custom knives will consider your knife because of it's competitive price point.

The benefits to the maker are the following:

You will pick up new customers from a couple different buyer strata. Additionally, with the Internet and other forms of collector discussion. Your knives will create the "buzz" all products seek.

Also, consider that most new knife makers are selling their "mistakes".

As the demand for your knives rise, so will your prices. This raise in price will benefit not only the maker, but those buyers who were smart enough to buy the makers knives "early".

Now the makers knives are selling at a profit in the aftermarket. This of course will bring the interest of the magazines and dealers. This will give an additional boost to the maker. Again, increasing the demand as well as another price increase.

Don't forget to figure in the time factor. That is to say, they can now make the knife quicker. Which means the maker is making more knives, that are selling for more money in the same amount of time. Which means their profit margin has increased.

Gaining a favorable position in one market, will allow for a smoother transition if the maker chooses to. Having a favorable position in multiple markets expands the makers client base. This increases demand and the prices that collectors are willing to pay.

As for factory knives selling for $100 and over. You will have to discuss that with those "Custom" knife dealers who sell factory knives. I have no knowledge of that aspects of knives.

However, it would appear to me from a purely marketing point of view that the factory's are doing a great job to convince the buying public that something mass produced in Taiwan is worth over $100.

It would appear to me that the makers need to get a marketing firm to let the buing public know of the advantages of custom knives.

To speak of as John said the Blood, Sweat and Tears that go into producing these knives.

I would have to disagree with a few "old school" Dealers dictating prices. Ultimately, the market dictates prices.

WHat is something worth...what someone is willing to pay for it.

I do agree that a well respected dealer with years of experience in a particular market or with a particular maker. Does develop a high level of expertise when discussing these knives or these makers. As such their opinion does carry more weight, as it should. They have earned it. So in that area, yes they can sway a client with thier "Expert" opinion.

In Corporate America a business will pay big bucks for this individuals expert opinon.

Custom knife buyers get this for free from professional custom knife dealers.

As for makers afraid to raise their prices. This is due primairly to them not knowing what their position is in the market. If they knew that their 5 main competitors were getting 15-25% more for the same knife and same quality. They wouldn't have a problem raising their prices.

Dennis, ultimately it is the maker business and they are responsible for all aspects, good, bad and indifferent.

Belive it or not I actually recommend to some makers that they should raise their prices. While at the same time I decrease the discount I receive.

Now that is a "New School" Dealer.

[Osprey Guy]

"Ultimately, the market dictates prices".


You're right...the market does dictate price. And as long as knifemakers and dealers continue to educate the market with the myth that custom knives are worth so little, nothing is ever going to change.

And we're not talking 15-25% difference here...Why would someone be willing to pay $1500 for a high-end custom knife, when he can find something comparable for $350....Why pay $400 for a nice custom hunter, when someone down the aisle is trying to "make a name for themselves" by pricing theirs at $100?

BTW-How many years does that new guy have to wait to get his prices up to where they should have been in the first place? Cheap is not the way to enter a custom market. Cheap suggests cheap...

"Hey general public! Especially you who have never purchased a quality knife before. Here's some really fine custom knives...yours for the low, low price of only $100."...... yeh...that'll leave an impression.


Dennis Greenbaum

Yeah Baby!

[Darren Ellis]

Originally posted by Les Robertson
Current estimates are that there are over 4,000 custom knife makers in the US.

Hi Les,

Reading your posts with interest, keep the info flowing.

You seem to be up on the statistics. Out of those 4000 (aprox.) custom knifemakers in the U.S. currently, how many would you estimate were *full time* makers? Out of those full time makers from the first question, how many would you estimate derived their *sole source* of income from custom knifemaking? These are just some numbers I've been wondering about...



-Darren

[Les Robertson]

Hi John,

I have been to several makers shops and watched knives being made. I have even had invitation's to come over and make a knife.

Truth be told Im afraid to make a knife. Im afraid I might really like it. The last thing the custom knife market needs is another lousy custom knife maker.

John, the custom knife market like any other market caters to the buyer. It has to, as knife makers are notrious for not buying knives.

I think the Art Knife market is suffering due to the cost of the knives. Not to say they are not worth it. It is especially difficult to do so over the internet. Where much of the detail is lost in the pixels.

Additionally, the lack of an aftermarket also hurts the sale of these knives in the primary market.

I agree with you that it will take "education" of the buyer to help them understand what they are getting for their money.

Perhaps an Art Knife Guild or organization would help.

[Les Robertson]

Hi Darren,

Out of that 4,000 probably less than 200 are full time.

For those who custom knives is their sole source of income, 75.

This is just an educated guess.

[Darren Ellis]

Originally posted by Les Robertson
Hi Darren,

Out of that 4,000 probably less than 200 are full time.

For those who custom knives is their sole source of income, 75.

This is just an educated guess.

Thanks Les, that's a pretty sobering number, less than 2% of the custom knifemakers currently in the U.S. are making a living at it.

-Darren

[Les Robertson]

Hi Dennis,

In a round about way you are answering your own questions.

Ok, here is a question for you.

Why do people continue to buy a drop point hunter from Bob Loveless (who does little of the work on the knife). For Several Thousand dollars.

When they can buy a similar style knife from Geno Denning for $250?

I don't know about the "myth" of custom knives. Im on the oposite end of that specturm. I deal in the reality of the aftermarket. Where collectors find out what their knife is really worth on the open market.

Dennis,

For most buyers who enter a new market, the price is an important issue, if not the most important issue.

When it comes to collectibles, there has to be an entry level, in this case knife, for those buyers to purchase.

As they do not know the difference between 440C and 440V. They don't know names or who the hottest maker is.

That comes with them staying in the hobby.

Proof of this is found in the strength of the custom knife market today. 10 years ago the market was on the decline. Then tactical folders came along. They had an entry level price between $200 and $300.

As those buyers came in to the custom knife market they bought more and more. Increasing the demand and increasing the price.

Here is one last thing for you to think about.

How would the custom knife market be today if all the makers who did deals with the factories....DID NOT?

How would the custom knife market be today if the only place you could get custom knife makers desgin was from the custom knife maker?

How many $100 + factory knives would there be if they did not have the power of the custom knife makers behind them?

[Les Robertson]

Hi Darren,

Take heart. Of that 4000, about half of those are "hobbyists". Those who do it for fun with little or no thought of profit.

Another 1000 are those makers who will occasionally set up at a "club" show. These makers are a little more serious but don't really consider it a "Business".

Of that remaining 1000, 500 of those are heading out to their shop on a daily basis to make knives.

These are the hard core group. They advertise, go to shows, have a web site, etc.

It's the same with Custom Knife Dealers. Why do you think so many of them carry factory knives? It's because the can't make a living just selling custom knives. That and you can get a lot more knives for your $1,000 buying factory knives.

Just for fun somtime get a Knives 2004 and a Knives 1999. Go through it and make note of how many of the makers in the 1999 book are not in the 2004 book. Conversely, look in the 2004 book and note how many names you see that were not in the 1999 book.

There is a constant shift of hundreds of makers each year.

Note, that the Knives Annual's are in no way a complete listing of all the makers in the US. There are some that are not listed. There are others who are listed who no longer maker knives.

But it will give you a feel for the amount of change in a relatively short period of time among the custom knife makers.