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  #46  
Old 02-12-2004, 02:59 PM
jbgatlin jbgatlin is offline
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I find it unethical to bump up my price in order to offset my dealers discount. Just a personal thing. Anyway, I want him to make money as well. The better he does, the better I do......Hopefully!

Great topic by the way,
Brett
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  #47  
Old 02-12-2004, 03:00 PM
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Les Robertson Les Robertson is offline
 
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Guys,

Ultimately, whichever pricing or business structure you go with. You have to do what is necessary to full fill your clients and potential clients wants and needs.

Failure to do so will eventually put an end to your business.

**Note**. I have to catch myself when I write things like this. It is only applicable if you are in business.

If you are a knife maker who is truly in it just to make the knives you want. With money or lack their of, having no impact on what you make. Then you are the exception to the rule. Drive On!


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  #48  
Old 02-12-2004, 03:10 PM
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Les Robertson Les Robertson is offline
 
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Gib,

Your formula and explination are right on.

Brett,

Please stop, you're scaring me. A talented new maker and a head for business.


I think too many makers view working with dealers as giving away some of their piece of the "pie".

In fact if it is done correctly the dealer will help you make a bigger pie. There by increasing the size of your piece of pie. Making the discount you give the dealer a sound investment. As your return on investment grows each year.


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  #49  
Old 02-12-2004, 03:45 PM
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Les Robertson Les Robertson is offline
 
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Hi Keith,

I was re-reading your post again. I have to say I disagree with you.

If a dealer has "dead inventory" there are ways to "move" it. A dealer who represents a maker should never be in the position where they have to undercut the makers price in order to move the knife.

This is bad for the maker, the dealer and all the other collectors who have supported that maker.

One mistake dealers make (mostly the new ones) is that they really don't know the market. They are more about just moving merchandise (this is why the sell factory knives as well) than increasing a makers position in the market.

As you say, they will lower a price to move a knife. Additionally, they are not interested in taking a knife you purchased from them back in trade.

The main reason for this is their lack of the custom knife market.

With that in mind, at times they will buy a knife that is overpriced for the makers position in the custom knife market. If that is the case, you may sell one or two to collectors who are not familiar with the market as well.

However, with educated buyers who know the market, they will have no interest in that knife.

If a maker is working with a dealer, it is imperative that they can advise that maker on "competitive" pricing.

This does not mean that the maker has to give away their work for next to nothing. It does mean that their pricing has to be competitive with the market they are making knives in.

Generally, the dead inventory consists of knives that were purchased by a dealer who does not understand the market. As such they overpaid for the knife. The knives don't sell. Fortunately, they got a discount and the just lower the price to that and move it.

If you were a custom knife maker how many times would you want to see a web site with the photo of your knife and description. Then you look down by the price and you see either a line through it (with a lower price now showing) or ON SALE.

By doing this you have told the custom knife world a couple of things.

1) This makers work is not selling.

2) I feel the only way I can sell this makers work is by selling it below his retail price.

3) This makers retail prices are too high.

4) As a dealer I did not have sufficient knowlege of the market to either:

a) Recognize that the price the maker was asking was not equal to the quality of the work.

b) Recognize that the price the maker was asking was not competitive with his position in that particular market.

Either way I have shown makers that I am not competent enough at what I do to consistently represent the makers I work with in a favorable light.

Custom knife dealers have one huge advantage over makers at a show. We trade knives.

If there is an "art form" among dealers this is it.

To you makers out there, check some of these dealers sites. Look for the Bargain Basement, the lines through the prices or the "SALE" price.

Another one I noticed over the holidays was: 10% off of any custom knife in inventory".

WOW! There is only one reason you do that at Christmas time with custom knives.

Of course you have to check, as maybe the prices were 10 - 20% over retail to begin with.

None of us are immune from mistakes. I have had a couple of makers email or call me to let me know a price was too low.

I appreciated the call. The last thing I want to do is cause grief for a maker I represent.


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  #50  
Old 02-12-2004, 05:41 PM
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hammerdownnow hammerdownnow is offline
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I have always heard to buy what you like. Buying on speculation is like playing the stock market. Collecting for the sake of what you might make off it in the future is like marrying for money. The pleasure of owning the art should be the motivation.
Take the Randall speculation market. The only Randall worth a spit. IMOP, is one that was made by Bo. I see a rude awakening for the collectors of those repops. I would much rather own a custom makers interpitation of a Randall model than a factory job.
Me being a broke ass collector, I tend to buy low end models from artists whose work I like. When money permits. Seeing knives from custom makers on dealers tables gives me a chance to see knives in person that I may not otherwise get to hold. If I was to come across a makers knife that I liked at a discount price, I would jump on it and not think less of the maker, because I buy for the sake having and holding the art.
"On Sale" seems to be an ingrained magic phrase to make us want to buy. Everywhere you look from cars to pizza, its sale, sale, sale! There is no getting away from it.
"Honey, I saved you money"." I bought it on sale" may be a punch line to a joke, but it sure rings true.
My opinion don't mean squat and I am probably in the minority.I just put down some thoughts and ramblings.


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  #51  
Old 02-13-2004, 01:28 AM
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Kevin Wilkins Kevin Wilkins is offline
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Quote:
Originally posted by hammerdownnow
SNIP

"On Sale" seems to be an ingrained magic phrase to make us want to buy. Everywhere you look from cars to pizza, its sale, sale, sale! There is no getting away from it.
"Honey, I saved you money"." I bought it on sale" may be a punch line to a joke, but it sure rings true.
My opinion don't mean squat and I am probably in the minority.I just put down some thoughts and ramblings.
You're right about that! This sale sale sale trend is starting to take over in Germany now too. "Look how much I saved!" What a lot of bull####. What all the "Buy now and save 50%!" signs forget to mention is... DON'T buy at all and save 100%!. :-)


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  #52  
Old 02-13-2004, 10:03 AM
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Keith Montgomery Keith Montgomery is offline
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Les, obviously you are correct in your position that if the dealer has the knowledge and properly prices the knife in the first place then reducing it later won't be required. Not all dealers are good at this though. They are also not good at finding ways to move the knife without reducing the price (I was going to ask how you would go about doing that, but I may be getting into an area you would sooner keep to yourself). If a knife is not moving the easiest way to get it out the door is to put it on sale. That is what most dealers are going to do. I do not hold this against them, but then I'm not the maker that will have the value of his/her work lowered by action.

You make very good sense and show why the choice of the right dealer will be highly advantageous to the maker. As in all things there are those that are better at what they do than others. The problem for the maker is to be able to get on with one of these top notch dealers. It would seem that a dealer can only take on so many clients and do a good job for them all. I think there are way more makers out there than there are good dealers for them to get together with. This is the case even if you take into consideration that one dealer can represent many makers.


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  #53  
Old 02-13-2004, 10:10 PM
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Hi Keith,

Your point is well taken:

"if the dealer has the knowledge and properly prices the knife in the first place then reducing it later won't be required. Not all dealers are good at this though."

You are correct, not all dealers are good at this.

So the question has to be asked? Why would a maker give a full discount to dealers who do not know the market?

After all would you pay a full salary to someone who is unqualified in all aspects of the job you are hiring them for?

If the dealer cannot provide pertinant and timely information to the custom knife makers they represent. They are no more than an advanced collector with a web site. As the majority of these type dealers don't set up at shows. They meerly walk around. Why is that? Well if your behind the table you have to answer questions. With limited custom knife and market knowledge, it can be embarassing.

How much money would you give to a financial planner with only a basic working knowledge of the different investment options? How long would you stay with them if the products they bought for you didn't work out and had to be sold for a loss?

Keith you brought up the point about the amount of makers a dealer can represent so many and do a good job.

How many makers do you think a dealer can represent and do a good job?

As for how to move custom knives that are slow or won't sell. I have a simple forumla....I don't buy knives that won't sell.

It's a very simple forumla and easy to implement if you know the current and near-term future market.

However, if you don't...look for those "SALE" signs on the web sites. Also, the lines through the prices and those 10% off all custom knives on those and other dealer web sites. Another thing you will notice that these sites have in common....they sell Factory/Production knives.

Perhaps the time spent on buying and selling factory knives could be better utilized learning more about the custom knife market.

Im sure both the makers the dealers represent as well as their clients would appreciate that.

One last thing these dealers have in common. They DO NOT GIVE YOU FULL VALUE FOR A KNIFE YOU BOUGHT FROM THEM TOWARDS A TRADE IN ON A NEW KNIFE!

Why is that? In order to offer full value for a trade in. You have to know what position the maker occupies in each market they are competitive in. You have to understand competitive pricing. Lastly, you have to understand if that maker's position is on the rise, reached a plateau or is on the decline....and WHY.

If you don't have the ability to gather, interpret and utilize the intel that is out there. Long term you have wasted both your clients and the makers you represent time and money.


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  #54  
Old 02-14-2004, 03:08 AM
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Kevin Wilkins Kevin Wilkins is offline
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Quote:
Originally posted by Les Robertson
SNIP

As for how to move custom knives that are slow or won't sell. I have a simple forumla....I don't buy knives that won't sell.

It's a very simple forumla and easy to implement if you know the current and near-term future market.

SNIP
Say Les, not to be rude, but I used to be closely involved in advertising luxury clothing and was able to see what goes on with buyers for major stores. If you know your market so well that you never make mistakes, you should switch fields and go into fashion. You can make a high 6 figure salary with some very very nice bonuses. Those people live and breath their product area and their markets and they still make some mistakes. (not many or they dont last long) But that's why you even see sales at Bergdorfs... :-)


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  #55  
Old 02-14-2004, 10:15 AM
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Les Robertson Les Robertson is offline
 
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Hi Kevin,

Of course I make mistakes. Sometimes I buy to "early" on a particular style or material used. It's at that point I put the marketing machine to work. As there are several things that can be done to make that particular style, maker or material "hot".


I have been offered several jobs with 6 figure incomes. I don't know how the corporate and tax structures are set up in Germany. However, here in the US the phrase that pays is:

It's not what you make...it's what you keep.

After I got out of the Army I was promoted to Major in the Army Reserve (as I received my commission through ROTC). Any way about 18 months after I got out I got a call from a buddy of mine who was back in. He asked me what I was doing. I replied Im a full time knife dealer. He laughed and said "how would you like to come back in the Army". I laughed and said "I couldn't take the pay cut".

So while money is important, it is not the only thing that motivates me. I love custom knives, it is my greatest passion after my family and friends.

The other thing is that going to another industry I would loose the 20 years of experience I have with custom knives.

This is the experience and knowledge base that allows me to look at a makers work and decide within a minute wether or not I should buy some.

I suspect those in the fashion industry have the same ability. Those who sit in the front row seats at the cat walk and watch the models walk up and back.

I would be at a distinct dis-advantage. As I would be concentrating on the women and not the clothes. I suspect I wouldn't have my 6 figure salary for long

So while on occasion I will make a mistake. When I buy a knife from a maker I do belive they and their knives have the potential to compete favorably in their market. Sometimes things happen outside the realm of mine or the makers control to make them non-cometitive. Either for a time or completely.

At that point there are measures that can be employed to move that knfe(s).

However, one thing you will never see on my site or at my table at a show. Is the "dumping" of a makers knife due to my inability to sell the knife.

When you are a full time professional in any industry. You have to consider the totality of the cirumstances your actions will have on the industry.

We in custom knives both makers and dealers are selling a product that no one needs.

Makers are forever touting their work as "art". Which some of it truly is.

I hear all the time that custom knives are no good as investments. Part of the reason for this is those dealers who undercut the makers price.

Imagine if every custom knife sold by dealers was sold at full price. Some with a premium.

Then add to that equation when the collector wanted to upgrade to a more expensive knife. The same dealer would take the knife back and give that collector the full price towards that more expensive knife.

This would allow more collectors to get into more expensive knives. This in turn would create a greater market for more expensive knives. This in turn would allow those makers with the necessary skills to get more morey for their knives and produce more expensive knives.

However, when the dealers don't believe in the makers thy represent, why should their clients?

Sure, Corporate America dumps Billions of dollars of "Retail" mechandise onto a waiting market both here and abroad. Of course having a 50-70% profit margin built in eases the "pain" of doing this.

However, custom knives are not mass manufactured items. As such there is a limtited amount that can be produced world wide.

Consequently, it is up to us in the custom knife community to change the perception that custom knives are just another retail commodity.


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  #56  
Old 02-14-2004, 02:42 PM
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You hit the nail on the head there Les. That sale sale sale mentality is fueled and funded by a huge mark-up. Makers and dealers have to hold the line. High material costs. Fuel, electricity, man hours for the maker. Advertizing, travel expences, ect. for the dealer, all cut into an already slim profit margin. Dumping or sale-ing can only set a bad precedent. you are right, re-educating the public is the only way around the problem.
Promoting knives as "art",seems to me, could and should be a tool for re-education.
When a man takes a pile of materials and thru his vision and manipulaiton, turns those things into a thing of beauty that evokes an emotional response in another human being, that is art. Very few items we come into contact with evoke the same emotional response that a knife will.

(edit) I told a lie in my earlier post. I don't think I, (we) can buy just for the sake of art. There has to be many justifications for making a purchase. One of those is "investment". That is a biggie, especially when used on the spouse.


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Last edited by hammerdownnow; 02-14-2004 at 02:58 PM.
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