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  #1  
Old 08-19-2008, 11:42 PM
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spaknives spaknives is offline
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Question How Set The Perfect Price For Each Knife???

Hey There,
I have been making knives now for about four years and selling for about three years. One of the biggest problems I still have is figuring out just how much to ask for a knife. I Know this could be a touchy subject and maybe even a personal subject. I also know there are hundreds of variables that can be looked at and it is probley totaly differnt for every knife maker. A lot of it depends on just how well known a maker is and a lot of it may depend on the rarity of handle material, who made the damascus, how many hours were spent making the knife, what the maker had to spend on parts and fittings so on and so forth. I was hoping that if some of you proffesionals who have a good way to come up with the pricing could kinda go through your pricing process it may help me come up with a little better set process for my self. I was wondering if one thing people do is mark up material a certain percentage and add that in to the price some way. Say I buy a set of mammoth scale and a billet of damascus all for $100.00 then add 15% on to that so that would be $115.00 dollars worth of material and then some way add in some money for the grinding and assembly time and a little to cover pins and materials. Or is there a lot better formula to figure out a price. Do some people just make a knife, look at it and say "hmm that looks like a 300.00 dollar knife." I know I have read other people sights that say they have a stategic pricing guide or formula to come up with a price, but I have yet to see any ones way of doing so. Any advice or help on the subject would be great. Thanks for the help, Shane
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  #2  
Old 08-20-2008, 12:36 AM
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Teknition Teknition is offline
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I think you are asking an impossible question to answer even for a very seasoned maker. There are so many factors that add in to the equation and many of them change with each knife you make. Pricing a hand crafted item isn't like producing widgets where they are all the same, material cost factors are known, time required to make each piece is known, cost of overhead per piece can be figured out, etc.

Alot depends on the maker, as you have already mentioned. For example, if Mr. Fisk and I went halfs on a 1000.00 piece of mammoth ivory and we each put our half on a knife, Mr. Fisk will get his money back out of it

If you are a full time maker, you have to make enough to pay your bills and make a profit, otherwise your not going to be a full time maker for long. If you are a hobby maker and have a day job, you can get by with making less per knife or sometimes losing a bit. For a hobby maker, alot of times its nice if you make enough to buy more materials and can stash away a bit in the new tool fund.

Labor is another tricky area. You can't really say I have to make X numer dollars per hour because the more knives you make and the more experience you gain, the faster you will be able to make a knife. So when you are starting out, your knives are way over priced, and when you have 20 years in it, they are under priced.

I think probably the best way to price your knives is to take into account your consumables like belts, epoxy, sandpaper, etc. add in a bit for overhead like electricity and heat or a/c. Give yourself a wage, and then in the end, have a look at the knife and ask yourself if the knife is worth the total that you came up with.

In the end, your customers will let you know if your prices are high or low. If you can't make knives fast enough to keep up with the demand and the waiting list just keeps getting longer every day, then your prices are most likely too low. If you are sitting on a stack of knives and the phone ain't ringing, you may want to consider that they may be over priced.

Right now, with the perceived economic slow down, I think there are a lot less knives moving in general. The price of steel and materials in general seems to be going up by the day and expendable income seems to be less and less.

The bottom line is a knife is worth what someone is willing to pay for it. Price your knives so that you are making a fair and reasonable profit, and the customer is getting value for his money and you will have a winning formula.
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  #3  
Old 08-20-2008, 03:51 PM
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AUBE AUBE is offline
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Quote:
Originally Posted by Teknition
The bottom line is a knife is worth what someone is willing to pay for it. Price your knives so that you are making a fair and reasonable profit, and the customer is getting value for his money and you will have a winning formula.
That pretty much sums it up right there.

Keep in mind that everyone has a different opinion on what a value is. Some people will look at a $500 knife and think its a great value, others will look at the same knife and think its way overpriced. Both of them can be right. The person that thinks its a value may have deep pocketbooks so $500 for a nice knife isn't a bad price to pay at all when they are used to buying $2,000 purses or some such. The person that thinks it is overpriced might just be barely getting by financially (maybe hes a knifemaker ) so $500 is out of the question.

A lot of it comes down to marketing. If you market to a crowd that has more money to spend on knives you can get higher prices. I'm sure we have all seen knives where one sells for double what the other one sells for from a different maker even though the quality is about the same.

This is a touchy subject for some.

One observation I've had over the years is if you set your prices high it can be better for you in the long run. Your sales might be slow at first but as long as you are selling a quality product there is someone out there somewhere that will buy it. You just need to find them. Once you start selling them, those knives will then have a high value and more and more people will start buying them as the word spreads...sometimes as investments. If you start off with your prices low its harder to raise them...people already associate low prices with your product. Also people often associate high prices with high quality and low prices with inferior products. You can see this in every market. Take cars for example. A Corvette might retail for $60,000 and can outperform many much more expensive sports cars out there. But if Corvette tried to raise their price to say $200,000...the price of one of their competitors that has the same performance level they would sell very few models. People have associated a low price (figuratively speaking) with Corvette . People buy the more expensive cars because they are "elite"...a status symbol....and often as an investment.


As for charging more for exotic materials....I would recommend it. I typically charge 10% over my cost for using exotic materials because accidents happen. You may sneeze when grinding your edge bevels on a piece of $200 damascus...or a racoon may sneak in your shop at night and decide to gnaw on your $100 piece of ivory. (I ruined a knife last night with a sneeze...and over the winter a coon stole my buffing compound and some stag/bone before I realized what was happening) The extra amount charged helps protect against loss.

Basically just add up your materials cost, your time spent, and what you think the knife is worth and price accordingly.

I pay attention to how long it takes me to make a knife, price about how much I want to make an hour,, subtract expenses from my profit and I have a ballpark figure. If its a design I did not enjoy doing I typically charge more because it was more stress.

My prices are currently set based entirely on what I think they are worth as inexpensive tools. I don't take into account demand, value as an investment, etc. After 14yrs of making knives, 3yrs ago I started a small company making inexpensive custom knives designed to be used. Finish is second to performance/price. So my pricing is pretty basic. In fact when I started I used Ebay to check the demand and market value of the pieces. They originally would auction for $80-90 on average. This was more than I thought they should sell for since my goal was inexpensive tools....I cut the price down to $65. From a business standpoint that is idiotic....but it the higher price was counterproductive to my goals. When I again start doing pieces based on the artistic aspect of the work and not solely the tool aspect, my pricing will be different.

Make sure to add in all expenses. Gas, shipping costs, electricity, materials, machine repair, time for customer service (this can eat up more time than you'd expect) etc etc.
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  #4  
Old 08-21-2008, 12:01 AM
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Teknition Teknition is offline
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Quote:
Originally Posted by AUBE

...and over the winter a coon stole my buffing compound and some stag/bone before I realized what was happening)
He's probably out there right now polishing that new handle on his bowie

Brad
www.AndersonKnives.ca
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  #5  
Old 08-21-2008, 06:26 AM
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NJStricker NJStricker is offline
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I've seen different approaches to setting knife prices. Like the guys above have said, somewhere between getting your money back and too much is just right!

Bob Engnath advised, at least for relatively new makers, that they charge enough to make 3 more knives.

Wayne Goddard had something like a formula, which I forget exactly what it was, but it was basically (materials+shop rate) x 3 = knife price.

I've seen websites where the cost of a custom knife was quoted on a per-inch basis.

A lot of it comes down to knowing what your market is, and making sure you have a broad market. (From this standpoint, it also makes sense to make knives in different price brackets. A customer may be willing to try a new maker on a $125 knife, and if happy with the result, come back later for a $300 knife.) Some makers hit the shows hard, have a website, and generally try to reach out to as many potential customers as they can. Others are content to hang out on their favorite armchair survival forum and sell to their armchair survival buddies.
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  #6  
Old 08-21-2008, 12:02 PM
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Andrew Garrett Andrew Garrett is offline
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I use a worksheet that is broken into four sections: Parts, Embellishment, Sheath, and Labor. Everything is itemized for description and price.

For parts, I list the price + $3 to cover the shipping to me.

Embellishment is a flat quote on things such as scrim or design etching (much like I quote a tattoo).

File work is quoted in hours by the inch and a rate is selected based on 'basic' like thumb serrations, or 'fancy' such as vine work.

Different finishes cost a few bucks each based on what products are used to achieve it.

Labor is easy. I quote one hour per every inch of over all length, rounded up to the next inch. If the blade has a false edge, dagger grind, or otherwise complex grind, I add 25% to 50% to that time estimate based on the complexity. I have a blank where I select a labor rate. Since I'm almost a completely unknown hobby maker, I have decided to base my rate on the year. I started in '05 at $5 per hour. This year, I'm up to $8 per hour. I'll probably give myself a raise if I'm ever published or can't keep up with orders to a ridiculous degree.

The sheath section quotes a flat rate for materials and a time quote for type of sheath. Tooled or carved is a flat add on.

The form indicates that I add $15 for shop expenses (electricity, belts, etc.).

The bottom of the page lists total time and materials for each section. I add everything up and that's my price. I enerally round up to the next $5 for simplicity sake.

Most of my knives go for less than similar knives elsewhere in the custom market ($125 -$175 on average for a VEGA) Larger fancy pieces might approach $300 without quite getting there. Like I said, I'm not a 'big name' in this craft. I just enjoy the art.

I'll email you a copy of my worksheet if you want to use it for ideas. I've been thinking about some revisions anyway.

* I should be clear that I don't need this income to survive. I have a good full time job and a great part time job that makes about the same. Knifemaking is a labor of love and I'm happy if it pays for materials and new tools.


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Old 08-21-2008, 06:45 PM
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SharpByCoop SharpByCoop is offline
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'Perfect price'?

The perfect price is one that pleases both the buyer and seller. It's that simple.

Now, the question becomes, how can a relatively new maker in an incredibly competitive and growing environment be happy with his pricing and attract new buyers?

Frankly, you will have to toss out the complicated formulas and work at a loss for years or more. What you need to sell through the knife is value and what you are investing in by selling at a loss, is the longer-term reputation as a maker gaining prominence. You are gaining your profit through reputation, and that's the perfect part of the transaction that has no price tag..

Your knives have to be either much better quality than an established maker's at the same price, or less in price for the same value.

Value is also determined with a maker by being a long-standing presence. Ever see how valuable makers work is that bail after a few years? Plummeting resale. That is part of what is being paid for at the outset, over a competent factory knife.

Lots to discuss, and the answers aren't simple.

Do you have a website? First and foremost for getting smart exposure.

Coop


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Last edited by SharpByCoop; 08-21-2008 at 06:48 PM.
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  #8  
Old 08-21-2008, 07:43 PM
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Andrew Garrett Andrew Garrett is offline
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The 'complicated formula' is not so complicated once you've written it down. Parts plus labor is as simple as it gets. This actually makes pricing real easy since you don't have to stand back with you're hand on your chin, look at a knife and say, "Hmmm... how much to ask for this one?" That's just too 'willy-nilly' for me. When someone asks me how I came to a certain price, I want to offer an intelligent answer.

I suppose that the day will come when I'm experienced enough to price my work without my worksheet, but it's giving me a great foundation to build on.

With all that precision and carefull design going into the knife, why 'fly by the seat of your pants' when it comes to setting a price?


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Old 08-21-2008, 09:15 PM
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SharpByCoop SharpByCoop is offline
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Well-put, Andrew. I will have to backpedal a bit here.

If your knives are readily selling, then, there you go, it's appropriate to figure out applicable costs.

My point(s) are based to makers who are not sure of their 'position in the market', as I have heard it put. Shane may very well have a clear idea.

Coop


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  #10  
Old 08-22-2008, 09:16 AM
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spaknives spaknives is offline
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All Very good info fellors!! I have been looking for something just a little more "solid" then what I have been doin lately. The work sheet idea does sound like a pretty good way. Once a maker becomes quit a bit more known and his work is a large demand (not that I'll ever be there) it may not work as well. Well I guess you could just keep giving yourself hourly raises until your price is right. That would work! Thanks for the help guys. Shane
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  #11  
Old 08-22-2008, 09:43 AM
Jon Christensen Jon Christensen is offline
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I've been developing a flat rtae sheet to help me with this. It's a "work in progress" and changes all the time as I modify it to suit me.

I have a base price for a knife and then areas for embellishments.
I've worked backwards through it with knives I've built and it comes in real close. It's a good guideline and if nothing else the time spent creating it really helps you think about how you do things and where you can improve.

I've cut and pasted it here so you can see it. I have one for each type of style of knife that I make.
Feedback is welcome!!!
Jon



Flat Rate Sheet

Basic Bowie, Notes, Base Price, Job
7"
8"
9"
10"
11"
other

Blade Steel
Damascus (per inch finished)
Random
Ladder
Twist
Simple Mosaic
Complex Mosaic

Blade Treatments
Sharpened Clip (per inch)
fullers 1/8" groove (per inch)
radiused ricasso
Sandblasted finish

Guard and fittings
Wrought Iron (per inch finished)
Damascus (per inch finished)
Random
Ladder
Twist
Simple Mosaic
Complex Mosaic
mildsteel/nickel
Framed Handle
Nitre Blueing
Color Case Hardening

Handles
Silver Ricasso Wrap
Silver Handle Wrap
Hand Rubbed oil finish
Two piece handle
Ferrule/spacer
Mortised handle

Sheath
Bowie
Pouch
Bills case
Total


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  #12  
Old 10-30-2011, 09:56 AM
ironjohn ironjohn is offline
 
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i do a good number of knives in a year and i am a full time blacksmith, so it is my living. all my knives are "users" so i base my prices on good quality handles with few "extras".

i start at $20 per square inch of blade for plain high carbon steel. but never go below $45 (as for carving knives, where the blade can be smaller then 1 square inch). this covers my hardwood handles and a few brass pins.
for any extra pieces of brass i add $10-$20 (guards and such)
i also make my own damascus - and ask $50+ per square inch of blade
sheaths are $5- $20 per inch

i have it all laid out on my website - here is the link
ironjohnlogan.com/knives

hope that helps
john
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  #13  
Old 01-07-2012, 04:05 PM
irontree irontree is offline
 
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I'm still an amateur at this but my brother-in-law does it for a living and I have worked a few shows him. From I have seen it comes down to quality, rep, and clientele. Start with quality, work the shows, build your rep, and clientele will follow. He sells his knives for $100 -$150 more now than he did 5 years ago. His clients now call and order 4 to 12 knives at a time. In this down economy he sold $14K worth of knives last Nov. You can have all the formulas you want but if people won't pay that price they mean nothing. As with all marketing it comes down to know your customer, what he wants, what he is willing to pay.
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  #14  
Old 01-10-2012, 06:32 AM
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xspook2158 xspook2158 is offline
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I am new to this forum, but as a fly fyer my prices do get questioned.

All I can advise is search what others are charging, compare your work, then and only then decide on youre price. Once decided, never back off of it.

Just my opinion.

Jeff
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  #15  
Old 01-10-2012, 10:30 PM
Bearpaw Customs Bearpaw Customs is offline
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Every Knifemaker has his own way of Priceing I have been making for 39 years and still fly by the seet of my pants.I make money on some and some not so much.But I have one set rule "I don't make a knife for les than$150,That is my Starting price.
I have prices on my web site on knives.Standard Knives come with Black Or Maroon Linen Micarta,Stabelized wood is 10% over my cost,Ivory is twice as much as the cost as you may have to use 2 sets on one handle,Stag-Curent price plus shipping and a 10% mark up,Mother Of Pearl is Cost plus 50% as I don't really like working with it.
File work $15 to $25 per inch dsepending on pattern
Tapered Tang $40 to $60 depending on size of knife
I hope this confuses you as much as it does me
DAVE
http://bearpawcustoms.blademakers.com
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