- Joined
- Jul 4, 2009
- Messages
- 1,201
Thank you everyone for reading this thread.
First, let me explain my background a little bit so that you can know where I'm coming from. In many way, professionally, I come from three different worlds. First, I was a metalsmithing and jewelry design student in college. After that, I pursued two careers at once, one in graphic design, where I ultimately found a career in litigation graphics, and second in the fashion industry where my partner and I made jewelry and clothing. We peddled our wares at fashion event not unlike knife shows and even made it to Vegas for the big fashion trade shows there.
So that gives me three experiences to draw from: one as an artist and craftsman in light metals, one as an artist that charges by the hour and one as a maker/business owner that had to consider the bottom line in both making and selling products.
Now, for the statement that I think might ruffle a feather or two: In my opinion, knifemakers often seriously undercharge for their work, and I think that hurts other knifemakers.
I know that times are tough right now. And I know that hand craftsmen face a lot of competition from manufacturers and each other.
But I see the pricing of so many knives to be near the level of obscene, especially when I consider the cost of materials, the cost of equipment, and the expertise of the makers.
Again, for a little perspective.
when I was in the fashion world, a cost breakdown looked something like this:
- cost of materials including scrap
- cost of facilities and equipment (easy to rough calculate - If you are a business, just figure out your monthly expenses and tool budget and divide by the number of pieces you reasonably produce in a month. If this is your hobby and you only produce one or two a month, this number will be huge, so you need to come down on this part),
- cost of packaging.
- labor cost (THIS MEANS YOU - how much should a skilled laborer make an hour?)
For a dress, the totals look something like this:
Fabric/thread/buttons: $35
Facilities/tools: $15
Packaging (hang tags, hangars, postage, whatever) $10
Labor (from first cut to in the box) $20/hour x 3.5 hours = $70.
TOTAL COST OF MANUFACTURE: $130
Most of us can figure this out fairly easily, and we have a number that seems reasonable and is within a market expectation. Let's pretend that the number above was not for a dress or shirt but actually for a knife. To many people, $130 is a lot to pay for a knife. I won't dispute that. The big problem here is that this is only the cost of manufacture. Almost anyone who has experience in the manufacturing/wholesale/retail chain knows that selling a piece for cost of manufacture is really selling it at over 75% off retail!
OK, now this is where I think many artists, from painters to potters to knifemakers make their blunder. They need to remember that they are not just a laborer, they are also the brains and vision behind the operation. They are the head of the company, and may even one day need to pay an apprentice for the labor involved. Think about it, if you are pricing your knives with the formula above, and you take the labor out of it, you get NO money for actually owning the business. Further, you're doning more than just making them, you're finding retailers, packaging them, marketing them to the community.
Nearly universally, this is simple math. To get the price you should actually charge a store to carry your wares (aka Wholesale) you take the cost of manufacture and multiply it by 2.
WHOLESALE PRICE = $130 x 2 = $260
So this is a $260 knife, right?
I'm sorry, we're not there yet. All you've done is finally gotten it onto a table, a website or under glass in a shop. The efforts of selling it are worth OVER half of the final price. To get the actual retail price of an item, the formula in retail business is universal and set in stone. You take the wholesale price of your wares and multiply by 2.25.
RETAIL PRICE = $260 x 2.25 = $585
Now you might see a problem. Who in their right minds would pay $585 for a knife that only took 3.5 hours in labor with only $35 in materials?
Now we come to another mistake that many makers make. Often, we don't realize that we are filling every role in the chain. We are paying for gas and accounting, we are paying booth fees, and in some cases we are paying for retail space. That makes us all three: Manufacturer, Wholesaler, Retailer. By putting each of these under one roof, you can save a bit of money. By all means feel free to pass that small savings on to the customer. I just think that everyone needs to consider that they are performing three jobs here, and they need to be paid for each. Again, don't just "cut out" one of the jobs because you will eventually lose your shirt.
If you're looking to move items in your inventory quickly, and you want to sell it for much less than the formula, mark it as such.
Retail price = $585 - Trade Show Sale Price = $385.
Another note on pricing and how to turn your talent into an advantage in a manufacturer dominated world.
This is where the value of great design, craftsmanship and individuality comes into play. You might not pay $585 for a hunting knife that isn't discernibly different from any other "custom" hunting knife, but you might find the cash to pay for a hunting knife that is better made, better functioning and more beautiful in your eyes than any of the "me too" knives you've seen.
One last thought:
My mother has an MBA, and she has often repeated to me, dozens of times: "You can do all the math in the world to justify your price, but something is only worth what someone else is willing to pay for it." When I was in the fashion business, she was begging me to lower my pricing to something closer to what someone would expect to pay at Target or the Gap for a piece made of the same materials.
My counter was always the same: "The problem is not the price. The problem is finding the customers who think nothing of paying that price for something that makes them look like they DON'T shop at Target or the Gap."
I know the consumer grade crowd is gigantic. And if you can win one of those people over into the custom/handmade world, you've definitely won one for the "good guys". But please, don't do it by thinking that you are only worth $2.50 an hour and that you are only a maker not a maker and marketer/seller. Undervaluing your knives doesn't just hurt you, it has the potential of hurting the entire craftsman community.
As usual, the above is just my opinion and your results may vary. I'd love to hear some thoughts on this ramble. Thanks in advance!
First, let me explain my background a little bit so that you can know where I'm coming from. In many way, professionally, I come from three different worlds. First, I was a metalsmithing and jewelry design student in college. After that, I pursued two careers at once, one in graphic design, where I ultimately found a career in litigation graphics, and second in the fashion industry where my partner and I made jewelry and clothing. We peddled our wares at fashion event not unlike knife shows and even made it to Vegas for the big fashion trade shows there.
So that gives me three experiences to draw from: one as an artist and craftsman in light metals, one as an artist that charges by the hour and one as a maker/business owner that had to consider the bottom line in both making and selling products.
Now, for the statement that I think might ruffle a feather or two: In my opinion, knifemakers often seriously undercharge for their work, and I think that hurts other knifemakers.
I know that times are tough right now. And I know that hand craftsmen face a lot of competition from manufacturers and each other.
But I see the pricing of so many knives to be near the level of obscene, especially when I consider the cost of materials, the cost of equipment, and the expertise of the makers.
Again, for a little perspective.
when I was in the fashion world, a cost breakdown looked something like this:
- cost of materials including scrap
- cost of facilities and equipment (easy to rough calculate - If you are a business, just figure out your monthly expenses and tool budget and divide by the number of pieces you reasonably produce in a month. If this is your hobby and you only produce one or two a month, this number will be huge, so you need to come down on this part),
- cost of packaging.
- labor cost (THIS MEANS YOU - how much should a skilled laborer make an hour?)
For a dress, the totals look something like this:
Fabric/thread/buttons: $35
Facilities/tools: $15
Packaging (hang tags, hangars, postage, whatever) $10
Labor (from first cut to in the box) $20/hour x 3.5 hours = $70.
TOTAL COST OF MANUFACTURE: $130
Most of us can figure this out fairly easily, and we have a number that seems reasonable and is within a market expectation. Let's pretend that the number above was not for a dress or shirt but actually for a knife. To many people, $130 is a lot to pay for a knife. I won't dispute that. The big problem here is that this is only the cost of manufacture. Almost anyone who has experience in the manufacturing/wholesale/retail chain knows that selling a piece for cost of manufacture is really selling it at over 75% off retail!
OK, now this is where I think many artists, from painters to potters to knifemakers make their blunder. They need to remember that they are not just a laborer, they are also the brains and vision behind the operation. They are the head of the company, and may even one day need to pay an apprentice for the labor involved. Think about it, if you are pricing your knives with the formula above, and you take the labor out of it, you get NO money for actually owning the business. Further, you're doning more than just making them, you're finding retailers, packaging them, marketing them to the community.
Nearly universally, this is simple math. To get the price you should actually charge a store to carry your wares (aka Wholesale) you take the cost of manufacture and multiply it by 2.
WHOLESALE PRICE = $130 x 2 = $260
So this is a $260 knife, right?
I'm sorry, we're not there yet. All you've done is finally gotten it onto a table, a website or under glass in a shop. The efforts of selling it are worth OVER half of the final price. To get the actual retail price of an item, the formula in retail business is universal and set in stone. You take the wholesale price of your wares and multiply by 2.25.RETAIL PRICE = $260 x 2.25 = $585
Now you might see a problem. Who in their right minds would pay $585 for a knife that only took 3.5 hours in labor with only $35 in materials?
Now we come to another mistake that many makers make. Often, we don't realize that we are filling every role in the chain. We are paying for gas and accounting, we are paying booth fees, and in some cases we are paying for retail space. That makes us all three: Manufacturer, Wholesaler, Retailer. By putting each of these under one roof, you can save a bit of money. By all means feel free to pass that small savings on to the customer. I just think that everyone needs to consider that they are performing three jobs here, and they need to be paid for each. Again, don't just "cut out" one of the jobs because you will eventually lose your shirt.
If you're looking to move items in your inventory quickly, and you want to sell it for much less than the formula, mark it as such.
Retail price = $585 - Trade Show Sale Price = $385.
Another note on pricing and how to turn your talent into an advantage in a manufacturer dominated world.
This is where the value of great design, craftsmanship and individuality comes into play. You might not pay $585 for a hunting knife that isn't discernibly different from any other "custom" hunting knife, but you might find the cash to pay for a hunting knife that is better made, better functioning and more beautiful in your eyes than any of the "me too" knives you've seen.
One last thought:
My mother has an MBA, and she has often repeated to me, dozens of times: "You can do all the math in the world to justify your price, but something is only worth what someone else is willing to pay for it." When I was in the fashion business, she was begging me to lower my pricing to something closer to what someone would expect to pay at Target or the Gap for a piece made of the same materials.
My counter was always the same: "The problem is not the price. The problem is finding the customers who think nothing of paying that price for something that makes them look like they DON'T shop at Target or the Gap."
I know the consumer grade crowd is gigantic. And if you can win one of those people over into the custom/handmade world, you've definitely won one for the "good guys". But please, don't do it by thinking that you are only worth $2.50 an hour and that you are only a maker not a maker and marketer/seller. Undervaluing your knives doesn't just hurt you, it has the potential of hurting the entire craftsman community.
As usual, the above is just my opinion and your results may vary. I'd love to hear some thoughts on this ramble. Thanks in advance!
(That said, I'm sure there're some here who live in a vacuum.)
Some of you will be too young to understand that!!!!!!!!!
