Any business relationship needs to be mutually beneficial. Both parties give up something to gain something else. Every good business relationship is a trade.
Custom makes often have great designs but they lack the resources to manufacture them in any quantity and they lack the resources to market and sell them.
Benchmade has a big factory with millions and millions of dollars worth of sophisticated equipment that no custom maker could ever afford. BM has an established marketing program. They have sales channels. And they have a brand name. What they need is great designs.
It's a perfect fit.
But, remember, everyone gives up something in a business relationship too. The custom maker gives up the majority of the profit from the knife. It may seem unfair that BM takes the lions share of the money. But, BM also bears the majority of the expenses in this relationship.
Consider, for example, marketing.
If you're a custom maker, your marketing efforts may include a simple, small website that you may make and maintain yourself. It's nice and it's quite adequate. And you probably host it on a free or very low-cost hosting service. The site may cost you a couple of hundred dollars a year. BM has an elaborate website with a forum and with online shopping. Obviously, BM spends a lot of money on maintaining and operating that site. They've got an employee whom they pay a salary and benefits, who spends most of his time working on that site. Between paying that employee, paying royalties for the forum and e-commerce software, and paying hosting fees for a very high-traffic site, it wouldn't surprise me if BM is spending $75,000-100,000 per year to operate that website.
If you're a custom maker, you might get a table at five or six shows every year and you might travel to those shows and have expenses associated with them. In fact, you might spend $5,000-$10,000/year just going to shows. But BM has large booths at major shows. Just the custom-made display that they use in those booths cost $10,000. A booth is five or ten times the cost of a table. And BM flys eight or ten employees to each show, puts them up in hotels, pays expenses, etc. It would not surprise me if BM's tradeshow budget is in excess of $250,000/year.
If you're a custom maker, you probably have business cards and you may even have a simple, one-page, photocopied brochure. BM publishes several elaborate, full-color catalogs every year.
BM takes out large ads in major magazines. They have a long mailing list for bulk mailings. They have a whole department full of employees who's full-time job is just marketing. They put a lot more money into marketing than I think most custom makers can appreciate.
Now, when BM and a custom maker enter into a collaboration deal, BM's marketing organization promotes not just BM and not just the knife, but they also promote the custom maker.
Remember, this is a business deal and for it to be successful, both parties need to get something they want out of the deal. BM gets the maker's creative design. The custom maker gets publicized by BM's marketing organization.
Remember, this is a business deal and for it to be successful, both parties need to give something up. The custom maker gives up a lot of money. But, what does BM give up? Well, BM does give up some money too. If they'd designed the knife in-house, they wouldn't have to pay that maker any royalty. But, BM also gives up something else. They give up the development of their internal design capabilities.
A business relationship ends when one party decides that he no longer want or need the benefit he's getting out of the deal or when one party decides that the benifit he's getting is no longer worth the price he's paying for it.
A custom maker has only a limited production capacity. Eventually, he will decide that he has established himself and he no longer needs BM's marketing and sales capabilities. Some custom makers may choose to invest in increasing their own manufacturing capabilities to handle greater volumes so that they no longer need BM's manufacturing capabilities.
BM does custom collaborations to get fresh, creative new ideas. Sometimes, BM may decide that they're no longer getting fresh new stuff from a certain designer and so they may decide to try some new projects with a different designer. They want to keep that freshness and that creativity.
Also, BM is working to develop their own internal design capabilities. The BM49, which was designed entirely in-house, is a great example of that investment starting to bloom. BM now has a staff of talented designers and so they need fewer outside collaborations.
So, don't be surprised if you see a constant churning in BM's custom collaboration line up. It's actually a healthy sign. The other important thing to realize is that all of the custom designers who have done collaborations with BM remain big names in the custom and small-production knife business today. Their time with BM has contributed to their fame and success.
