Benchmade Pricing - update

I've never heard of MAP before. Manufacturers Asking Price?

And really, it doesn't sound all that bad.
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If MAP is the same thing as MSRP, it doesn't sound bad, it sounds terrible.

And it sounds doubly-terrible if the changes mean that Benchmade will no longer be available at the best online dealers, dealers like NewGraham and Knifeworks that have earned my trust over many years by providing superior service/selection/prices.
 
Minimum Advertised Price. BM won't allow dealers to advertise for less than its standard. CRK does the same. I don't know if others do, too.
 
I play racquetball with a guy that has a large territory for a major sporting goods distributor. I asked him if they carried Benchmade, and he said not anymore, they cut us out. I asked him what he thought, and he said Benchmade sell out and they probably think they can do this. He mentioned William Henry's business model, but said that they would have no problem carrying other brands and had already started talking to other companies. He felt it was a mistake, and said that other sporting goods manufacturers had done similar things. It hasn't worked yet in his experience.

I have an MBA with a undergraduate degree in Economics, doesn't mean I know anything more than anyone else, but I can't see how on earth this helps them sell more knives.
 
It's not just knives folks. Some guitar companies have went that route too. Some abandoned it and some still operate that way.

Gibby
 
If distributors are cut out of the equation and they only sell to dealers or the end-user,
they will show a huge profit margin, thus boosting their portfolio.
This is done when you want to make your company look really good because you want to sell it off.

mike
 
Thanks for the info, Esav. I know that many companies, knives and other, have similar agreements. I've just never heard it referred to as MAP before.

This is done when you want to make your company look really good because you want to sell it off.
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Companies can also cut staff if they can maintain profit levels while selling fewer items.
 
For some reason, the "Soup Nazi" comes to mind. I'm thinking Benchmade might be a "Knife Nazi". "NO AXIS FOR YOU!!"
 
2brothers said:
If distributors are cut out of the equation and they only sell to dealers or the end-user,
they will show a huge profit margin, thus boosting their portfolio.
This is done when you want to make your company look really good because you want to sell it off.

mike
Click to expand...
dude, you sooooo know something, don'tcha;):cool::eek::o
 
I know many of you won't pay retail, that I agree with if you have the option to exploit it. But here in SA we pay bit more than retail of a knife at a dealer, it does get expensive but heck, we don't have anything else. Say MSRP is $100.Insured posting costs about $40 and u buy a knife thats $60 on internet and your back to $100 and in this country posting almost always disappears. So I don't think the southern hemisphere will be that influenced by this.
 
Nobody has given BM the credit that they know what they are doing.

This marketing strategy makes sense if:
Your main and large percenetage of sales are via brick and mortar stores.

These stores are being hurt by lower web prices (lower overheads)
The stablity of these brick and mortar store are being threatened in this weaker economy.
To support these stores, you would stablize your price to be profitable for these stores.
You ensure the continuation of your majority marketing outlets
You enable you the manufacturer to sell your own product directly.

The risk is loosing the online web sales due to higher prices.
And from the responses here, you all suggest the prices on these knives are not elastic (increase price and still maintain sales)
 
Here is one way to look at it (from Benchmade perspective). I will use easy round numbers for ease of calculation, not because I have any idea of what their sales are.

Let's assume a manufacturer sells 20,000 knives for $100 to distributors, and it costs them roughly $70 to produce each knife. That gives them 2 million in sales. The manufacturer is making 30% at that scenario, which would be $600,000 gross profit.

MSRP may be 200.00, but the Etailers are unloading them at 150 because they have low overhead.

Now the manufacturer decides to only sell direct, because technology makes it easy online. They sell the same 20,000 knives for 150 direct. Their sales are now 3 million at around 60% profit, or 1.8 million. Investors or potential buyers like the looks of that.

Now let's say the bad PR created by this change in approach lowers sales the first few years. Even if they only sold 15,000 knives at 60% profit, that would be 2.25 million in sales, with a profit of 1.35 million.

Again, I have NO idea what the numbers actually are. All indications are that the price to the consumer will go up more than my model. My math may be off a bit, but I think this illustrates an important point. Sales can drop, but if the margin is significantly higher, a companies bottom line could appear better. Bummer for the average guy, good for Benchmade? Time will tell. I feel like they are trying to keep more of my money. Maybe they are trying some scheme to set prices by what the consumer will pay, rather than what the product costs to make.

Somebody slap me into reality if this is off-base.
 
Esav Benyamin said:
I'm not sure we've gotten the real word on what's going on and what it will mean to us, but it doesn't sound encouraging at this point.
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This is straight from the dealers mouth. One who advertises here so I assume it's solid. I also see no price increase on the Griptilian I ordered so take that for what it's worth.
 
neeman said:
Nobody has given BM the credit that they know what they are doing.

This marketing strategy makes sense if:
Your main and large percenetage of sales are via brick and mortar stores.

These stores are being hurt by lower web prices (lower overheads)
The stablity of these brick and mortar store are being threatened in this weaker economy.
To support these stores, you would stablize your price to be profitable for these stores.
You ensure the continuation of your majority marketing outlets
You enable you the manufacturer to sell your own product directly.

The risk is loosing the online web sales due to higher prices.
And from the responses here, you all suggest the prices on these knives are not elastic (increase price and still maintain sales)
Click to expand...



This is exactly what I am saying. You need to take care of the little guy who is down the block or in your town. MAP was used alot in the audio/video industry even 10-15 years ago. Some more strict then others but it kept alot of people honest. MAP is the lowest price you can "advertise"it for but that does not mean if you come into a store that the person behind the counter could not "sell" it for less. This will surely help stabilize pricing.

Example: Brand Y, Model 10 Retail is $149.00 MAP is $99

You as a dealer can sell it for what you want in that margin based on your market. The guy selling for $98 is in violation if its what they are advertising it for. The only one effected is the non-brick and mortar store that has to advertise to sell. It only helps the little guy who depends on walk ins as well as online. Now, the way it usually works is there is nothing against offering the Model 10 for $99 + free shipping and throwing in something else to sweeten the pot. Its up to the dealer.

Now, if they are planning on selling direct to the dealers, better for the dealers, not for wholesalers. If they are planning on selling directly to the end owner, good for BM and bad for everyone else. This, would not be a productive move for the many.


mnyshrpknvs
 
I find it hard to jump in line with all the "sky is falling" posts here. Benchmade has stated on its own forum that the MAP policy is being done to help B&M stores, assure the end user gets genuine BM stuff (not knock-offs), and to take a step closer to the end users to get better feedback. Now I am sure that some of this is PR and I'm also sure that profit is affecting their decisions as well. Having said that I do believe that part of the reason this is being done is in fact to help their sales at genuine store front authorized B&M stores. If Benchmade made the MAP to equal MSRP that would kill the dealers. Why spend the gas money if you're going to spend MSRP, just order it direct from the Benchmade website - they do sell MSRP priced knives from there. Sure I know that some dealers do sell at MSRP. I have one locally that does this and they don't sell very many Benchmades.

There has always been online retailers that sold BM knives priced "too low to show, add to cart for price". Now that BM has enforced this policy I'm willing to bet they all do this. In fact this policy of MAP is in effect right now. I can go online right this second and order a Benchmade knife at under MSRP. I've noticed a slight increase in the price on almost all knives, but this is not exclusive to benchmade's products as it seems like spydies and others have all taken a 10% or so hike.

I'm surprised to see such opposition to a company instituting a MAP policy on a board where people post tons of pics every day loaded down with Sebenzas and Surefire lights. Sorry for the long post, but I just don't believe that the sky is falling.
 
I have not checked on the prices of the new 09 knives in my local B&M store. But my late 08 purchase of a Rift was below what I usually see online. I live in a low cost area so take this based on that. I will go check on the 09 prices soon. Since I buy BM almost exclusively from this B&M, unless his prices go up it will change little to nothing for me. I would like to buy more Spydercos also but he stocks only a limited amount of their lower end line, so my BM purchases will likely continue.

I personally don't think Benchmade will gain much from their recent pricing scheme moves unless they only sell direct. The way I understand the discussion here, the dealer can still sell product for the price he or she wants as long as they don't advertise a lower price. If wholesale prices stay the same or only increase slightly (10% or less) this policy should not affect online dealers all that much. If Benchmade jacks the wholesale price up way higher this policy can only hurt their sales volume.

I see an increase in prices and a possible decrease in availability outside of direct order from Benchmade as generally a risky business move. It may increase the amount of $ made on each sale but will surely decrease volume. For a manufacturer that largely caters to the mid-high/high end of the market, they need as many customers as they can get. Upsetting these higher-end customers will not be good for business, even if pricing policies just appear unstable but are not actually so. There are or will be other manufacturers that will be more than happy to meet high-end demand at a lower cost, thus taking sales away from Benchmade.
 
mnyshrpknvs said:
This is exactly what I am saying. You need to take care of the little guy who is down the block or in your town. MAP was used alot in the audio/video industry even 10-15 years ago. Some more strict then others but it kept alot of people honest. MAP is the lowest price you can "advertise"it for but that does not mean if you come into a store that the person behind the counter could not "sell" it for less. This will surely help stabilize pricing.

Example: Brand Y, Model 10 Retail is $149.00 MAP is $99

You as a dealer can sell it for what you want in that margin based on your market. The guy selling for $98 is in violation if its what they are advertising it for. The only one effected is the non-brick and mortar store that has to advertise to sell. It only helps the little guy who depends on walk ins as well as online. Now, the way it usually works is there is nothing against offering the Model 10 for $99 + free shipping and throwing in something else to sweeten the pot. Its up to the dealer.

Now, if they are planning on selling direct to the dealers, better for the dealers, not for wholesalers. If they are planning on selling directly to the end owner, good for BM and bad for everyone else. This, would not be a productive move for the many.


mnyshrpknvs
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But the B&M stores are probably as vulnerable to the current economic situation as anyone being that they are probably all considered a small business in a tough economy so another risk could be that many of those B&M stores fail after BM put all their eggs in that basket.
 
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