Collector - maker profit sharing alliance

Joss

Joss

Joined
Nov 20, 2001
Messages
7,353
In the other thread, there's been a lot of discussion about makers selling their knives for less than the current market value. The buyers for those knives have an option to turn around and make an instant profit. Sometimes (Ken Onion) this profit is very large.

I have always felt that this was a fundamentally inefficient system, but I also recognize that it is not smart for a maker to raise their prices so much. If I were a maker in this situation I would probably choose to sell part of my production on eBay.

Anyway, what I'm thinking about here is different...

What do people think of the idea of sharing those consequent profits with the maker, maybe 33%?

So assuming one were to buy a knife for $500 and sell it eventually for $800, they would share $100 of the $30 profit with the maker. The reason why this share is limited to 33% is to reward the collector for the risk they're taking (i.e., on many knives the collector will not make any profit), the time-value of money, and all the associated costs (time spent taking care of the knife, etc).

There should be a logical time limit to this commitment, maybe 10 years.

This would be totally voluntary and if there's consensus that this is a good idea and lot of interest, I would take it upon myself to formalize that.

What do people think?
 
Math aside; I don't care for the idea.
It's too much like commision sales,
and complicates maker/client relationships
unnecessarily.

BTW......S'pose the client sold at a loss?
 
In my point of view the person who buys a knife as an investment, thinking about selling it again in a short period is not a collector, he is a business man. Either he takes that profit to buy what he is really interested in collecting or he uses this funds as part of his income, I have know both kinds of businesmen. It's diferent though from the guy who had a knife in his collection for some time and decided his taste has changed or evolved and he feels that some of his knives don't fit his collection anymore.

Sometimes this can be subtle diference, sometimes it is a very clear and distinct difference... and fewer times he is a reall collector.

Besides, it's just like the standart 25% discount most makers cut for dealers in general. The thing is that lots of dealers sell the knife WAY over the 25% cut they got, making profits that can go up to 50% in some cases (happened to a number of Brazilian knives in the past). As it inflates the prices of the final products, the market is affected and the maker feels like he can raise his prices as there is people paying way too much on the dealers' websites... just my 2 cents.
 
Hi Joss,

You wrote:

"What do people think of the idea of sharing those consequent profits with the maker, maybe 33%?"

Would makers who knives sold for less than retail send their collectors a check. Thereby sharing in the losses?

Makers like Ken are smart, as like you they understand that by raising their prices to what they are in the aftermarket will eventually take their knives to the point of diminshing returns. At which point their career is over.

Even if the knives settle at a point of about a 25% "Arbitrage Factor", similar to where Emerson's prices have settled in the aftermarket. Ken will always have a loyal following. If for no other reason he makes "Wicked Cool" knives.

WWG
Working on a shodan in Arbitrage-Do. :thumbup:
 
I'm with Russ on the "complicates the maker/client relationship" point.

While I can undertsand the pragmatic basis of the suggestion, I can see a number of issues cropping up:

1) client comes here on the forums to show off pics of his newly aquired knife and is immediately branded a "shill" for his real or imagined profit-sharing plan with the maker.

2) client comes here on the forums to show his newly aquired knife and maker is criticised for delivering the knife ahead of others on his list who are not part of his profit-sharing plan.

3) the client has essentially become a dealer in this scenario, whether he likes it or not.

I don't know if I have articulated that very well - there's more about this scenario I don't like but can't seem to put my finger on - but there you are.

Roger
 
We're stinkin' capitalists here......share our profits?!......are you nuts?
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LOL... got my laugh of the day! Brazil also put three goals on Gana today... so it's been nice so far :D
 
I have to say I don't really care for the idea of people 'flipping' pieces won at lottery for huge profit. Money aside, it strikes me as rude, especially if you're doing it right in front of the maker. Here's someone who put their hard work into creating something, is pricing it artificially low in order to ensure that their work is accessible and then someone immediately makes 3 or 4 times more profit on the piece than the maker??

That said, I'm not sure I care for Joss's idea either - complex and adds a whole 'nother potential for disputes & bad blood.
 
BrB said:
LOL... got my laugh of the day! Brazil also put three goals on Gana today... so it's been nice so far :D
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Glad someone's laughing, wasn't fun here in Prague when Ghana smoked the Czechs.
 
I have to say I don't really care for the idea of people 'flipping' pieces won at lottery for huge profit. Money aside, it strikes me as rude, especially if you're doing it right in front of the maker. Here's someone who put their hard work into creating something, is pricing it artificially low in order to ensure that their work is accessible and then someone immediately makes 3 or 4 times more profit on the piece than the maker??
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Very well said.

Glad someone's laughing, wasn't fun here in Prague when Ghana smoked the Czechs.
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No worries mate, it was a pleasure to play vendetta for you today!
 
BrB said:
No worries mate, it was a pleasure to play vendetta for you today!
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Thanks! Sucks being in a group where both your home country & adopted country fail to advance.
 
WoodWorkGhost said:
Would makers who knives sold for less than retail send their collectors a check. Thereby sharing in the losses?
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No - the way I'm thinking about, this is a collector driven idea.
 
RWS said:
We're stinkin' capitalists here......share our profits?!......are you nuts?:D
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I'm more of an hard core Capitalist than anyone here. This is not incompatible with Capitalism.
 
Joss said:
I'm more of an hard core Capitalist than anyone here. This is not incompatible with Capitalism.
Click to expand...

Of course, distributing profits in the form dividends, or paying interest when using leverage, is a business' obligation to its owners and creditors.

As was suggested in the other thread, if you help Les finance his knife business, he'll return you 10% and guarantee your principle, thus making it a "guaranteed" 10% cash flow ROI. What's the risk of his "guarantee" and is a 10% return adequate for the related risk? who knows?

In this case, if a knifemaker sells you a knife through his own lottery that you won, which would have otherwise taken you years to acquire if you had ordered it, perhaps a "tip" is appropriate as a gesture of appreciation for allowing you to benefit from the quickly profitable turnaround and his offering the lottery to the public to begin with.

Tipping a knifemaker for the profit you immediately made from his lottery, from a knifemaker who is so popular that he feels he has to have a lottery at the show to be fair, might be fair in my opinion.

In the scheme of things, the amount of "tipping" money involved in the life of any one collector is so insignificant it probably shouldn't make that big of a difference if he gives a couple hundred dollars tip to the maker on his quick thousand dollar turnaround profit. I mean, how many lotteries is a collector actually going to win from these "great" lottery knifemakers in his lifetime? Maybe a half dozen? So why not tip them when you win one of them? This only applies in the case of winning a lottery.

Of course, I wouldn't tip 'em a dime. I don't even like tipping in a restaurant.....:D
 
This has nothing to do with dividends, and everything to do with the collectors contributing to making knifemaking a more profitable business. This benefits collectors directly by making the field more profitable.

In addition, this goes way beyond the lottery phenomenon. There are significant profits realized on knives bought normally from shows or commissions, etc. There's no reason to limit this idea to lotteries.
 
Joss said:
This has nothing to do with dividends, and everything to do with the collectors contributing to making knifemaking a more profitable business. This benefits collectors directly by making the field more profitable.

In addition, this goes way beyond the lottery phenomenon. There are significant profits realized on knives bought normally from shows or commissions, etc. There's no reason to limit this idea to lotteries.
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Collectors buy knives. Sometimes they even wait on a maker's waiting list for years to acquire one of them. With that, I think collectors are already contributing as much as fairly possible to the economy of the knifemaking industry.
 
Fairness is a concept completely abused, and that's why I didn't reference it in my initial post. I'm not proposing that to create a sense of guilt in collectors.
 
We're all a buncha decent guys each of whom have decided to put thousands of dollars into buying pieces of sharp steel. We're not a bunch of folks taking unfair advantage of others, and, I know you don't mean that, Joss.

I could easily put this extra money I've dumped into knives and place it in more Microsoft stock and profit from a decent yield without them asking for any of it back.

This is a hobby and I don't consider knives to be a smart investment, unless you really know what you're doing.

As such, I don't think its unfair to not give part of my profit away to the knifemaker I purchased the knife from no more than I would ask a knifemaker to share in a loss.

But, a tip for a lottery quick turnaround is decent, IMO.
 
RWS said:
I could easily put this extra money I've dumped into knives and place it in more Microsoft stock and profit from a decent yield without them asking for any of it back.
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As a side note, have you looked at MSFT's last 4 year performance? :) I know what I'm talking about - I work there. :(
 
msft


:D

EDITED TO ADD:
One stock doesn't make a portfolio, of course. I was using Microsoft as a dividing line for the argument. There are relatively lucrative investments in the market that will yield me more than knives ever will with less risk.
 
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