Curious about knife businesses.

[knerd]

First of all this thread is just a way to get opinions from business owners/knife dealers or even other members about running a knife business. If any of this is in anyway against any rules then can a moderator please close it, thanks. And second of all I'm not trying to steal revenue information or anything shady like that (hell, I don't even know what I'd do with it), if there's anything you don't want to post on a public forum please just say so. This is simply a thread to help answer a few questions that I've had interest in since first becoming a knife knut.

On with the questions:

1. Do business owners get discount prices on knives from manufacturers, bulk discounts? I've noticed some places sell just under the MSRP, but when I recently (past few years) discovered the internet market I've really been wondering how these places make much income.

2. Is the amount made from selling knives something to write home about? What's the average $/hr rate? I'm assuming, from what I've seen, most businesses have blade maintenance services provided such as sharpening and cleaning to bring in more money. Is that required to actually run a successful knife dealership?

3. How would one go about opening up their own knife business? Do you need special permits, college education, or can you just buy some land and build a shop and start selling?

Thanks guys. :thumbup:

 

[Knife Outlet]

OK, I'll throw in some thoughts.

1. Yes, knife dealers pay a dealer price for products. They earn their living from a markup between that price and the selling price. Stores that sell close to MSRP are able to do so because not everybody shops on the the internet. In fact, about 85% of the population does not shop on the internet.

2. A small business is a small business. Most are failures - up to 75% of them, in fact. Some are successes. A very few are overwhelming successes. The ability to succeed is not in the type of business but in the person doing it. There is no hourly rate unless you can and do pay yourself one. Working for yourself is like working for someone else on paper. The difference is that you are responsible for growing the business and earning an income from it, not someone else.

3. You would start by deciding what sort of knife business you want to open and why you want to open it. The only requirements are having some money and a willingness to risk it.

 

[Fred S2]

this isn't really starting-a-knife-business related, but i have purchased my last 10-15 knives (all of the good ones) online

 

[cotdt]

What about making and selling your own brand of knives, is it easy to get shops (both in-store and online) to sell them? Is the income anything to write home about?

I'm talking about a small knife making business, nothing like Buck or Benchmade. Like getting some shop in Seki Japan to build your design, and you inspect, sell to outlet, and provide customer service.

 

[knerd]

Thanks for the info. I'm not planning on starting up a business, just interested in how it's done and was always curious about the price that dealers pay for knives and still make money off them. I'm sure others share my interest as well. I know there are a few other members here that work at/own knife shops, it'd be nice if they'd chime in. How's the current economy? Do you rely more on online sales, or does it matter?

 

[kreole]

On the dealer side for #3, spyderco actually lists their requirements on their site: http://www.spyderco.com/dealers/requirements.php

 

[blackfeetmageet]

I have always been curious about the exact discount that dealers get when ordering knives, bulk or otherwise. I am sure it is hard to find out about for a good reason. If everyone knew how much dealers paid (or could pay) for knives, they might compromise a lot of potential business. People might try and hagle too much -not considering overhead and what not. And then, I am sure there are a lot of dealers who charge way too much and dont want others to know -Like some of those knife shops that are in big malls. It is like they charge a 10 -20 dollar finders fee plus other built in overhead costs (I have never understood how they stay in business; they must make some sales, but to who?)

Still, I would like to know the dealer's cost.

 

[knerd]

I have always been curious about the exact discount that dealers get when ordering knives, bulk or otherwise. I am sure it is hard to find out about for a good reason. If everyone knew how much dealers paid (or could pay) for knives, they might compromise a lot of potential business. People might try and hagle too much -not considering overhead and what not. And then, I am sure there a a lot of dealers who charge way too much and dont want others to know -Like some of those knife shops that are in big malls. It is like they charge a 10 -20 dollar finders fee plus other built in overhead costs (I have never understood how they stay in business; they must make some sales)

Still, I would like to know.

Yeah that's why I'm wondering, it's by all means not going to stop me from purchasing knives unless they're marked up a lot. Just wondering how much $/knife is made on average. These places can't be doing too bad because they're still open.

 

[blackfeetmageet]

Someone should have chimed in by now, I bet there is a privacy issue.

 

[knerd]

It's fine, I actually have gotten more answers than I was expecting. If there is information that is private, I have no problem with them keeping it that way. I'm sure I'm not the only knife knut out there that has an interest in this subject, hence the creation of this thread.

 

[Dinkum]

There are a few ways to get knives once you have satisfied the criteria for the seller or their seller.

1: Go through a wholesaler like Moteng or Blue Ridge Knives, you can pay from 50-75% of MSRP. You then set your price and hope you can get rid of what you have in stock often enough to give yourself an income. Or you can have products drop shipped to a customer by listing the item on your website and hope there is one in stock at the distributors so that you dont have to call the customer and tell them there is a wait.

or you can deal with the manufacturer yourself, they usually have a minimum first and consequent order value/ # of items. Some guys like Chris Reeve will cut you off at the knees if you are caught selling their stuff too cheap, some firms couldn't care less.

Other than knowing what the hot items are and getting them in stock before the competition or having too many in stock when they go out of fashion, best example I can think of is the TOPS Tom Brown Tracker, there was a time they were rarer and harder to find than rocking horse manure. Now, you probably can't give them away.

Hope this helps, its probably a job a load of us would like to do, I did in on a small scale (US$10,000-15,000 a month of stock purchases) once you have paid freight, tax, dealt with stuff that shouldnt have passed QC and returned it. Hoped you have stuff that people want (as most today want instant gratifiction so it has to be in stock or you lost a sale) There isnt much mark up, especially when some guys are selling for about $10.00 more than they paid for it.

 

[LX_Emergency]

or you can deal with the manufacturer yourself, they usually have a minimum first and consequent order value/ # of items. Some guys like Chris Reeve will cut you off at the knees if you are caught selling their stuff too cheap, some firms couldn't care less.

I personally think that's a sad buisiness practise. Once you buy product off of someone (because that's what a retailer does as well) it shouldn't be the sellers worry how much he'll sell it for.

I've seen WAY too many companies do this and I'll not buy from them unless I have no choice.

For me just one more reason not to get a sebbie.

 

[knerd]

I personally think that's a sad buisiness practise. Once you buy product off of someone (because that's what a retailer does as well) it shouldn't be the sellers worry how much he'll sell it for.

I've seen WAY too many companies do this and I'll not buy from them unless I have no choice.

For me just one more reason not to get a sebbie.

I think Benchmade did something similar. I personally think they shouldn't worry so much, they already got paid by whomever purchased the knives directly from them so why should they care if someone sells it at a loss? Guess they don't want the general public to find out about a cheaper price, so maybe this topic is a little controversial in the knife industry? Interesting.

 

[LX_Emergency]

Anyone who's not an idiot understands that retailer buy for less...otherwise they wouldn't be able to make a profit. The problem I have with it is when they start telling retailers how to run their buisiness. Telling them they can't have a "sale" on something the retailer already bought from them.

 

[syltetoy]

There are a few ways to get knives once you have satisfied the criteria for the seller or their seller.

1: Go through a wholesaler like Moteng or Blue Ridge Knives, you can pay from 50-75% of MSRP. You then set your price and hope you can get rid of what you have in stock often enough to give yourself an income. Or you can have products drop shipped to a customer by listing the item on your website and hope there is one in stock at the distributors so that you dont have to call the customer and tell them there is a wait.

or you can deal with the manufacturer yourself, they usually have a minimum first and consequent order value/ # of items. Some guys like Chris Reeve will cut you off at the knees if you are caught selling their stuff too cheap, some firms couldn't care less.

Other than knowing what the hot items are and getting them in stock before the competition or having too many in stock when they go out of fashion, best example I can think of is the TOPS Tom Brown Tracker, there was a time they were rarer and harder to find than rocking horse manure. Now, you probably can't give them away.

Hope this helps, its probably a job a load of us would like to do, I did in on a small scale (US$10,000-15,000 a month of stock purchases) once you have paid freight, tax, dealt with stuff that shouldnt have passed QC and returned it. Hoped you have stuff that people want (as most today want instant gratifiction so it has to be in stock or you lost a sale) There isnt much mark up, especially when some guys are selling for about $10.00 more than they paid for it.

Discouraging ; ) My dad pays about 50% or less MSRP and does it in retirement so there isn't so much pressure as you describe ; )

Manufacturers are tough to deal with as they have a minimum order requirement and you can get stuck with obsolete items if you do not move them quickly. But as a hobby and extra income it can be rewarding.

China, Taiwan and India made products offer the greatest markup and profit as they can be purchased cheap; such as a Cheaper Than Dirt Rough Use Knife is about $5 but its a knowledge game as the quality runs from excellent to novelty.

One hour on a knife forum reading all the squabbles can discourage any would be knife seller ; )

 

[Knife Outlet]

I think Benchmade did something similar. I personally think they shouldn't worry so much, they already got paid by whomever purchased the knives directly from them so why should they care if someone sells it at a loss? Guess they don't want the general public to find out about a cheaper price, so maybe this topic is a little controversial in the knife industry? Interesting.

The reason for the minimum advertised prices is to protect the brick and mortar stores from the internet and the internet sellers from each other. Actually, they would sell more without the MAP policies but that isn't the purpose.

 

[knerd]

The reason for the minimum advertised prices is to protect the brick and mortar stores from the internet and the internet sellers from each other. Actually, they would sell more without the MAP policies but that isn't the purpose.

Good point, I realize there's good reasoning behind some price regulation. I mean it is a business after all. But they can't exactly control what someone sells a knife for after they purchase it from a dealer, capitalism at it's best.

 

[syltetoy]

Good point, I realize there's good reasoning behind some price regulation. I mean it is a business after all. But they can't exactly control what someone sells a knife for after they purchase it from a dealer, capitalism at it's best.

You have to have a unique product to fully control the pricing and survive in business. Busse seems to be doing it well; although I am surprised that some really large foreign manufacturer does not make a comparable large tough knife and sell it for much less as there must be a market of people that cannot afford a Busse and would buy a similar "comparable" knife. I wonder how Busse stays in control?

 

[Charlie Mike]

Rolex does this practice even moreso. At least yearly, the prices on all Rolex watches go up a couple hundred $$$. Authorized Dealers cannot sell them any cheaper than the Rolex MSRP. They still seem to do well as almost every watch they make has a buyer.

 

[Knife Outlet]

You have to have a unique product to fully control the pricing and survive in business. Busse seems to be doing it well; although I am surprised that some really large foreign manufacturer does not make a comparable large tough knife and sell it for much less as there must be a market of people that cannot afford a Busse and would buy a similar "comparable" knife. I wonder how Busse stays in control?

That's right. The MAP programs don't dictate a selling price. They dictate an advertised selling price. What a dealer does face to face with a customer is neither included in these policies nor would it be enforcable if it were.

In our industry MAP policies are very hard to enforce because most of the products are sold through distributors and the manufacturer loses control. Companies like Benchmade and Chris Reeve mentioned above do not sell through distributors so they can and do enforce the MAP policies.

MAP policies are not in the consumer's best interest, obviously. Their purpose is to keep prices high.