Custom Knife Prices

T

Tiaan

Joined
Nov 14, 1998
Messages
22
During the past month or two I have followed a number of threads on this forum. I have been amused, informed and amazed. Most of my amazement came from a statement someone made:
something about a sebenza being an entry level "custom" knife at $300. Then there was a query from a person looking for customs for $300 or less.

As South African Knifemaker this seemed a bit over the top, the exchange rate being somewhere between R5 and R6 for the dollar, it means that my most expensive knives (which I struggle to sell locally, if they sell at all, are considered cheapies in the US of A. My lockbacks start at $200, the most expensive ones (damascus blade, unusual, expensive handle materials) goes to $300. Not because of inferior workmanship but due to the local market. Most of the knives I sell locally are compared by the buyers to Kershaw.(Kershaw is THE knife in our town). If it is better than a Kershaw at about the same price a sale might be done.
So how should I approach this? Raise my prices on my website so the overseas buyers will think "If it costs that much then it must be good stuff" ? In the process keep my local prices at their current levels to keep body and soul together until I am better known and have a backlog of two or three months?

I strive for honesty and integrity in all my dealings. If a USA collector sees a knife on my website for $450, and then contacts a local farmer to drop in at my workshop to check out my "local" prices and I quote him $250, it will lead to me becoming an outcast in collectors circles due to inconsistent pricing. I know some knifemakers who, after finishing a knife, looks at it and say "This is worth $450." A few months later the same design and materials on a knife will be $300.
Depending on the finish and his bank balance. I try to keep within certain limits on every design I make, using a set price list for every part and step used to make a knife. Which means that a quote today and in six months time for the same knife will be the same or within $10 to $20 of the first price.

A bit of background: I am situated in the far north of South Africa, on the Zimbabwe border. Bushveld, hunting country. My main market are hunters, local and overseas. So my busy times are from April to August.

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My website adress for all who asked:
http://www.limpopo.co.za/burgerknives.htm

[This message has been edited by Tiaan (edited 26 January 1999).]
 
Tiaan
You raise a good point. I've talked to many knifemakers over the years, and it seems to me that just about everyone has their own ideas about how to price their knives.

I personally think many custom knives are over priced. I believe that some makers are trying to attract collectors only. That's fine though. If people are willing to pay the price, there must be a market.

I personally couldn't afford a $2,000 or 3,000 knife and don't believe most people can. Certainly not the average working person.

Now I only build hunting and fishing knives, and I try to price them so the average person can purchase the best knife they have ever owned without taking out a loan. Most of my knives are in the $125.00 to $225.00 range. I sell every one of them.

I know I could get more for them, but I'm not trying to make a living at it. Someday I will but for now I'm just happy to be able to sell someone a knife at a fair price that they are very proud of.

As for you and the problem of seliing internationally and locally. I see no reason
why you should't have two prices. One for local sales and another for international sales. Particularly since many of your knives have exoctic handles from your country that we do not have here. We can get them of course but we must pay the price.

I've looked at all the knives on your web page and personally think that some of them were underpriced considering the workmanship and materials that were used.

So don't be afraid to charge more. Raise the price a little and test the market.

Thanks.

 
Ah the elusive correct price for a knife. As the Q/A goes:Q, what is something worth? A, whatever someone will pay for it.

Most new knife makers mistakenly price their knives based on the current market price for simliar knives. This is not fair to the new maker. For the knives they are most likely looking at are made by those makers who have spent years developing a market for their knives.

My experience has been that most makers initially ask too much for their knives. Im not saying that they shouldnt get this money.

Like it or not it takes about 10 years to become an overnight sensation. You have to attend knife shows. Gun and knife shows dont offer you a real test for what your knives are worth on the open market with competition in the room. You must advertise! You must send in information to the knife magazines about your knives. Yes, if you advertise with a magazine the will publish your press releases and occasionally do an article on you.

Offer a catalog, preferably with photos. Present yourself as a professional. Have a business card, have a table sign. If you lack sales skills or are not an individual who does not have great interpersonal skills, find a course, read a book, but get some. You are not just selling your knives, you are selling yourself as well.

Yes, all the above cost money. But understand that there are now over 4,000 custom knifemakers world wide. There are more knife shows now than ever before. So people are becoming educated about custom knives much quicker than ever before.

A site like this can provide an incredible amount of information to the new collector, even the advanced collector.

What does this mean to you, the knifemaker? Price your knives fairly, based on your experience and your ability and the materials used.

Here is a test. Pick a knife you make, then ask yourself who in your area/market makes the same type knife. You should already know the answer to this question, if you don't, success may elude you. Why is that. You dont know what your competitiors (you know all those makers ads you see in the magazines and all those makers you see at the knife shows and all those makers you see on the internet, and....well you get the idea; are charging for their knives. If your knives are not up to the quality of your competitors
and you are charging more, this could be a problem.

Dont expect to get the money that the well known makers do, early on. Be honest with yourself, ask the tough question "why would someone buy this knife". If you can give yourself several reasons, your ok. If you can't, then look at your knives again and figure out what you can do to make you want to buy that knife.

Ask your customers why they did or didnt buy the knife. Ask dealers to look at your work and critique it. Dont be upset if they dont buy your work right away. As a dealer I have developed the reputation that you should not ask me my opinion if you dont want it. Pointing out the mistakes will and letting you know about them will help you much more than me saying "good work, keep it up" and walking away.

When do you raise your prices? When you attend a show and bring home nothing but the table cover.

Be leary of your fellow knifemakers telling you that you are selling your knives to cheaply. After all they are your competitiors. Some of these individuals will tell you to raise your prices. Then turn around and tell a customer who is thinking about this makers knife, that his knives are more than fair. He will then send that perspective customer over to your table to see your High prices! Yes, it has happened before and will happen again.

Also, remember you can always raise your prices, but you cant lower your prices. Lower the price of your work and you will irritate all those who paid the higher price.

Think of your knives like stocks. People want them when the price is going up, when the price starts to drop, its time to sell.

If your knives sell for less on the secondary market than on the primary market, this will have a negative impact on your business.

As far as being overseas, how much does it cost to come to the US for a show. Many overseas makers choose to work with dealers to carry their product. Yes, you will have to give a discount, but balance this against the cost of coming to the states for a show.

By all means get a web site and advertise this in US knife magazines.

There are several ways to figure out what to charge for a knife. I hope these comments and suggestions help.

What is your knife worth? What someone will pay for it.



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Les Robertson
Robertson's Custom Cutlery
http://www.robertsoncustomcutlery.com/rcc/makers.shtml
It is easier to get things done with a kind word and a knife, than with a kind word alone!


 
First off:

Thanks to Mr. Robertson for some really on target advice. I've spent many years since 1977 working in the graphics and advertising business and it's nice to see someone writing the truth about it.

Second off:
Tiaan, Here in Germany where I'm located the prices are sky high compared to what they are in the States. Handmade folders sell $1000 and up. Peter Herbst gets DM 1200 + for his integral fixed blades. The costs of materials is higher than in the USA. Sales tax here is 16%. Benchmade's production knives sell for DM 350 and up - that's over $200.

In the German ( European ) market my knives are way under priced, but in the USA I have very tough competition. Point being, who the Hell has ever heard of me? Well thanks to the Internet more people than I would have thought possible. I think a well designed website is the best marketing tool a knifemaker can have. I've sold knives to people all over the world and am pleased and proud of the high percentage who've come back to order a second or third knife from me. I think that's because the quality of my knives makes them worth more than the prices I charge. And by German price standards my knives are really a value.

Yes, there's a lot of hype about the Internet - but part of is true. Once people in America began to have access through risk-free (for the buyer) credit purchases, they'll be able to evaluate your work first hand, and if they like it, they'll buy more - and tell their friends. Your knives won't be considered "cheapies" in the USA, they'll be considered a great bargain with exotic africian elan...

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www.wilkins-knives.com



 
I try to price my knives where both my customer and I feel good. In other words a win-win relationship. Since I do price my
knives (IMHO) very reasonably, I very seldom can sell to dealers. Since I normally only attend the Guild show, the bad news
about that is, my knives are not shown across the USA. It would be to my advantage to allow dealers to sell my knives at other
locations.

I have been making knives for 20 years. In most trades I would have a "master" status. Now I would assume that any tradesperson with 20 years experience could expect a minimum of $20.00 a hour. If I priced my knives at that rate, I doubt that I would sell very many.

When I make a knife that is fully filed worked and fluted, I doubt if I even make $10.00 a hour. This really does not bother me. I'm part time and at this time of my life I prefer to stay that way. My day job gives me a lot of personal satisfaction. And without a doubt, Knifemaking is wonderful.

A.T.
 
We are all familiar with the term "time is money". Actually, time is more important than money. Because no matter who you are or what you posses you can have no more than 24hours in a day. As most of attest, time is now more valuable than money.

Before I went through Graduate School I was unfamiliar with the term and concept "the cost of money". This term is especially important to small business owners. As we tend to not have the cash reserves of large corporations.

If you can sell a knife for $200, but will only sell 10 during the year. However, if you sell the same knife for $150 and sell 20 in a year, you will make more money.

Why? Two things, first you will be able to have a better cash flow situation. This may allow you to do things such as purchase steel when its on sale, or buy more and get a better price. This increases the profit margin of each knife.

Second, if you know your going to sell more knives, you can work in a batch process or you can outsource your cutting and drilling. There by making more knives in less time. Again increasing your profit margin. Additionally, as you make the knives, through repetition you will get faster and each knife will take less time. Again increasing your profit margin.

By selling the knife at $150 and selling more of them. You will gain additional benefits beyond money. People will show their knives to others. Free advertising and the potential for an additional order. Also, if people feel they received a good value for their money, when it comes time to purchase another knife they will consider you. Once again the potential for additional orders at no cost to you.

As Bernie so elquently stated, there is nothing wrong with making money. He is correct there is nothing wrong with that. But ask yourself, what is that money costing you?

I as a dealer broke from the usual mode while attending Grad School for my MBA. The cost of money concept coupled with a Saturn Car commercial that said they only have one price. They dont negotiate the price of the car. That inspired me to to sell at the makers price (with a couple of exceptions). This allows my customers to get the knife at the same price as the maker charges without the waiting time. I could charge a premium, but I dont.

The reason I don't, is the cost of money. The quicker I sell the knife the quicker I can make my next knife purchase.

Also, I allow my customers to trade back in any knife they purchased from me towards the purchase of a more expesive knife. The knife has to be in mint condiditon, but I give them credit for the entire purchase price.

If your buying knives from a dealer and they wont make you that offer, ask them why? Chances are you already know why.

Also, I will never undersell a knife I purchase from a maker. This devalues that makers knife and the collection of all those who have bought that makers knives before.
Unfotunately, not all dealers do this.

This gives you an idea of how I base my pricing for knives. 95% of the knives I seel have the same price as the maker. So its easy for me to remember what they cost.

I hope you will add the "cost of money" into your equation the next time you are thinking of what to charge.



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Les Robertson
Robertson's Custom Cutlery
http://www.robertsoncustomcutlery.com/rcc/makers.shtml
It is easier to get things done with a kind word and a knife, than with a kind word alone!


 
Thanks for all the replies I have received, as well as all the email. Like I said, I have been INFORMED!
I have decided to keep my prices as is on my website and to raise my "local" prices to be in line with relative earning levels. A person in South Africa who earns about R3000 locally can expect to earn $1000 in the USA. So if I charge R300 at my workshop, the overseas customer will pay $100, postage included. Is this reasonable? This way I won't have to worry about the exchange rate fluctuations messing up my well planned costing.
Steve, I used a circular saw to almost remove a finger, as soon as I am in running condition I will start pushing the handle materials side real hard. In the mean time I am getting together all sorts of nice stuff for you to drool over!

Thanks again for a lot of valuable advice.

Tiaan Burger
Burger Custom Knives, Messina, RSA
http://www.limpopo.co.za/burgerknives.htm

[This message has been edited by Tiaan (edited 26 January 1999).]

[This message has been edited by Tiaan (edited 26 January 1999).]
 
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