Customs Pricing – Opinions and Views?

supsme said:
jdm...
I didn't say don't sell to dealers...DON'T DISCOUNT...
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Yes, but then they WON'T BUY from me:D My last name is not Fisk, Loveless or Moran, so there is NO demand at this time for my knives in the primary market, much less the secondary because no knife buyers outside of a few folks on the forums even know who I am. As previously stated, my reason for selling knives to a dealer at a discount would be to get my name out there in the most cost effective manner.
 
Make your discount price your price to "Anyone"...I don't care if you sell your knives for $50. Have enough confidence in your prices being "Bargains". Remember Don Hanson used to sell his knives for $30. And don't give up your daytime gig anytime soon...
 
supsme said:
Make your discount price your price to "Anyone"...I don't care if you sell your knives for $50. Have enough confidence in your prices being "Bargains". Remember Don Hanson used to sell his knives for $30. And don't give up your daytime gig anytime soon...
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Why should I sell them for $50 when I got $150-160 each for the first 3? :p :D
 
We must remember that dealers spend money on our behalf as well. It isn't cheap to go the the major show. Taking out adds in the mag's is expensive. Quality photos car really run up a bill. They spend countless hours cultivating buyers. The web sites they have is also quite expensive. The small discount they request is far cheaper that what you would spend on any of these endeavors. And "Manufactures do indeed give discounts to quantity buyers. Hell, just look at wally world. Any one here think they don't get breaks from the manufacturers? for one appreciate what they can do for us. Mike
 
supsme said:
Kevin...
Maker goes to a show with 6 knives. He sells 3 of his knives to customers for $500. each...At the end of the show he sells the 3 remaining knives to a dealer for $1000.
Let's say 6 months later one of those $500 customers wants to sell the knife...he calls a dealer and asks how much his knife is worth...since the dealer purchased his 3 knives at $333. each, my guess he would offer about $250.
Everytime he discounts his knives to "ANYONE" he is lowering the bar on his prices in the secondary market...Makers {especially newbie makers} must limit supply and look to price knives at "DIRECT" prices...LOW...LOW...LOW... and move up slowly...Dealers should stick to the "INSTANT GRATIFICATION" market. if they don't like that...TOO BAD...
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You keep referring to collectors selling knives to dealers. This will most always net the collector less than any other method of sale. You just don't get it; that consignment, selling to another collector or trading will net the collector the most.

When the collector goes to the dealer to negotiate a direct sell, he is the one placing a negative impact on the secondary market not the dealer. Obviously, the dealer is trying to buy as low as possible. And in most cases, no matter how cheap the dealer gets the knife from the collector he is still going to sell it for the maker's current price. It's just good business practice, not greed or dishonesty on the dealer's part.
 
supsme said:
Kevin...
I finance Exotic/Collectable cars. And as fas as your Ferrari vs. Corvette discussion goes...It's like comparing a William Henry knife vs. a Ron Lake knife...I would think they cut about the same...but just a LITTLE different...
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As I correctly said in a previous post; you get more horsepower per dollar spent with a zo-6 Corvette than a Ferrari and yes you do get more cutting ability per dollar spent with a William Henry than a Ron Lake.
But that is as far as my comparison went or goes in either case.
 
I don't think that a maker selling knives to the general public at the price he would sell to dealers would work. My guess is that most makers do not end up making a whole lot of money on the knives they sell to dealers. They do it to get their name out to more people, so that they can sell more knives at full price. If they were to sell all their knives at the profit margin made when selling to dealers, makers would not be able to stay in business very long. They would never be able to afford to go to shows, or to advertise their knives in any magazines. This would mean that unless they got lucky, they would never get well known. Just selling your knives cheap doesn't mean that you will have customers beating your door down. The maker would also have to sell way more knives to make a living.

Though most makers may make knives because it is what they love to do so, they also want to make enough money doing so to make it worthwhile. Makers selling all their knives at the price they sell to dealers for would only be a good thing for the people buying them, and only in the short term. Many makers would quit, because they weren't making enough money, and what do you think that would do to the value of their knives in the secondary market?

I believe that it is a good idea for makers to sell knives to dealers for a discount, as long as the dealer is one that will promote the makers.
 
Supsme,

You own a multi-million dollar business...stop it. You sure don't talk like you know anything about business. At what age did you take over the family business?

If you had that kind of business acumen and that much money. You would have had better answers with regards to your business plan for makers. Since you say you finance collectible cars, you would have done more homework with regards to the knives you bought. It would have been second nature to you having provided finance in the collectibles market.

Sorry Supsme, I have to call BS on you.
 
Keith: You are correct. Good dealers earn their discount. Boxing up several knives and sending them off to a dealer frees up the maker's time-The dealer does the selling. It takes time to answer emails, fill out paperwork and box up knives-Often more than 1 hour per knife to get it to the customer after the knife is finished. Not that that's a problem when the maker is getting full price, but, it's a slam dunk to see that the time the maker saves largely offsets the lower profit made when selling to a dealer.

Plus, good dealers promote your work. They have websites, they go to shows and people see your knives.

By offering dealers a discount, I also help my customers by ensuring that they will not overpay for one of my knives. I insist that my dealers sell at my retail. If they overcharge, or discount, they're done. It is a system that has worked out well for me.
 
Les...
I started my business in 1982 with -0-... Having a partner who owns 11 dealerships does help greatly...
Your accounting advice to makers is very good solid advice... your sales/marketing advice isn't... I've made my point...I'm off to Italy...I'm done...
 
supsme said:
Les...
I started my business in 1982 with -0-... Having a partner who owns 11 dealerships does help greatly...
Your accounting advice to makers is very good solid advice... your sales/marketing advice isn't... I've made my point...I'm off to Italy...I'm done...
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Eleven exotic car dealerships? That's interesting.

It's odd that someone with such a low opinion of business in general actually owns one. :confused:

Have a nice trip.
 
Hi Kevin,

More importantly, if he buys the car at retail and sells it at retail (remember he only wants it to be for sale at one price). How does he make money.

Again, Supsme...sorry have to call BS.

WWG
 
WoodWorkGhost said:
Hi Kevin,

More importantly, if he buys the car at retail and sells it at retail (remember he only wants it to be for sale at one price). How does he make money.

Again, Supsme...sorry have to call BS.

WWG
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And new Ferraris and a lot of other exotic cars ALWAYS have the "market adjustment" line on the window sticker:D
 
Back to the topic of taxation, I'm surprised to hear that Mr. Josh Smith has elected for his knifemaking business to be an S-corp. Is that fairly recent, and is that what your CPA told you to do? I'm pretty sure that's not generally recommended, as other types of business tax structuring will allow for a lot more flexibility (LLPs, LLCs). My tax accounting is a little rusty, so I'm not sure on the details.

WWG, I remember in another thread you said that you're a C-Corp??? I believe that involves shareholders and annual meetings and a 35% tax on just about everything ....
 
Hi 3 Worlds,

Yes my business is a C corp. I have shareholders (my wife and I). Should we choose to raise additional capital we can issue stock. So far that hasn't been necessary.

I agree for most makers a LLC would probably be the best route...there are always exceptions.

I have been involved with a Sole Proprietorship, Partnership, LLC and C Corp.

As for paying 35% you might want to check with your CPA on that. Generally the tax rate you pay is predetermined by the amount of profit you make.

Corporate Income Tax Rates--2007, 2006, 2005, 2004, 2003, 2002, 2000

Taxable income over Not over Tax rate

$ 0 $ 50,000 15%
50,000 75,000 25%
75,000 100,000 34%
100,000 335,000 39%
335,000 10,000,000 34%
10,000,000 15,000,000 35%
15,000,000 18,333,333 38%
18,333,333 .......... 35%

Of course you can reduce your taxable profit with deductions and deposits to a 401K or SEP.

Oh if you are a business entity and do not have a 401K or a Simplified Employee Plan (SEP). You are making a big mistake. You can have one of these as well as a personal IRA.

WWG
 
ThreeWorlds said:
Back to the topic of taxation, I'm surprised to hear that Mr. Josh Smith has elected for his knifemaking business to be an S-corp. Is that fairly recent, and is that what your CPA told you to do? I'm pretty sure that's not generally recommended, as other types of business tax structuring will allow for a lot more flexibility (LLPs, LLCs). My tax accounting is a little rusty, so I'm not sure on the details.

WWG, I remember in another thread you said that you're a C-Corp??? I believe that involves shareholders and annual meetings and a 35% tax on just about everything ....
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I am way late on this thread, but a note on S-Corps - the main advantage for someone that would otherwise be a sole proprieter is that you can pay youself a wage through the S-corp and then take additional "profit" at the end of the year in the form of a bonus. The bonus bypasses social security taxes which at nearly 14%, can add up.
 
Architect is right. I pay myself and my wife a wage in which we are employees of the corp. As officers of the Corp. we are also allowed distributions which you have to be careful with. It depends on the amount of money the business is bringing in and if there is actually profit to distribute. My corp. also rents the shop I work in from Josh and Jodi Smith which is another expense on the business that ends up in the same pocket in the end. It's about legally knocking down the bottom line at the end of the year.

I am far from knowledgeable enough about this stuff as I should be but I have an outstanding accountant with credentials. That's what I pay him for. He is also conservative which I like. I don't want to color outside the lines. But your stupid if you don't take what's coming to you.
 
Architect,

Very succinct and to the point.

Josh,

You are 100% correct you have to be stupid not to take what is legally coming to you.

As for lack of expertise in this area, you are way ahead of most of your peers.

WWG
 
LLC; LLP; S Corp.; C Corp. all in deed options for consideration depending on the maker's perticular objectives or situation.

However in getting back to the basics, how many makers have accountants or bookkeepers?

Do you get profit/loss statments at least quarterly?
 
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