Dealer markup

[akivory]

Is there a standard dealer mark up in the custom knife business?As a scuptor when I sell my art work to a gallery it is marked up 100%.I have no problem with that as the gallery can get a lot more than I do and I do not have to deal with selling.It has worked for me I have made a living at it for the last twenty years.I helped a friend get his knives into a high end shop and he is getting more than he was able to to get at gun and craft shows.I know of another very good knife maker (part time)who cant sell his knives beacause he can not to stand to see any one else make money off them.If you make few knives and have a waiting list you probably are better off selling them yourself.
Chuck

 

[Sid Post]

If you have a product you can't sell, would you rather have 100% of nothing or 50% or something?

By using another party to sell your product, you can concentrate where your skill lies and let someone else concentrate where their skill lies. Purveyors provide a real service. Could you really justify all the travel expenses (motel, meals, etc.) and the lost time away from your shop if you actually went to the shows or exhibits or whatever forum you sell at?

As to markups, that depends. If you are dealing among individuals, you will probably find no two parties (maker and dealer) have the same "standard" terms. Recognize the value you add to the transaction and adjust your markup appropriately.

 

[Les Robertson]

AK,

Generally each dealer will work out their discount with each maker.

New Makers...a big discount.

Established makers a smaller discount.

Some Makers...no discount. But they are few and far between!

BTW,

No custom knife dealers get 50%.

Nor do we have a Wholesale Price List.

I will tell you that you should "qualify" each dealer that you are giving a discount to.

I mean by "qualifying" that they should be able to explain to you what they are going to do for you and your knives to earn that discount.

 

[Keith Montgomery]

The right dealer will offer you good value for the markup they make. They will look after any problems that you have and will offer a liberal return policy.

The markup on a custom knife never be 50 points (100%). If a maker sells a knife for $500.00 direct he will likely sell it to a dealer for around $400.00. If the dealer were to try to sell this knife for $800.00 he would likely have it for awhile. That is unless the knife were from a really hot maker whose knives were next to impossible to get any other way. Chances are more likely that the dealer will sell the knife for $600.00. It is, in my opinion, worth the extra $100.00 because you are able to get the knife right away, instead of having to wait maybe a year or more. Sometimes way more. The good dealers will also hunt for a knife for you and have far better contacts than you do. If you are looking for a certain hard to find knife, you would be more likely to end up with said knife if someone like Les was searching for it.

In my books, good knife dealers earn every penny of the markup they get.

 

[Happy Camper]

This was one of the topics discussed at the North Carolina Knifemakers Guild meeting.

The purveyer performs a service in the form of advertising, salesmanship, inventory, and travel and time. That service has an equivalent cost to the maker, as Sid pointed out, consisting of travel cost, lost time in the shop, etc. If the maker traveled to the knife show, he would have to add these costs to the cost of his knives in order to make the trip worthwhile. Also, not all makers are good salesmen.

The upshot of this is that the dealer isn't actually marking up the cost of the knife per se, but incorporating his service into the final cost of the entire process.

As such, when the maker sells his knives directly, it is wise not to undercut the dealer's prices too heavily. As with any other products, if a manufacturer offers true 'low cost direct retail pricing,' that manufacturer will quickly find themselves with few retailers and the burden of advertising and exposure are likely to increase. If the dealer markup is considered as advertising cost for maker exposure, then the cost of advertising is incorporated into all the products, not just the ones that happen to be on the dealer's table.

Of course, that's the theory but it's obviously a case by case issue in reality. After all, if things worked fairly and makers charged at least decent blue collar wages for the time they spent making each knife, nobody would be able to afford them.