Do knife consumers really understand prices?

Kingknives

Kingknives

Joined
Mar 14, 1999
Messages
691
As a hobby knife dealer, I'm seeing more and more where the buyer is expecting to pay less than wholesale for a particular knife.
Any ideas on what might be causing this? The online auctions? Intenet sales? Maybe just lack of awareness? I think they just don't know what the knife costs a dealer. It's very frusrating when people offer you less for a knife than what you paid for it! How can we reassure them that they're getting a good deal? Thanks for the input!
 
How can I sell below my cost?
I make it up on volume!
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No, the math doesn't work.

Perhaps they've seen the Multi-Tool prices at "Mammoth Mart."

Now and then there are close-outs and liquidations, and maybe some folks think that's the normal price.

Maybe somebody bought some knives for what distributors pay, instead of what dealers pay, and sold them at retail.

Maybe somebody has negative overhead, or is doing it for love and not money.

Any other theories?

Most of us can't have a year-round fire sale.



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- JKM
www.chaicutlery.com
 
This is a problem due to many factors, unfortunately I'm afraid there is no easy answer.

Loose distribution policies allow many "one time" dealers to pick up a small lot of knives which they pass on to buddies at cost or blow out online to get the one knife they want at "cost". This hurts dealers who want to stick around and, customers who purchase from them. How do you feel when you buy a new knife for say $100 that lists for $160? Now, what happens when someone blows them out on a one time hit for $80? Now, if I sold the knife to you for $100, I have two basic choices. 1) I match their price, taking the potential loss and hopefully make the money up later with a satisfied customer who comes back or 2) wish them well and leave you, the customer, feeling like you paid too much. The simple fact is that I cannot stay in business if routinely sell at a loss. How do I combat this? I'm open to suggestions here.

The other aspect, as seen with the recurrent threads with regards to Chris Reeve specifically, is the feeling consumers tend to have, that the prices are being artifically inflated to make a killing. I am surprised at the number of people who bring this up. Perhaps, there is the impression that the margins on knives are uniform whether you are selling Cold Steel, Benchmade, Chris Reeve or, others. Now, add to that the fact that some knives are in very limited supply and orders made today will not be available for several months. To a certain extent though, the mixed message in the marketplace contributes to this as well. I have made retail purchases on Cold Steel products at less then 50% of retail, on Benchmade I made a few at 50%. Now, as a dealer I wonder how the guys that sold the knives could stay in business.

When I was a consumer, I patronized the people who gave me good service. I recognized their efforts had value and the time spent on the phone, at their expense, and the man hours (or fractions of an hour
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) in email helped me get the right knife and saved me money in the long run with fewer "bad" purchases. With the growth of internet and mass market mega-stores though, I'm finding many people approach the custom / premium knife purchase with a Wal-mart mentality. Since most knife dealers lack the buying power of a Wal-mart, there is no way we can compete head to head. Needless to say, when I want a Buck 110, even I get it from Wal-mart. When I get my Kit Carson
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, I won't get it at a Wal-mart price, and don't expect to either. After all, how many sales clerks can tell you much of anything about knife steel, blade grinds, etc?

Sid
knife dealer
 
It is not customer naivete when they expect better bargains, they have just gotten used to high efficiency product sales and distribution. It is the general way things have gone for several years (a wave of the present, rather than a wave of the future). They expect you to run a very small margin on your transaction. The only way this works is if you carry virtually no stock on hand and virtually drop-ship the customers order from a manufacturer warehouse (like Amazon.com) Buzz words like Just In Time (JIT) manufacturing come to mind. In order to cope with this customer mindset you need to look for angles to turn over your inventory very rapidly. The internet for a sales outlet and electronic order processing are tools.

I'm affraid that customers will increasingly get their information "service" via web searches and shopping web-bots. They won't want to pay you for this service or to maintain stock on hand. They won't realize what they're doing, but they will gravitate towards buying from whoever has stock today at a good price. No one can afford to always have stock on hand at the best price and we will need to make do with having good prices on the items that we do have. It will be critical to immediately have the customers know when you've got the goods so that they fly off your shelves quickly. Web based promotion will be a crucial part of the business.

Get used to cheap customers. Your going to see a lot more of them.


[This message has been edited by Jeff Clark (edited 05 June 1999).]
 
You could not get me to go into retail business today. I don't know how mom-and-pop stores are going to compete with on-line sales. An on-line knife shop is open 24 hours a day, 365 days a year, it has as many sales clerks as necessary, as much square footage as you want, and yet those clerks are not paid and that floor space is virtual.

All I can say is that retail stores better get very, very good at personal customer service very, very fast. That's the only thing you have to compete on. By the way, that's worth a lot. I frequent George and Son in Portland even though the prices are full MSRP because when I walk in, they say, "We've got just the piece for you," and it always is.

Chuck
 
It was that kind of customer that helped me make the decision to get out of selling knives as a hobby. I enjoyed selling at gun shows, but there was always some joker who thought they could fool me into thinking some other dealer at the show was selling the exact same knife for $20 less. Yeah, pull my other leg, it plays Jingle Bells.
I suppose that it is just something that you have to get used to. People are out for bargains and unfortunately, it seems like if you want to stay in business you almost have to run at a minimum profit margin.
On the whole I feel that most people are more savvy about knives than they were 10 years ago, but then the "tactical" knife market seems to have made a tremendous growth and spurred that interest. There seems to be more people carrying better quality knives, and getting into the hobby of collecting. But then you always have the ones who exclaim "$200 for a knife?!"
Those are the people who are satisfied with buying a $5 el cheapo special Chinese copy. And then you get someone who really appreciates the fact that you are not trying to rip them off, and give them some BS on how this copy "knife is the one that Marines on 4th Recon are carrying."
I actually heard that pitch in San Antonio from another dealer. Ludicrous!
Kingknives, perhaps you should consider keeping a copy of a catalog with retail prices around. That and some current knife magazines so that your potential customers can see the actual prices that the knives are supposed to sell for.
There is no easy solution to inspire consumer confidence I guess.

Just my opinion,
Phil
 
I made a deal with a small new knife manufacturer and was one of the first people to invest in thier product as a distributer. I spent three years making sales calls, magazine advertizing sales and shows. I did not have a lot of money and was trying to build up the business. I also carried custom knives, a few of the better quality factory knives and left handed knives. 90% of the people wanted prices that were at my cost or lower. I think I had maybe two or three shows I made a profit and maybe 12or13 shows where I broke even. Generally they would find a knock off that was in thier price range to buy. I started carrying knock offs as well and sold a few of those. Then the Distributers started lowering the prices. After I had purchased stock. So anyone that purchased after me go a better deal. The company that I was a distributer for started making deals with dealers I had called on at the same price I was purchasing for. When I asked why they did that the answer was The dealer made a larger order than I did and said I was too high. My prices were the ones that the factory had set for dealer prices and I kept as much in stock as I could afford,often holding stock for 6 mo. or more.So I figured that I should get the dealer price, since I already had two years invested in inventory,marketing and selling the product when few others would even talk to them. Now they also sell direct to the consumers.There is no loyalty. Business as a whole is always a gamble. I have been an independent businessman for 30 years so I was not a naive youth. Not whining just stating my experience in the cutlery business.Now I just laugh at all the antics I see and enjoy the friends I have made in the industry. I do not plan to get back into being a knife dealer. There are too many "hobby" dealers out there that do not need it as a main income. For those that are trying and maybe making a living I salute you.

"Been there, Done that...lost the T-shirt."

Cheers,

ts

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"Cet animal est tres mechant;quand on l'attaque il se defend."("This animal is very mischievous: when it is attacked it defends itself")
 
The big difference that the internet provides is the ability to cut out the middle-man. Advertising on the internet is global and virtually free. Computers can help to handle large volumes of individual orders with the efficiency that once required wholesalers. Even the retail teir is at risk. There is a shift towards direct manufacturer to end customer sales. On line auctions are a little like that, direct from the source to the consumer. As people get more savy I expect outfits like Amazon.com to have problems. Why should even a small percentage of the price of a book go to them when the publisher could sell direct to the public?
 
These very issues are why I am making a HUGE change in my business.

I can not compete with my very suppliers anymore. I must control my own destiny and make certain my suppliers are my suppliers and not my competitors.

I have made many changes at WOW over the last few months to guarantee my future income. My success has always been in that I do things differently than my competitors and that is about to be expanded upon greatly.

The internet is a simple thing to master, if you know the tricks. I know the tricks and plan to use them myself for a change and allow my dealers to hop on board as well.

I learned nearly 2 years ago to never put most of my eggs in one basket. The Benchmade lesson and that of others has taught me well. The future is as bright as I can make it.

The consumer will benefit from the internet greatly. Obviously if a dealer has a lower overhead the result will be a lower price. This will never change. What will change is the manufacturers views of the internet dealers. It has already occurred in other product markets and it will trickle down to the knife industry soon enough.

The dealers must learn how to ride the wave or they can choose to just stay afloat. Those who do not adapt to the changes will most certainly drown.



[This message has been edited by Mike Turber (edited 05 June 1999).]
 
Thanks for the insights and input. I saw a post earlier on the "wanted to buy" forum.
Someone looking for a NIB, M.O.D Razorback , but doesn't think he should have to pay more than $75. That's what I'm talking about. I guess I shouldn't let it bother me. The people that really appreciate good cutlery know the worth of the knives they're buying. The others are just ignorant and shouldn't be playing with sharp things anyway! There, I feel better now! Take care everyone.
 
to stand out at knife and gun shows, my father and i started carrying microtech knives and some custom knives. people really stop and notice these knives and they get a conversation started about knives in general. we are very knowledgable about the products we carry and do not push a sale at all. we are ready to defend why a knife costs what it does by showing off the features. we would never make up some crap story just to sell a knife. we do not carry any knock offs or cheap imports. we also listen very closely to what people tell us they want. many, many times during a weekend a buyer will purchase a different knife than originally intended based off our input. i have even seen my dad talk guys out of a knife because he knew they wouldn't be satisfied with it. anyway it is frustrating to see the guy next to you selling some of the same knives for less than you paid whosale! as far as the for sale sections on the forums, i myself have picked up some great deals. i realize these are one of a kind situations and certainly would not expect the knife to be priced that way for everybody....dmc
 
I agree there are several factors at work that I view as major factors in this problem. People have been buying via mail order for far longer than the net has been around. Honestly the net is just another way to buy via the mail order route. People expect cut rate prices since they have to wait. Then there is the one I feel is the biggest issue. That is the cheap knock offs. People are used to buying slick looking knives for almost nothing and do not expect to pay what they percieve are high prices for a quality knife. My challenge has been to convince folks to buy the good knives and stop buying the junk. This is no easy task as any dealer can tell you. I have never had a customer regret listening to my advice and spending more on a better knife. I have many who regeret not listening to me. Of course I will sell whatever my customers want. That's the only way to stay in business for most dealers. In my view the small knife shops days are numbered unless they get on the net and increase their volume by selling to a larger pool of customers and at lower prices. Thus they are able to in some cases get high volume discounts and at the very least make up for the lower prices by moving more product. I can not see those small shops lasting for very many more years unless they get with the program. Honestly I would never open a shop.

Regards,

Tom Carey

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IF you are a knife maker interested in free space on the web.
Check out. CGA online

www.anova.org/cga





[This message has been edited by Tom Carey (edited 05 June 1999).]
 
Okay, mea culpa. I want the Razorback but I wnat it cheap... I have bought 2000$ worth of BM and MT autos in the past month from internet dealers. Just saw a clearance on the ayoob knife at 74.95 and saw 3 go for about that price on bladeaucction... No sin in me wanting to bottom fish on the prices... I am not trying to haggle with anyone... I also understand that dealers need to make a profit...It just happens that I am looking for that odd steal on a few blades that aren't at the top of my must have list... best luck to all.

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Dances with lemmings

 
fracmeister,

We all shop for the bargains, even dealers like myself. There is a problem though when the average customer is not able to distinguish from a special case sale (need rent money, moving dead inventory, etc.) and the normal mode of business that keep the doors open. Blurring the lines is where most people start having problems understanding price and value.

Like most people, I occasionally enjoy the hunt for that great bargain. When it is a knife that I am mildly interested in, it is much easier to be very picky on the price point where I will actually buy.

Stay sharp,
Sid
 
Sorry Fracmeister,
No offense meant by mentioning your post. Just using it as an example. I have to confess, I've actually sold a couple of knives below wholesale to unload them. I just make sure the buyer realizes he's getting an exceptional deal, and hope he doesn't expect it all the time. As a dealer, I buy from different distributors so I can shop for the best deal too. Nothing wrong with that. Like everything else, it pays to shop around. Peace
 
I am pleased to say that I am constantly reminded that the members of this forum really demonstate a lot of graciousness and "class". I am pleased to be a member.
sal
 
Responding to Tom C.: "Honestly the net is just another way to buy via the mail order route." --This is far from true. I'm reminded of the comment by the British Post Master who thought that the telephone was equivalent to messenger services, and that they had plenty of messenger boys in London so the phone would never catch on there. The internet provides a revolutionary ability for the average shmo to get quick information about price fluctuations and stock availability. It is like having a terminal at the Chicago commodoties exchange. It is this extra information and the ability to execute rapid trades that totally changes the deal. The net gives you an immediate snapshot of what's available this minute, even if it is only one or two items at a given price. Mail order ads are usually weeks old and static in content by comparison. The deals aren't as good and the product may not be there when you look for it. These factors and the quickness of the transactions bring many types of people who would not use mail order.

In response to Sid's comment about problems of customer's not understanding special circumstance bargains from normal trade: This reflects very old principles in buying and selling. Most crafty buyers for any major purchase go looking for the distress sale items. It is what artful shopping is all about. There is a classic joke about a woman selling a new Porsche for $10.00 because her husband ran off with the secretary and told her to sell the car and give him the money. This is the kind of deal you long to find. No one really wants to pay retail. No one wants to support you. They want to find items at special prices for special reasons. There's an old con man's saying that you can sell anything if the buyer thinks that it is stolen. With the internet it is easy for the special circumstance seller to throw his merchandise on the international market. A perfect place for that is Ebay. Buyers are rapidly discovering that they can EXPECT TO FIND special deals. Don't be insulted if they ask you if you have a special deal on an item. They will hunt some more and maybe come back if the specials aren't out there. This is just life in the internet age.

[This message has been edited by Jeff Clark (edited 06 June 1999).]
 
I have to throw my two cents in here. I'm an ELU, and I don't mind paying retail for a knife. If someone else sells it lower, I might buy it, but what will sell a knife more than price (to me) is the service from the person behind the counter.
As an example, when I was looking for my BM 875SBT a while back, I went to two different stores.
The first place, I damn near had to set myself on fire to get any help. I was the only customer in the store, and the exact comments when showing the knife were "we don't sell many of these". Of course, being watched like a convict while I "inspected" the knife didn't help, either. I haven't gone back.
The second store, I walked in, looked at the display, and WHOOSH!! "can I show you anything in particular??" After the initial shock, I explained the particulars, and voila! every single 875SBT in stock is on the counter in front of me. At this point, what my wife refers to as "glazed donut face" has occurred. I bought it. And I paid $121 after taxes.
When I was in Arizona, I went to the Knife Shop in the Tucson Mall. I name this store in particular, because I have NEVER had that great of service in ANY knife store I had been in before. I just wish I could have remembered his name. duh.
The whole point is this, I would pay anything for whatever I am looking for, but I will always support the small shop owner before a mass distributor. It's the little guys who make the difference, not the guys who want to make a buck by underselling everyone else.

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Whoever said you can't buy happiness, doesn't know where to shop.
 
Jeff,

Here is what I was trying to get at. The fact is mail order and the net are the same from the stand point that people expect to get a great deal for the wait that is involved because of the shipping involved with both one has to wait. I Do agree with your points. In fact you are preaching to the choir. The net has changed all the rules and is of great value especially to us knife collector's and dealers.


Regards,

Tom Carey

------------------
IF you are a knife maker interested in free space on the web.
Check out. CGA online

www.anova.org/cga



 
I go through the same thing day in and day out working in a bike shop. There are TONS of mailorder places that have the ability to sell merchandise at a few bucks more, or even less, than we can order it at. We usually relate the horror stories (of which there are plenty in this business) of dealing with these places (mixed up orders, etc), and add what we can offer that they can't:
1) Better service
2) Better advice
3) Warranty and service support
4) Free installation
Other than that, if someone wants to order mailorder, then they will. I think it is fair to say, though, that some knives are quite overpriced, and you certainly do pay a lot for a name. If you are honest and upfront with people, and you point them to the best product for their purposes, which is not necessarily the most expensive, then you'll get a good reputation and whatnot.
Steve
 
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