How Do They Do It??

[T-BAG]

How does a company like BudK or Smoky Mountain Knife Works make, transport, stock, inventory, ship, package, sell and pay someone to do all this and sell a knife for $4.00. I can't figure it out but they sell em all day long for 4 to 9 dollars...and seem to make a profit when I buy wood for a handle and it costs $20.00.......What am I missing here? I realize it's crap steel and plastic handles but still.......4 dollars...seems like it would cost that to ship from China or Taiwan.

 

[Myal]

I deal in knives wholesale and some retail

the manufacturers do it by having low production cost , shipping by surface transport instead of air and shipping in quantity .

For me , to order knives and have them sent airmail means to add 100% to 150% of the total cost of the knives to the order

if I am willing to wait 3 months and have them sent surfacemail , its a negligable cost

then thereis the volume of knives sold , I heard it said that the easiest way to make a million $ is to take $1 off a million people

if there is only a small margin but bulk sales , the profits are there as much as if it was small sales and huge profits per sale .

I make almost as much $$ selling $10 knives as my friend in the same town who sells $150 customs knives over a month .

 

[EdgeOn]

Low cost. That $10 knife cost less than $1 to manufacture in China. While the amount of the sale is small, the gross margin as a percentage of sales is large.

 

[mp510]

How does a company like BudK or Smoky Mountain Knife Works make, transport, stock, inventory, ship, package, sell and pay someone to do all this and sell a knife for $4.00. I can't figure it out but they sell em all day long for 4 to 9 dollars...and seem to make a profit when I buy wood for a handle and it costs $20.00.......What am I missing here? I realize it's crap steel and plastic handles but still.......4 dollars...seems like it would cost that to ship from China or Taiwan.

I know an individual who worked for a (cosmetics) manufacturing company. He still works for the same company, at the same location. Now it's effectively a distribution point. He has said that when the large quantities that are shipped get sent over here the shipping is very affordable, and even after paying to have the merchandise shipped here, the profit margin on outsourced goods is way better than when the same items were made here, at the same retail price. But, his company will be changing again. Manufacturing is coming back to the USA- management determined that continuing production overseas will ultimately be a bad business move, sales are already down due to lesser quality.

In China, a furniture factory worker makes 48c./hr. In Viet Name it's 17c./hr (according to ABC news).

cheap labor+cheap shipping+ cheap materials= cheap product.

 

[Bob W]

First off, if you see a $4 knife at BudK or SMKW, it's usually a bottom-of-the-line Chinese import with the absolute crappiest materials available. Probably costs a few cents to make.

Second, those are very high volume dealers, so their profit margin on each knife can be very low.

Third, just to point out, there are sometimes fantanstic $4 values at SMKW. Victorinox paring knife, Opinel, closeout Wengers, etc.

-Bob

 

[T-BAG]

Third, just to point out, there are sometimes fantanstic $4 values at SMKW. Victorinox paring knife, Opinel, closeout Wengers, etc.

-Bob

I agree..At BudK I got a $7.00 neck knife and use it for packages and envelopes and any other little thing.....If it breaks, big deal....But after looking at it , it got me to wondering ...I couldn't make that knife for $7.00 if most of the materials were free...Hence the question.....I also didn't realize people in Viet Nam got .17 cents and hour.....AN HOUR......that's pitiful man.