How Will ECONOMY Affect Knife Prices?

[Confederate]

After watching Glenn Beck tonight and seeing how the Federal Reserve has cranked up the printing presses on the nation's money supply, I wondered how that would affect the prices of everything, including knives. On the one hand, there will be more money in the country (inflation), but on the other hand, fewer people will have jobs and the demand for everything may tumble (it's already started).

Already some knives are becoming available at some pretty good prices, but what of inflation? Knives, like any other hardware, are commodities and commodities can be good investments during inflationary hikes. On the other hand, people aren't buying and the increase in the money supply is being accompanied by a decrease in demand.

Over the next year I expect some custom knife makers will be hit hard, as lower priced items tend to sell better than high cost items. But what about the mid-range knives out there? They've been steadily increasing in price up until now. What do you think we can expect over the next year?

Feast, famine or a little of both?

 

[Billbo66]

Interesting question. I can only speak for myself as a consumer, but disposable income is down at my place. No lay-offs, but the threat of a bad economy makes me think twice and then again about tomorrow. It is a good time to avoid debt and have some savings. Of course, that kinda thinking wont jump start the economy, but I have to look out for my own now.

So- if demand goes down, I would expect to see collector value level or drop. EDC sales may also decline, as people calm down wants. But, I wouldn't let that stop me from getting what I need, rather than want. Demand dwindle may be offset by inflation. Level prices? Hell, I dunno.

That's my thought.

 

[OmegaJuicebox]

Well, Gerber has already uped their prices and I hope NO ONE else does the same. I think some companies are going to be forced to raise prices while others may stay the same.

 

[PetaBread]

BM Mini-Grip prices have gonna up $2 at knifeworks!!!!!:grumpy:

Thank gezus that gpknives still has BM Mini-Grips for $56:jerkit:

 

[udtjim]

I would guess that anything including knives that are over priced will see a decline in sales. If the economy gets really bad then only food clothing and shelter are going to sell.

My Grand Mother had a grocery store during the great depression, people traded their farm land for food. After the depression she had a hell of a bunch of land. She deeded most of it back as people managed to pay their bills but many had left the area and never returned.

 

[radu1976]

Farm land for food ? Oh, mein Got...those must have been tough times...
Nowadays if you keep cash...not good because inflation, if you invest in gold or real estate ...not good at all as those value are decreasing ...what should be the good investment ?
Keep the cash and buy land after a few years

 

[bradpierson26]

i have seen like a 2-3% jump already.
tangent ---- ruger 1022s have jumped $40 :jerkit:

 

[scarysharp]

The prices will go up as the Fed prints more money, meanwhile the value of the dollar goes down.
Basically you will need more worthless dollars to buy the same knife.

Welcome to the new economy.

 

[Confederate]

That's what usually happens, Scarysharp, but if a lot of money stays out of circulation, inflation may not be felt at first. If people aren't spending money, demand is cut, and that can also fudge inflation. Inflation happens when people have money they're willing to spend. More dollars=less value UNLESS people aren't spending. In short, Obama's plan may work in the short term, but the next generations are screwed.

Steel, like any other commodity, drops in price as demand decreases. People aren't building buildings and the market dives. Knife makers get a better price on the steel, but have to factor inflation in at some point. In other words, prices may initially favor the buyer, but if the economy starts moving again, inflation will roar in. So in short, who knows? Knife makers may try to hedge against inflation by buying crappy steel which people will buy because they don't have much cash. Like everyone else, they may try to maximize profits.

I can't predict....

 

[Stockman]

I can foresee two different scenarios based on the assumption that consumer demand will decline.

Manufactures, wholesalers and retailers could lower their prices in an attempt to obtain a larger market share from competitors, which is quite a common approach in a short term declining market.

I don’t believe that this will be the case this time.

My guess would be that all involved in the supply chain will accept that volumes will diminish significantly, for an extended period of time, and thus increase prices and profit margins, to compensate for the sales decline.

 

[cbxer55]

Both my wife and I are laid-off. So no new anything for the foreseeable future. No knives, no flashlights, no guns, NOTHING. So I could give a hoot what the price is! I will not even be looking.

 

[AMRaider]

On the primary market, prices seem to be steady or up slightly. It's hard to say if this is due to inflation or the rising cost of materials, or perhaps something else.

On the secondary market prices have come down on most things. It looks like a lot of folks are selling off some of their sharps to free up some cash (perhaps for guns and other neccesities?), but maybe I'm just seeing things.

The only knives I see either holding their value or increasing in value on the secondary market are the ones at the extreme high end. A few folks (I'm sorry, but I can't recall who exactly) in the industry commented in a recent Blade mag how the high end stuff is still hot. Despite the poor economy, I'm guessing that the folks who had a lot of money prior to the plunge still have most of their money and can still afford the high end stuff. Anyway, just my cents.

 

[eburon]

I actually see that the prices of knives in Europe are going up for some brands such as Fällkniven because of the economy - Swedish krones going down sharply during the last 6 months while the Japanese Yen (where the VG-10 is being produced) is going up. So they decided to increase the prices of their knives by 35% which is insane in my opinion.

I also see that the prices of premium production brands such as CR, Strider, Busse etc are still on their all-time high level. I noticed that there were marginal price decreases during 2001-2003, but that 'crisis' was nothing like what's happening now.

For me, I am already on the 'saving node', but still buying Busses.. How about you guys?

 

[Jake Bauer]

BM Mini-Grip prices have gonna up $2 at knifeworks!!!!!:grumpy:

Thank gezus that gpknives still has BM Mini-Grips for $56:jerkit:

Just wait. Thanks to BMs new MSRP price fixing, you will be paying $90 to $105 for a mini grip soon.

tangent ---- ruger 1022s have jumped $40 :jerkit:

Well, they did add the extended mag release as a standard on all models. Maybe that's why.

 

[not2sharp]

It is hard to say what the price of anything will be, because we have several countervailing forces driving the economy in different directions. Individual employment and wealth is decreasing sharply for the middle class, who are likely the primary customers for the sorts of knives that most of us enjoy. This will certainly drive demand downward.

On the other hand, the reckless spending by our governmenents on all sorts of pork barrel projects and bailouts will greatly deminish the value of our currency; which may soon lead to a high level of cost driven inflation - especially in the US where we have become so dependent on foreign imports. Then we have to consider the many building political waves running through the system; everything from the outright banning of certain knives and materials, to the increased likeliness of wars, factory closures, taxation, energy shortages and outages, and general instability. Trying to get a handle on where the prices should be is like trying to do celestial navigation at the height of a typhoon.

n2s

 

[shecky]

Increased prices is mostly the result of higher material, production and distribution costs. However, this may be countered somewhat by falling demand for knives as consumers put such purchases on hold. The result may be the demise of some knife makers but not dramatically higher prices, as the survivors are increasingly hungry to compete, preferring to cut costs and or cut profit margins, at least for the short term. Increasing costs because of inflation doesn't seem out of the ordinary at this point.

 

[TheGame]

I believe with the economy the way it is, the prices will rise. Why? Well, around me everything else has already risen in price, so the way I view it, it is only a matter of time before the Knives go up in price.

 

[Artfully Martial]

The concept is that inflation decreases fixed debt amounts. I.e., if you owe 20,000 dollars on your new car, and then there's signficant inflation, then you may owe only 18,000 on your new car, if you take into account the relative value of money. I.e., before inflation, 20,000 is worth more, after inflation, 20,000 is worth less and therefore, non-adjusted debt becomes effectively reduced.

As per my finances in the coming year, I have more money than ever before, so my kife buying has gone way up. Got my new Macbook Pro a month ago, bought a new G10 Offset and RAM, probably go a couple more on the way, got my vacation to Vietnam and maybe Japan lined up. Got my new G8 GT about 6 months ago.

I.e., the economy hasn't affected everyone yet. I imagine it will make its way over to my business sooner or later--BUT, my competitors are leaving the scene and I get their business. So, so far, the recession has had the effect of increasing my income.

And this isn't just true of my situation as well. I think we might see something similar happen in the knife world. Perhaps one major company will focus far more on its low end foreign produced knives instead of its existing 100ish dollar line and effectively eliminate itself as competition to the other high end knife manufacturers. This would effectively translate into a far more profitable remaining group of high end production knife makers. Even if the overall demand of knives in that segment goes down, way down, if we eliminate, say, 10% of the offerings (let's say company X shuts down, or almost entirely only makes cheap knives now that don't compete for the same buyer's attention), then the other companies will generally pick up those buyers they lost to Company X (there are some exceptions...maybe Benchmade could be Company X, hypothetically, their fans will probably migrate to Kershaw in far excess of Spyderco, just due to the fact that there's relatively little crossover between Benchmade and Spyderco fans) and actually, therefore, increase their own demand for the products.

Anyway, recessions are complicated, and we will not be feeling it in the knife world in a big way in 09. The catalogs are already out anyway. We should sart to see a trend by Christmas of this year, going on for a couple more years, and that will reveal how it will all play out. I greatly suspect that at least one of the major brands will depart from their current rank to compete more in CRKT's price range and quality level.

 

[Trent Rock]

I consider knives a luxury good as opposed to a necessity good (although to some people it is more of a necessity good..for example, if you use your knife in your daily work activities or on your farm)
Demand will fall for luxury goods during sluggish economic times===>
Prices will fall for knives
Then again, my assumption of knives as a luxury good could be wrong

I'll keep my eye on the recreation index, to find out, now that my interest has been piqued

After being virtually unchanged in November, the index for recreation
declined 0.2 percent in December. Decreases in the indexes for sporting
goods, for photography, and for toys contributed to the decline. The
index for video and audio, which fell 0.1 percent in November, increased
0.1 percent in December. The recreation index has increased 1.8 percent
over the past year.

I don't know whether knives fall under Recreation/Sporting goods equipment or Tools, hardware, outdoor equipment and supplies
I tend to lean more towards it being classified under sporting goods equipment

Here is the price index for sporting goods equipment (U.S. city average)

Did prices seem high for knives around 1995???

http://data.bls.gov/PDQ/outside.jsp?survey=cu

Interesting thread
I never really tried to figure out what category knives fall under

Do you guys consider your knives more of a TOOL/outdoor equipment or sporting goods equipment (or a TOY??)??

 

[Sal Glesser]

Trying to get a handle on where the prices should be is like trying to do celestial navigation at the height of a typhoon.

n2s

This is a good analogy.

Massive layoffs worldwide decrease available funds for knives, which deceases demand.

The increased value of the Yen (up some 25%) will certainly force an increase in the price of knives made in Japan and shipped to USA. This will reduce demand for Japanaese made knives.

China is having an increase in the Yuan, but many companies in China have overproduced for the current economy, so you both a need to increase costs as well as a need to decrease costs.

Excess inventory will lower prices on goods that need to be moved.

Generally advertising increases to offset diminishing sales, but additional advertising raises costs.

Many companies are shifting to lower costs models in an effort to increase market share. Some are creating higher line models for the same reason.

New restrictive knive laws are also shifting types of knives (England, Denmark, Gemany, Australia, Israel, etc.) being made.

In general, more products are being produced than can be consumed so competition becomes tougher. This often drives down prices and quality.

I think it's a good question, but aswers are elusive.

sal