Codger_64
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- Joined
- Oct 8, 2004
- Messages
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In a recent discussion on limited editions, Mr. Voyles brought up an interesting and thought provoking point, that of how many is too many. In his view, an issue by manufacturers or SFO customers of one thousand dozen of a particular “Limited Edition” knife was way to many, and a disservice to collectors. It was, in his opinion, a spoiler of prices down the road, and led to many would-be collectors getting out of the hobby. It caused the subject knives to not gain in market value as many people had hoped they would. Thus the opinion that Schrade and other manufacturers raped and pillaged the collector market and depressed the hoped-for expansion of the number of collectors of newly issued special Limited Edition and Commemorative knives.
First, I have to wonder who was disappointed when these “special” knives did not experience a meteoric rise in value. Was it the general knife buying public? I don’t think so.
The idea of making knives to be collected, not used, was a fairly new idea in the late 1960’s and early 1970’s. Traditional knife collectors, few and far between, concentrated on building collections of antique knives, not many of them post-war (WWII, not Civil War). They collected knives from historic companies which had gone by the wayside and thus were no longer produced. Depending upon the longevity of the company and the apparent production quantities, some patterns and marks were considered rare, thus more desirable, I.E. brought more money on the secondary market. As there was no “knife-bay” in those days, this meant those erstwhile flea market and gun-show knife dealers who scoured estate sales, pawn shops, garage sales and old dealer displays for goods hoping to make a profit, therefore a living off of the knife collectors. A symbiotic relationship, if you will. It was a relatively small market in the late 1960’s and early 1970’s with a relatively small number of merchants servicing it.
The merchants soon looked for ways to expand their markets, to get their businesses out of car trunks, off of flea market and gun show tables and into brick-and-mortar stores. So they began ordering “specialty knives”. At the same time, the manufacturers were beginning to notice the small but growing collector market segment and thought to gain their own market share, modest in terms of overall production, but significant in that special knives with special features could be sold for more money than their run-of-the-mill production knives of similar design and material and labor costs. Thus the “made for collectors” knives.
Now, as anyone who has ever dealt with manufacturing knows, the manufacturer deals in wholesale markups of a few percentage points - 10% to 15% over costs not being uncommon. They make their money on volume marketed, not individual sales of individual knives. As a simplified illustration, a knife which retails for ten dollars might wholesale for five dollars, fifty cents to a dollar of which represents profit to the manufacturer. At that rate, it takes a lot of knives to cover tooling costs, labor and other overhead, materials and packaging. Thus the old standard quantity knife measurement by dozens (I’m not sure how old, but dating at least to the early part of the last century). Set-up and tooling costs knife specific had to be spread out among the knives produced. Thus the shorter the run, the higher the cost per knife. A run of one thousand two hundred knives (100 dozen) retailing for $10 each (retail value ($12,000) would represent a profit of only $600 to $1200 dollars for the manufacturer. And a possible $2,500 to $6,000 for the merchant who takes his $6000 purchase and hopes to double his money.
So when a larger than wished for run of LE or Commemorative knives are issued, who stands to profit? And after the initial retail sale, when new collectors seek out older knives, who stands to gain the most from increased values or eased availability? Who ox is really gored if the values do not increase? Is it the merchant who hopes to make substantial profits on them? The original manufacturer? The primary retailer? The workers? The new collector? The older collector?
I admit that the allure/illusion of investment and the lure of monetary gain is indeed the reason many people decide to collect knives. Greed is as old as man, and catering to greed is the second oldest profession. Carneys and gamblers know this. Most people who play the lottery don’t. It is an important part of marketing anything. As is promoting your product and expanding your market base. However, few collectors realize much profit on reselling their knives in spite of promises of grand value increases by manufacturers, marketers and merchants. Certainly seldom the doubling of investment short term that the merchants themselves realize when a new knife is first sold by them. Or when a collection is liquidated piecemeal by an auctioneer.
Here is a typical markup for a special production (non-standard production but not limited edition) knife, the “Schrade Custom Made” SCM7 from 1984. Schrade sold them to dealers for $30 each. Of course big “special customers” received further discounts. MSRP for that knife was $80. Computing the changes in the value of the U.S. dollar from 1984 to 2007, we see that the $80 MSRP would be $159.65 today. So if you sold your SCM7 which you purchased in 1984 today for $160, what was your profit? See what I mean by illusion?
Let’s try another example. The Scrimshaw 155SC from 1978. A dealer paid $11.25 and sold it for $25.00. Sounds like the markup on furniture! Well, if you bought one in 1978 and sold it in 2007, you would have to sell it for more than $79.48 before you would realize any profit whatsoever. There were 12,000 made. To make the same profit the original dealer did in 1978, you would have to keep it pristine for thirty years and sell it for nearly $160!
Yes, dealers (merchants, promoters, knife journalists, auctioneers) complain that the special knives were issued in numbers too large to facilitate meteoric rises in value, to the detriment of the dealers and the collectors and the collector market in general. And if making large profits is your only motivation for buying, selling, collecting and writing about knives, I can certainly see how you might take exception and call foul on the manufacturers.
However it is my own humble opinion as a non-dealer collector (and non-professional knife “journalist”
that the larger production runs were and are a boon to main-stream collectors in that some really nice knives can be acquired by collectors who aren’t wealthy.
I often eschew the word “rare” and use the more appropriate word “uncommon” to describe knives which are not often seen but produced in numbers large enough to allow a young, new collector or older collector on a budget to obtain a nice example without breaking their bank account.
That said, I do own several very rare knives by virtue of their limited production. I did not pay excessive amounts for them. I “cherry-picked” them over the years. As my knowledge of the knives increased, I was able to recognize them for what they are, ignoring sellers‘ hype about origin, value and such. For the most part, they were acquired while looking to add new (to me) examples of mundane production knives to my collection. I bought them without worrying if I was making a sound economic investment since I have no intention of selling them for a profit, now or later. This, to me, makes my collecting fun. Otherwise, I would feel like I was just building an inventory to stock my store. I would keep track of the buying price of each individual knife added, a detailed inventory list, and chart the value growth of my collection preparing to unload them like penny stocks when markets for the individual knives peaked at a magical expected profit level.
An honest dealer (manufacturer, merchant, promoter, knife journalist, auctioneer) will readily admit that knives are for the most part sorry investments. Yes, there are a few examples where genuine rarity has, along with merchant hype and fashion, proven to be very profitable, though seldom for the collector.
To my way of thinking, “Limited Edition” and “Commemorative” knives were created to be a marketing ploy in the first place. As are the majority of the “collector clubs”. Few, if any, were started and backed by individual collectors. Most were founded, in fact, by merchants and manufacturers as a vehicle to promote and sell their wares (knives, memorabilia and books). There is nothing wrong with any of this as long as a collector is willing to look beyond the fiction to see the facts. And appreciate the knives for what they are. Utilitarian tools, an expression of skill in manufacturing and art in design and a reflection of the (hoped for) tastes and needs of the knife buying public at the time.
Anyone want to start a collection of Bradford Exchange knives? No? And then there are the excellent Franklin Mint knives like the Civil War Bowie. There are some nice “Thomas Kinkade - artist of light” editions. And the whole series of John Wayne movie knives. Probably some Norman Rockwells too. All were created for, and promoted to collectors. Remember there are no bad knives, just bad investments.
Opposing opinions encouraged and welcomed!
Codger
First, I have to wonder who was disappointed when these “special” knives did not experience a meteoric rise in value. Was it the general knife buying public? I don’t think so.
The idea of making knives to be collected, not used, was a fairly new idea in the late 1960’s and early 1970’s. Traditional knife collectors, few and far between, concentrated on building collections of antique knives, not many of them post-war (WWII, not Civil War). They collected knives from historic companies which had gone by the wayside and thus were no longer produced. Depending upon the longevity of the company and the apparent production quantities, some patterns and marks were considered rare, thus more desirable, I.E. brought more money on the secondary market. As there was no “knife-bay” in those days, this meant those erstwhile flea market and gun-show knife dealers who scoured estate sales, pawn shops, garage sales and old dealer displays for goods hoping to make a profit, therefore a living off of the knife collectors. A symbiotic relationship, if you will. It was a relatively small market in the late 1960’s and early 1970’s with a relatively small number of merchants servicing it.
The merchants soon looked for ways to expand their markets, to get their businesses out of car trunks, off of flea market and gun show tables and into brick-and-mortar stores. So they began ordering “specialty knives”. At the same time, the manufacturers were beginning to notice the small but growing collector market segment and thought to gain their own market share, modest in terms of overall production, but significant in that special knives with special features could be sold for more money than their run-of-the-mill production knives of similar design and material and labor costs. Thus the “made for collectors” knives.
Now, as anyone who has ever dealt with manufacturing knows, the manufacturer deals in wholesale markups of a few percentage points - 10% to 15% over costs not being uncommon. They make their money on volume marketed, not individual sales of individual knives. As a simplified illustration, a knife which retails for ten dollars might wholesale for five dollars, fifty cents to a dollar of which represents profit to the manufacturer. At that rate, it takes a lot of knives to cover tooling costs, labor and other overhead, materials and packaging. Thus the old standard quantity knife measurement by dozens (I’m not sure how old, but dating at least to the early part of the last century). Set-up and tooling costs knife specific had to be spread out among the knives produced. Thus the shorter the run, the higher the cost per knife. A run of one thousand two hundred knives (100 dozen) retailing for $10 each (retail value ($12,000) would represent a profit of only $600 to $1200 dollars for the manufacturer. And a possible $2,500 to $6,000 for the merchant who takes his $6000 purchase and hopes to double his money.
So when a larger than wished for run of LE or Commemorative knives are issued, who stands to profit? And after the initial retail sale, when new collectors seek out older knives, who stands to gain the most from increased values or eased availability? Who ox is really gored if the values do not increase? Is it the merchant who hopes to make substantial profits on them? The original manufacturer? The primary retailer? The workers? The new collector? The older collector?
I admit that the allure/illusion of investment and the lure of monetary gain is indeed the reason many people decide to collect knives. Greed is as old as man, and catering to greed is the second oldest profession. Carneys and gamblers know this. Most people who play the lottery don’t. It is an important part of marketing anything. As is promoting your product and expanding your market base. However, few collectors realize much profit on reselling their knives in spite of promises of grand value increases by manufacturers, marketers and merchants. Certainly seldom the doubling of investment short term that the merchants themselves realize when a new knife is first sold by them. Or when a collection is liquidated piecemeal by an auctioneer.
Here is a typical markup for a special production (non-standard production but not limited edition) knife, the “Schrade Custom Made” SCM7 from 1984. Schrade sold them to dealers for $30 each. Of course big “special customers” received further discounts. MSRP for that knife was $80. Computing the changes in the value of the U.S. dollar from 1984 to 2007, we see that the $80 MSRP would be $159.65 today. So if you sold your SCM7 which you purchased in 1984 today for $160, what was your profit? See what I mean by illusion?
Let’s try another example. The Scrimshaw 155SC from 1978. A dealer paid $11.25 and sold it for $25.00. Sounds like the markup on furniture! Well, if you bought one in 1978 and sold it in 2007, you would have to sell it for more than $79.48 before you would realize any profit whatsoever. There were 12,000 made. To make the same profit the original dealer did in 1978, you would have to keep it pristine for thirty years and sell it for nearly $160!
Yes, dealers (merchants, promoters, knife journalists, auctioneers) complain that the special knives were issued in numbers too large to facilitate meteoric rises in value, to the detriment of the dealers and the collectors and the collector market in general. And if making large profits is your only motivation for buying, selling, collecting and writing about knives, I can certainly see how you might take exception and call foul on the manufacturers.
However it is my own humble opinion as a non-dealer collector (and non-professional knife “journalist”
that the larger production runs were and are a boon to main-stream collectors in that some really nice knives can be acquired by collectors who aren’t wealthy. I often eschew the word “rare” and use the more appropriate word “uncommon” to describe knives which are not often seen but produced in numbers large enough to allow a young, new collector or older collector on a budget to obtain a nice example without breaking their bank account.
That said, I do own several very rare knives by virtue of their limited production. I did not pay excessive amounts for them. I “cherry-picked” them over the years. As my knowledge of the knives increased, I was able to recognize them for what they are, ignoring sellers‘ hype about origin, value and such. For the most part, they were acquired while looking to add new (to me) examples of mundane production knives to my collection. I bought them without worrying if I was making a sound economic investment since I have no intention of selling them for a profit, now or later. This, to me, makes my collecting fun. Otherwise, I would feel like I was just building an inventory to stock my store. I would keep track of the buying price of each individual knife added, a detailed inventory list, and chart the value growth of my collection preparing to unload them like penny stocks when markets for the individual knives peaked at a magical expected profit level.
An honest dealer (manufacturer, merchant, promoter, knife journalist, auctioneer) will readily admit that knives are for the most part sorry investments. Yes, there are a few examples where genuine rarity has, along with merchant hype and fashion, proven to be very profitable, though seldom for the collector.
To my way of thinking, “Limited Edition” and “Commemorative” knives were created to be a marketing ploy in the first place. As are the majority of the “collector clubs”. Few, if any, were started and backed by individual collectors. Most were founded, in fact, by merchants and manufacturers as a vehicle to promote and sell their wares (knives, memorabilia and books). There is nothing wrong with any of this as long as a collector is willing to look beyond the fiction to see the facts. And appreciate the knives for what they are. Utilitarian tools, an expression of skill in manufacturing and art in design and a reflection of the (hoped for) tastes and needs of the knife buying public at the time.
Anyone want to start a collection of Bradford Exchange knives? No? And then there are the excellent Franklin Mint knives like the Civil War Bowie. There are some nice “Thomas Kinkade - artist of light” editions. And the whole series of John Wayne movie knives. Probably some Norman Rockwells too. All were created for, and promoted to collectors. Remember there are no bad knives, just bad investments.
Opposing opinions encouraged and welcomed!
Codger
