Market Price

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Tony G

Tony G

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I had written this a bit ago but decided not to post it but then someone used the words “market price” in a post on the exchange and I lost all control so here are my questions about Knife values.

There is something that I just don’t understand and it is important to me because I value property for a living in order to determine correct transfer pricing for related party international transactions.

So please help me out here:

Say you have a knife like a Satin Orange/Blk G-10 warden (and to some extent other recent satin wardens).

The facts are:
  • A pile of them sell for $197 at Blade West, the Ganzaaa and the company store realistically there has to be way over 100 of them.
  • A pile more could be at Knob Creek & that Ganzaaa
  • They may or may not be made again as it is not an LE
  • Subjectively it is a nice looking knife
  • Functionally it does nothing better than any other GW some would say that because it is fat it does lots of things worse.
  • Busse does price its knives at about 10% under what they believe to be "real value".
  • Days after hundreds sell, a few people pay about 150% of the established “arms length price”.
Now if I had a client that wanted to stuff his tax haven full of profits that would be a perfect set of facts, so I’m interested. But no court in the world would say that the transaction in item six was in any way indicative of a fair price or a market value price. They would simply say that the few transactions like number six do not outweigh the numerous other recent transactions that took place at $197.00.

So what am I missing and the US Tax Court missing; or what is the buyer in transaction six missing?
 
Availability.

Market price is "a price point that people are willing to pay". If the availability was there, the price would remain $197, as anyone could pick one up for that. When they are no longer available... and demand is there... prices will rise.

So... availability (or in this case, not knowing the availability).
 
Um, a fool and his money are soon parted? If somebody is willing to pay X amount for a knife, then that knife is worth that amount to that person.

I believe what is coming into play is an inaccurate or skewed perception of supply vs. demand. People think that these things are super rare, when that may or may not be the truth. There is a history of people flipping knives on the exchange for immediate profit. When people see that over time, they are led to believe that is the way it works.

It appears that some people are willing to pay an inflated price, so naturally, someone will come along and sell for as much as they can get. Look at what some of the ASH-1s are selling for in the exchange. How do you determine the "fair market price" of an item without knowing how many were made? The price is set by however much people are willing to pay.

Over time, the market value will become more or less fixed as more becomes known about these particular knives.
 
OK good point but I'll think about it and see if I can wiggle out of it;)

Lil' Foo said:
Availability.

Market price is "a price point that people are willing to pay". If the availability was there, the price would remain $197, as anyone could pick one up for that. When they are no longer available... and demand is there... prices will rise.

So... availability (or in this case, not knowing the availability).
Click to expand...
 
Well, at least there is plenty of Booze to buy and the price hasn't skyrocketed on it!!!! ..................yet! :D
 
Tony G said:
...I had written this a bit ago but decided not to post it but then someone used the words “market price” in a post on the exchange and I lost all control so here are my questions about Knife values...
Click to expand...

can you post a link?
 
Ummmm.....what?! What's a US Tax Court and how is it relevant to anything on the Exchange or Game Warden? I got a "fair market value" for him right here...!
 
Tony G said:
That isn't going to happen. This isn't personal... just something that I want to get opinions about without getting into who is selling what for how much etc. etc.
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Oh, I was being cute... thought it was my add posted 40 minutes ago.. i reference market value of what others sold at today....

and thought i would get a free bump out of your post... :)
 
This is why I dont buy many knives secondary market. I know that the g/w or whatever sold for X amount of dollars. And I know somewhere down the line I can get either the exact same thing or something similar direct from busse for X amount of dollars give or take. So why would I pay 150 percent markup on something similar? I dont need to own everything of item Y....some do collect them and thats a diff priority. Now a knife that is no longer made is diff entirley like the SFNO or Hellrazor. Those have gone up as to limited supply,.
 
My observation has been the 'shipping increment', I do it too.

A deal on a current release usually includes the original buyers shipping cost (if said person is not trying to make a profit), each time they change hands the price goes up by $15 or so, outside of profiteering.
 
jimmyjones said:
My observation has been the 'shipping increment', I do it too.

A deal on a current release usually includes the original buyers shipping cost (if said person is not trying to make a profit), each time they change hands the price goes up by $15 or so, outside of profiteering.
Click to expand...


Thats not a big deal and I take that into account. You buy a knife for 197 then skunk charges ya shipping(or jerry) then your up to 212. So I have no problem paying 225 for a knife that someone had paid 197 from the store for. Its the 299 bullcrap that I see.
 
Yea, E**Y is a good example of that.
It's all about what someone is willing to pay for the item.
I paid almost double the list price for my #rd DBM but, the way I see it is it will go the same route as the SHBM's in a few years.:thumbup:



barrabas74 said:
Thats not a big deal and I take that into account. You buy a knife for 197 then skunk charges ya shipping(or jerry) then your up to 212. So I have no problem paying 225 for a knife that someone had paid 197 from the store for. Its the 299 bullcrap that I see.
Click to expand...
 
Here's the definition I'm using for Fair Market Value:

The price that a given property or asset would fetch in the marketplace, subject to the following conditions:

1. Prospective buyers and sellers are reasonably knowledgeable about the asset; they are behaving in their own best interests and are free of undue pressure to trade.

2. A reasonable time period is given for the transaction to be completed.

Given these conditions, an asset's fair market value should represent an accurate valuation or assessment of its worth.

The "market price" used in the post Tony's might be referencing would probably be more accurately stated as "recent sale price" so that it's not confused with "fair market value", but then we are parsing terms.

Now, we get a bunch of recent sales and we do indeed have a market value that is solid for that point in time.

You have to love free markets! :thumbup:
 
Homework...

If the potential Buyer took a few moments to research the prices, the Buyer would probably not move on a knife with such an inflated price especially so soon after they were available for much less. Seems that those who mark up knives that high so quickly are banking on the fact that someone is unaware of the knife's original price... i.e. preying on the uninformed.

It PAYS to do the homework to avoid getting... Screwed.
 
barrabas74 said:
Thats not a big deal and I take that into account. You buy a knife for 197 then skunk charges ya shipping(or jerry) then your up to 212. So I have no problem paying 225 for a knife that someone had paid 197 from the store for. Its the 299 bullcrap that I see.
Click to expand...

The way I see it, if a flipper buys a bunch of knives from either store then tries to re-sell them here, they should not include the cost of shipping 1 knife since that cost is distributed over the (dozen or so) number of knives purchased. AND, they should subtract a small amount since they have merely delayed the time it took me to score some the INFI. :D
 
RANT: Game Wardens aside; Busse knives (generally speaking) are rare and do have a secondary market upcharge which usually goes up as the knives exchange hands. If you look at almost every Busse predating this year's flood of show and Ganzaa blades. Many of their custom shop pieces were one-of-a-kind knives or one-of-a-couple at best, and this limited supply in turn forced the prices up. Even on today's market those knives still surface from time to time (like the mint SHBM with sheath which recently sold for $1350 on the exchange). That being said there are still Busse's being produced today that can be considered "rare", for example there is probably only a handful of the Bloodbath 5A, also many of the ASH-1 from Blade were unique.

Now back to the Game Wardens: For knives that are readily available, I think most (my self included) would pay the equivalent of a "Service Charge"; I didn't goto Blade, I didn't stay up until 3am pressing [F5] until my keyboard broke, or fight the stampede to the BCS. That's worth something in my opinion and I'm willing to pay for it, how much is all relative. I'd say $197 for a GW + original shipping (let's say $10) + shipping to me $10 which brings us to $217. To me 10% ($21.7 for a total of $239) would be a reasonable markup for a Busse that's definitely going to resurface again as part of one sale or another.

Just my 2 cents - Greg
 
Duh, move. I just realized the answer to the question I asked. [light bulb goes off!]
 
barrabas74 said:
Now a knife that is no longer made is diff entirley like the SFNO or Hellrazor. Those have gone up as to limited supply,.
Click to expand...

Recent "hot blades" on the forum have been the SFNO and Mean Streets, and Hellrazor to a lesser extent. Suddenly, we have a military overrun of Mean Streets, then a bunch show up in 'Ganzas. If I saw correctly, the Knob Creek photo showed a bunch of SFNOs in normal configurations - not SOWs or variants, but stock SFNOs, maybe with interesting handle scales.

My point is that these patterns aren't out of production. The original plan was to do subsequent runs, but it seems the shop got a bit behind on the schedule. Now, Jerry (possibly lobbied by Skunk) is seeing the demand and rejiggering production to meet it. Good marketing, and it puts desireable blades in the hands of newbies who want them.

Back to the marketing question. If you wait long enough, most things will come around. There's lots of fruitless stalking, but eventually you can pounce. I'm patient, and can wait 6 months for something I order to come from the shop, or a year for a Howling Rat to show up at a good price. (though I'm still waiting for the original tan howling rat. Those are hiding). Getting something NOW often involves a premium. It's worth it for a rare blade, or your favorite color, or the perfect DC/Snakeskin ergo to fill a hole in your set. People who flip blades are taking advantage of the desire to have it NOW and the fear that it won't show up again. I don't necessarily appreciate someone who buys out the BCS with the intent to resell, but it doesn't affect me much because I have a good range of users and can wait for the next deal to pop up.

YMMV
 
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