Price gouging...

WoodWorkGhost said:
Hi Pete,
Living in a capitalistic society you can ask whatever price you want for anything you are selling. The fact a maker raises his prices by 100% is totally up to that maker. Just as it is totally up to the buyer to pay the new price.
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I agree, if a maker decides that the value of his product deserves a higher price, because the resale goes up then that is up to him. It is also true that value of a knife is whatever someone is willing to pay for it, no more and no less. If it's worth it to you, than that is all that matters.

WoodWorkGhost said:
For the most part makers make knives because they view themselves as artists and this is their form of expression. For many the business aspect is a necessary evil which few if any take seriously. Probably due in large part to the fact that about 90% (or more) of the knife makers out there are part timers or hobbyists. Consequently the money they receive from making knives is just extra money. I suspect it is the same for those who make pottery, duck decoys, etc. It is something they have a talent for and that they love to do.
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True until the knifemaking becomes a livelyhood and not just a hobby. Then money does matter a lot and that is logical.


WoodWorkGhost said:
I do think that a maker should keep the price they quoted you on a knife, even if it takes them 5 years to make it (and they quoted you a year). If they want to raise their prices this is their incentive to finish the knives in the time frame they quoted.
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WoodWorkGhost said:
I have heard more complaints about the maker not honoring their price several years after the knife is due than raising their prices 100%.
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I have never heard of a maker changing the cost of a knife on a customer once the deal has been made to make that knife. That is just "dirty" IMO. I would never deal with that maker again and would post his info for everyone to know.


WoodWorkGhost said:
I understand fully what you are implying. To the point that I plan to make changes to my business structure in 2007. First thing I am doing is getting rid of my antiquated trade in policy. I don't know if I am going to eliminate all together (to be inline with most other dealers) or offer a 6 month window with a new purchase that must be at least 30% more than the original purchase. As I have been convinced that all custom knife buyers are full grown adults and consequently are responsible for their purchases.
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The fact that you would offer a trade in policy at all is more than just as usually, all sales are final, unless the item is flawed.

I have had custom knives on order for 2.5 years and not been upcharged for them. These custom knife makers were honorable men in this case and kept their word as should be. I kept mine and purchased the knives, which were top quality fit and finish as well.


However, I can see a knifemaker wanting to up his price when his knife resells for a whole lot more right after the new owner purchased it. That means that there are people out there willing to pay the high price, to avoid the 2 year wait, which is usally why there is such a high aftermarket price on certain knives.
 
With regard to wait list, all that makers and collectors should agree on is a slot. By the time the slot comes up, the collector's wishes will have changes and so will the maker's pricing. I respect makers who choose to honor a 2-yr old pricing structure, but it's not a rational way to conduct a business.
 
If a maker quotes me a price, I expect that price to be what I will pay for the knife, no matter how long it takes. For some knives I have on order, I have just been slotted in. When my turn comes up a decision will be made on the knife I want and a price will be worked out then. If I wasn't fine with that I wouldn't have asked to have my name added to the list.

If a maker's price on a style I am interested in goes from $500.00 to $1500.00, I don't care. I look at the knives being produced by that maker and decide if one would be worth $1500.00 to me. If the answer is yes, and I decide I want the knife, I order it. If the answer is no, I don't. To me it all comes down to the question, "Is the knife worth what is being asked for it?". I don't care what it cost last year.

In the previous paragraph I stated that i look at the knife and decide if it would be worth the asking price. More goes into my decision making than just liking the way a maker's knives look. Thanks to Les, I now spend time researching how well the maker's knives do in the secondary market, and how they have done in the past. It was so much simpler when I bought knives based just on how much I liked the way they looked, but I have gained a much better appreciation for custom knives because of the research I have done. My knowledge has also increased at an impressive rate. I enjoy collecting much more now than I did in my haphazard days.
 
I haven't seen anyone, including myself, expressing "blood pressure raising outrage". Maybe it's me you're refering to, maybe not. If so, rest assured, my blood pressure if fine. This is a discussion of a recent change in the world of custom knives that affects prices. Money, investment opportunities and security, that kind of thing. If you don't think that's significant, then you're wrong. It's huge. The big picture here involves a lot more than I feel like typing and I'm sure, more than you feel like reading but collectable knives, like all other collectables right now have experienced a "bubble" effect, which is directly tied to the U.S. stock market and real estate market of the last 15 years. A large scale adjustment is underway in real estate and will affect high end collectables. Muscle cars (not classics), knives (not the extreme high end), artwork, etc...The knife world is unique, in that some of the respected makers are buying into this. The art world has experienced some of this, but mainly by new trendy artists, who the established art community is looking upon with disdain for precisely this reason. I'm not an art expert, but have a cousin who is and have found this very interesting. It's true that I'm a bit disappointed in the short-sightedness of some of these makers. I think the big picture is interesting, but it's becoming obvious that a lot of folks don't.
 
AV8R said:
I haven't seen anyone, including myself, expressing "blood pressure raising outrage". Maybe it's me you're refering to, maybe not. If so, rest assured, my blood pressure if fine. .
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Not directed at you in particular, though your choice of thread title was at best intemperate and at worst inflammatory. I have heard more than a bit of belly-aching about price increases and was pointing out that buyers have a choice.


AV8R said:
This is a discussion of a recent change in the world of custom knives that affects prices. Money, investment opportunities and security, that kind of thing. If you don't think that's significant, then you're wrong. It's huge. .
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Yeah, I got that. But thanks for stating the obvious. I thought parts of my post addressed the issue at hand - such as motivations makers might have for raising prices. If you found my response unhelpful, well, you're more than entitled to your opinion.


AV8R said:
The big picture here involves a lot more than I feel like typing and I'm sure, more than you feel like reading but collectable knives, like all other collectables right now have experienced a "bubble" effect, which is directly tied to the U.S. stock market and real estate market of the last 15 years. A large scale adjustment is underway in real estate and will affect high end collectables. Muscle cars (not classics), knives (not the extreme high end), artwork, etc...The knife world is unique, in that some of the respected makers are buying into this.....
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Well you're not suggesting, I'm sure, that there is a pandemic of makers tripling their prices overnight, are you? If so, I have missed it. But then I really only follow the forged fixed blade market - maybe it's the tactical folder makers going nutty on pricing - I wouldn't know. If there isn't in fact widespread and drastic price increases, then I'm not sure I follow how your premise for this thread relates to bubbles and adjustments and such.


AV8R said:
It's true that I'm a bit disappointed in the short-sightedness of some of these makers. I think the big picture is interesting, but it's becoming obvious that a lot of folks don't.
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You lost me here. There have been numerous and lengthy responses to this thread. What exactly are you complaining about now?

Roger
 
AV8R said:
... It's true that I'm a bit disappointed in the short-sightedness of some of these makers.
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I don't understand why you think the makers are short-sighted?

If they charge more, get more, but then some day are unable to sell at that price (flavor-of-the-month has moved) they will have to lower prices again.

Why is this short-sighted compared to keeping their price the same for years while others are immediately reselling at 100% profit during the boom?

At the end of the boom, you still have knives that sell for less than they once did. The only difference is who got the money. Is it the fact that you think people will resent the maker in the first case, and the middleman in the second?
 
I think a lot of guys like myself have been collecting knives for years and were able to buy a lot of knives for our collections at what has always been reasonable prices. Now our favorite makers are either retired or looking at retirement and the prices for knives by our favorite makers have gone through the roof due to the knives being in limited supply. I know one of my favorite makers is getting older and has cut back on the amount of knives that he produces each year. He can care less about the secondary market and said that he will not let the dealers double the price of his knives and make all of the profit when he can sell the knife straight to the customer himself. He will probably never make over 100 knives a year and he will always have 100 people or more who will pay whatever he charges to own one of his knives. Even though he is my friend, he has priced me out of the market and I just cannot afford his knives at todays prices. As much as I hate not being able to afford knives by my two favorite makes, I just have to sit back and collect stuff that is in my price range.
 
for hitting the nail squarely on the head. It would be real interesting to expand on this and hear your thoughts. Without specifically talking about your friend, of course. Just generalizing. "Woodworkghost" made some great points about paying the long dollar. What will happen when your friend's knives are seen on the market being sold by current owners who bought at much lower prices, need quick cash and are willing to sell for less than the maker's price? Maybe like the real estate market now in bubble areas where supply is outrunning demand? I'm assuming that some makers in this position would not be averse to lowering prices again in the future if they had to. If things dried up more than expected. Maybe not your friend, but some makers. Being a maker, yourself, what do you think of this practice? Lastly, why do some makers in the exact same position choose NOT to hike their prices up to aftermarket levels? Thanks, I value your opinions,

Pete
 
We all know that as you go up in price, the market for your knives grows smaller. Some makers have sold knives for reasonable prices for years and now they have paid their dues and are now reaping the rewards. They are at the top of their game and they should be able to get the top dollar if they are savy enough to do so. I think that for a new maker or even a maker that is not nearing retirement to try to get secondary market prices for their knives is taking a big chance. I want to go back to one of the other discussions that was taking place least week regarding CNC and full time makers.
Every maker is different. Every maker has different needs and live different lifestyles. I live pretty cheap. My wife has a state job which takes care of health insurance. She was 110% behind me when I chose to go full time in 2003. In 2003 a weird thing happened. It was called a reality check. I knew what I was getting into, but I had to come up with a plan. My plan was to make more knives and to try as best as I could to keep the prices in a certain range. I was able to do that. The hardest part was and still is to make more knives. I choose to add the ole nasty, controversial CNC machine.
Mine is not a state of the art CNC, but I am using one that is 20 years old without a tool changer. As R.J. mentioned, It gives me lots of precision, but no speed and I don't have to hire an apprentice. I do however have to spend my nights learning CAD CAM as well as new machining techniques etc.
I am a traditionalist at heart. I am a Journeyman Bladesmith with the ABS since 1992. I should have been a Mastersmith years ago, but I chose to take a different route in order to make a living. I am so much behind the curve in the forging world to be able to make a living solely by forging knives. I still forge as a diversion from my other knives and I may still go for my Masters in a few years.

Back to the question about why some makers choose not to hike up their prices. I think that they are comfortable with their income and they have made knives long enough to have all of their skills down to the point of being able to stay competitive. I remember two things that George Herron told me years ago when I would go to his shop to learn how to make knives.
I told him that I wanted to make nothing but Sub Hilt fighters, fighters, boot knives etc. He told me that the buying public would dictate what I would make and that has remained true to this day. I make what my customers want which happens to be a lot of small hunters,throwing knives, small tacticals and I have been making folders for the past couple of years.
Another piece of advice that he gave me was that if I made a good knife and kept my prices reasonable, I would never lack for work in the knife business.
There are a lot of knifemakers who are not in business any longer because they did not folllow this practice.
 
I'm also a traditionalist at heart. In a lot of ways. If I was a knifemaker, then the opportunity to have learned and spent time with George Herron would be something I'd always treasure and hold proud. You're very fortunate and thanks for passing on his advice. The good side of a thread like this is that it brings some of these things to the surface.

Pete
 
Some makers are strangely ashamed of the price their knives get on the secondary market. I am not talking of makers who manage their prices carefully and choose not to react to fast - and maybe ephemereal - rises in popularity. I am talking about makers who say "well, this piece shouldn't be worth more than $500, so I'll sell it at this price".

Of course, all that it does is switch the profit from the maker - who does all the work - to a collector who was just a little bit smart when they placed their order, or is lucky enough to be at the right show, etc.

Only one thing decides the price of a good - the market. You can try to sell higher, but you won't sell. You can try to sell lower, but then you're just giving money to your collector.

Let's take a specific - though hypothetical - example of someone rushing through the doors of a show and getting first to Kit Carson's table. Say they buy 2 basic folders. Then they walk around and sell one of the folder to a collector for 2X what they paid. What happened is that the maker basically gave that guy a folder, free of charge.

This isn't rational. O try to stay 20% below aftermarket prices is a good idea. To keep one's head level in the face of sharp fluctuation is a good idea. To continuously undermine your own profit isn't a good idea.
 
I knife is for me a thing of beauty,I can admire it,use it.Certainly not an investment.When I was young and Bill Moran was 40 years old (yes I am old) I bought a few of his knives because he was a real gentlemen and his prices were fair.In the USA of course there is a big second market and most makers I know are not so happy with it.Here in Europe prices are much higher then in your country due to the limited supply but the market is allways right.For investment my MS shares were much,much better and they allowed me this passion for knives
 
I have to agree with Roger P and that well known dealer. I have been to a few knife shows in my time. One thing I have never seen is anyone holding a gun to someone else's head to buy a knife.

Collectors bitch that dealers get all the good knives before a show opens. Why does this happen...because the knife maker chooses to sell them to this person before the show opens.

Dealers bitch that certain collectors get all the good knives before the show opens. Why does this happen....because the maker chooses to sell them to this person before the show opens.

Collectors bitch that other collectors get put ahead of them or offer knives for sale for less money to those who call. Why does this happen....because the maker chooses to sell them to this person.

Im sure you see the continuing theme. Nothing happens until the maker chooses who they will sell the knife to. Nothing talks louder than money...RIGHT NOW.

**NOTE: Get the order in writing with the delivery date, this eliminates confusion on both the buyer and the sellers part. This way the maker knows the exact date they quoted and the buyer knows the exact date that the payment will be do. NOTE**

If you don't like what the maker is doing with their prices. Have another maker make a similar knife. After all why would you want to give someone money that you feel is jerking you around?

Internet buyers and dealers have learned to focus on the 25-30 makers whose knives at this moment can be bought and resold immediately (and I thought I was the President of Arbitrage Custom Knives). As the amount of money that can be made increases so does the level of bitching by those who do not get their knife.

Makers who for years have held a grudge with dealers making money from their knives. Have now come to realize it's not just those friggen dealers now the collectors are making money on reselling the knife they just received. The knife they told the maker they would never sell.

So Im sure some of these makers feel slighted, even though it was many of these same dealers and collectors who helped them to get to the position they enjoy today.

Over the years I have had several makers not live up to their part of the agreement. Raising prices, stealing designs, just not making the knives (while others get their knives), etc. Simple solution, just fire the maker. It took me several years to learn that lesson. Even longer to learn how to judge the knives and the maker for long term potential.

Bobby's post with George Herron's advice is excellent advice for most knife makers.

Gator, if a maker lowers their prices on the same knife that they sold several of to other collectors. They have baiscally sabotaged their career. After all why would you buy a knife that the maker has a history of selling it cheaper to the next customer.

WWG,
Apparently not the only Arbitrageist in custom knives. :D
 
If you think that you were wronged by one of these makers who chose to go way up on their prices, you can do one of two things.

Confront him and ask him why. You can never tell what they might say. They could be going through personal hardships (medical bills, family problems etc)

Go out and look for the next Bob Loveless, George Herron, Bill Moran, Walter Brend or Jerry Fisk. No matter how hard they try they will never be the original, but you will get a nice knife at a reasonable price and a chance to help the industry grow with a new friend ( at least until he gets famous and raises his prices:eek:)
 
There is no gouging in custom knives. Gouging can only exist in a commodities market.

Anyone who has can remember the days of majestic ,scrimmed, engraved, boxed art knives or highly embellished art folders would never "invest" in any current "flavor of the month".
 
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