Pricing vs. exposure

J

Jason Fry

Joined
Jun 5, 2008
Messages
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There are pricing discussions for new makers all over the web, but I've got a different kind of pricing question. I've been making knives for five years. Over that time, both my quality and my price have improved. I consistently sell knives quickly, which makes me believe that they may be priced below their market potential. I have been relatively unknown, other than a website, a presence on several forums, and a couple of small shows. That's the backstory.

I was fortunate to have a knife published in Knives 2013, and have a picture/article coming out in Texas Monthly magazine in March of this year. The knife in Texas Monthly was on loan back to me from a dealer who put his price on it for the article. His price is significantly more than I usually sell that knife for. I am soon to have major exposure to new customers, with a list price greatly above my usual pricing.

Here's the dilemma. How do I best take advantage of the exposure? If I leave my pricing alone, I'll leave money on the table and will significantly undercut the dealer. If I raise my pricing to the dealer's price, I am afraid I'll end up holding on to knives much longer and may end up with customers who are not satisfied with my knife at that price. I would like to move somewhere toward the middle, raising my prices to a point that better reflects my knives' market value and leaves less on the table, but not to the point where people don't feel like they are getting a good value for my price. I want my customers to feel like they got a "good deal" on my knives, like they expect to pay more for that kind of quality.

I'd love to hear thoughts and opinions from this group.
Thanks,
Jason
 
Bob Loveless was noted as keeping very good track of his aftermarket and dealer prices and keeping the pricing of his knives below that, I recall somewhere around 20%.

If you're relying on a dealer(s) for exposure, you could drive sales to them by keeping your order list under control, ie; "I can put you on my list for that $400 knife, and you can get it in a year, or you can get a similar knife from my dealer for 20% more and have it right away".

This is a great topic for conversation and I'm looking forward to hearing what the big dogs have to say.
 
For better exposure, consider using your name, rather than some indecipherable alphanumeric code for your forum handle.

Some of the best research you can do as a maker is attend a show like Blade, and spend 3 days walking the floor, looking at knives and prices of your competitors.

Bumping your prices significantly because one dealer has sold one knife at a significant premium is a bad idea. Too big a change based on too small a sample. Being published is great, but it is does not mean that your knives will instantly command a much higher asking price than they did before.

It's easy to raise prices - much harder to lower them. Better to go slow with increases, and do so based on a broad and candid assessment of your knives and your market position.
 
Point taken, Roger. Five years ago when I picked a username, I never figured my name would be significant. Finally paid the $10 and got it switched. Should see Jason Fry on here going forward.
 
jkf96a said:
Point taken, Roger. Five years ago when I picked a username, I never figured my name would be significant. Finally paid the $10 and got it switched. Should see Jason Fry on here going forward.
Click to expand...

Great. Now they'll all know we're related.

Just kidding, of course.

It's an interesting dilemma. Is it too late to talk to the dealer and the publisher and adjust the number? That might be a worthwhile option. On the other hand, if scores of people call you, they'll be happily surprised to find that you don't charge as much as they thought you would. I wish I'd had something handy to send the writer at the time, but them's the breaks. Call me later and we can talk about elephants.
 
Jason who?
As mentioned, you want to sell knives but who are you? I started a thread several years ago on here about this very subject and many makers requested the handle be changed to their real name.
 
Just be careful and don't try to capture the whole spread between your pricing and the dealer pricing/secondary market pricing. I think that story from Lorien about Loveless says it all. I can think of more than one maker who got greedy and tried to capture the entire spread - two quickly come to mind and are has-beens now. Trying to take every dollar off the table will always be a sure way to ruin your market.

Bob
 
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Pricing has destroyed more business than anything I can think of. You (as a manufacturer) need to decide how you are going to sell your products. If you are going to sell directly your pricing and marketing approaches must be directed differently than you would if you were strictly using a normal multiple levels of distribution network. Your output, costs (materials, labor, packaging, transportation, marketing, etc), required profit; all of these become factors.

I spent two years after The Wall came down working with Eastern European companies (and individuals) who expected to sell their products at full retail based off USA pricing. They couldn't/wouldn't understand that the product had to gain acceptance (branding), be transported, be advertised, be stored prior to sale, be taxed (including tarrifs), and all the other vageries of bringing a product to market. They saw that a paperclip sells for $1 (hypothetically) and expected that's what they would sell for at the factory (pre-paid, delivery uncertain). Needless to say they didn't get a lot of business.

I highly recommend you take some time and talk to someone who knows sales and marketing and business development. Make a plan for your business (there's software available to help you with this), and use that to help set your prices. Remember, different markets have different expectations as regards costs and profits. Europe is different than the USA, which is different than Asia.
 
Jason, you forgot one very important factor. Pricing vs Exposure VS KNOWN MAKER (Name recognition, Reputation etc.) Pricing is up to you. Exposure is partially under your control. Name recognition, reputation, and finally substantial demand has to be earned (the hard way). i.e.: my little sheath making endeavor was an overnight success................................and it only took 8 years to get there.;)

It's also a pretty good idea to leave some cream in the after market (a la Loveless as mentioned). This allows your Dealers, collectors, a shot at a little profit as they move your product and increase the demand by doing do. A lot more exposure more quickly.

Paul
 
RogerP said:
For better exposure, consider using your name, rather than some indecipherable alphanumeric code for your forum handle.

Some of the best research you can do as a maker is attend a show like Blade, and spend 3 days walking the floor, looking at knives and prices of your competitors.

Bumping your prices significantly because one dealer has sold one knife at a significant premium is a bad idea. Too big a change based on too small a sample. Being published is great, but it is does not mean that your knives will instantly command a much higher asking price than they did before.

It's easy to raise prices - much harder to lower them. Better to go slow with increases, and do so based on a broad and candid assessment of your knives and your market position.
Click to expand...

This is sig line material..
Roger laying down the gospel
Much Respect.
 
Hi Jason,

Good for you for implementing a name change. :thumbup: I am completely baffled ANY maker (and even collectors) feels anonymity is so valid. In a community I like to know and talk to the real players.

I did a search on your name, and you've started five threads in this forum since 2008, and only two showed your knives. Which were VERY well made.

Exposure? Right here, 24/7, not just in the rumpled pages of a Texas monthly or a single page issue of Knives Annual. LOL!

This is where the BUYERS hang out. Many don't post, but they ALL look. I'm nearing a half million views on my Sticky Gallery thread.

Roger, Mike, Bruce, Bob, Eisman, Lorien and Paul are about the top of the experienced pyramid here.

Post, show, teach, provide... and you WILL sell. It's almost magic. ;)

Looking forward to more of your presence. :D

Coop
 
Thanks for the honest comments, gentlemen. I have not posted many pics in this forum, as I have not been a paying member. I spent most of my time in Shop Talk until recently. As far as market research as alluded to by Roger, Snody, etc, I frequently browse the exchange here. I look at prices, quality, what sells and what doesn't. I have done only a few shows, but I listened more than I talked. My feeling that I'm maybe underpriced came from talking to other makers at the shows, including some makers we've all heard of. I'm fixing to dive off into it, with a table at the Lone Star Knife Expo in April. So far I've sold mostly to my mailing list built of previous customers, collected from a few hunting forums and through my website. Like post 815... onward and upward. I never expected to start at the top. I'm five years into the process, mostly on my own. Long slow climb is fine with me.
 
Jason, a worthwhile and interesting subject and some good advice being shared here.

IMO, there's several component's for consideration in trying to define your pricing structure.

The first step for accurately pricing any created or manufactured product is determining your true costs.
Do this by calculating your cost of material, supplies, power/fuel, depreciation on shop and equipment, marketing/advertisement (ads, show expense, dues etc.), insurance and office expense then add a % mark-up to cover salary and living expenses or figure hourly if more comfortable with that.
I'm not suggesting you do this cost analysis for every knife, but perhaps create "cost templates" say for your standard Hunter and standard Bowie then have adds for upgrades such as stag, ivory handle materials, damascus, blade length etc. This should give you a pretty accurate idea as to costs for most knives you make.

Then take this number and run it against the maker’s prices who you see as being your competition.

This first step should give you a gut check as to where you stand in your pricing both from a competition and profit perspective, but you are still not finished yet.
 
RogerP said:
For better exposure, consider using your name, rather than some indecipherable alphanumeric code for your forum handle.

Some of the best research you can do as a maker is attend a show like Blade, and spend 3 days walking the floor, looking at knives and prices of your competitors.

Bumping your prices significantly because one dealer has sold one knife at a significant premium is a bad idea. Too big a change based on too small a sample. Being published is great, but it is does not mean that your knives will instantly command a much higher asking price than they did before.

It's easy to raise prices - much harder to lower them. Better to go slow with increases, and do so based on a broad and candid assessment of your knives and your market position.
Click to expand...

You couldn't purchase better advice, and here is Roger giving it to you for free!
 
Pricing is one of the most difficult aspects of selling your work. On one hand, it has to be profitable to you, and on the other hand it has to remain competitive. I use a very basic formula of materials plus labor and it generally gets me a ballpark figure. Then I research the market at MY level of exposure and skill and adjust to where I can be competitive. My formula gets me within a close range. Track your sales for six months and readjust your figure depending on your results.

Brett
 
^^^ Well said, Brett.

Below is a set of thoughts not directed at anyone in particular:

A problem related to a simple count of the 'hours and materials' for pricing can be misleading. Of course we all want to be paid fairly for the time that's spent.

This said, here is an area where efficiency can really throw you, OR your competitors, a curve ball.

In any production field you want to produce twice the work in half the time of your competitors, all the while maintaining your quality. You can bet there are some doing that to you.

When I started out I virtually gave my time away for peanuts, but I got paid to learn. It was clumsy raising my standard to those pros who were established.

In time I learned how to do it good. In more time, I've learned how to do it as good, and in less time. I'm still not the most efficient. (Ex: I'm still behind Eric at P7's Show output, and I'm at my own limit.)

Points being, if a collector can purchase an 'equal' piece from a competitor for less, because he is making them more efficiently; we need to pay attention.

Or offer the customer extra value somewhere else in our offering. For me, I need to focus on exposure rather than speed or immediate production.

This is true in all fields.

Good topic. Difficult topic.

Coop
 
I agree you've gotten a lot of great advice - last few comments from Coop and Brett are really relevant for you I think. From my perspective as a collector, once you have an idea of your "costs" and therefore a preliminary idea of pricing, I would say to resist the temptation to go toward the "high end" at first. If you put out excellent work that is perceived as great "bang for the buck", that will help develop a little "buzz" for you. As Coop said, you are kinda getting paid to learn at first.

Try to get your knives in people's hands - ie go to some shows, get some knives to some of the guys here. Like the others have said, when you go to a show, check out other makers work, and try to assess honestly how your current level of skill matches up. I think some newer guys make the mistake of "rushing" to more expensive materials (steel,handle material, "embellishment") too soon, in an effort to sell higher priced knives. Myself, I'd rather see your best, cleanest hunter/fighter/bowie or whatever - one that shows your particular style.

As you get better...and therefore better known...THEN re-assess your materials and pricing. Listen hardest to those who give you constructive criticism....but don't let people get you down:p

Looking forward to seeing more of your work

Bill Flynn
 
some time ago this topic came up and my input was to keep track of your material and out of pocket costs, (as mentioned by Kevin) figure out a fair markup for these and go from there in determining what your time was worth, if anything.
Well, I drew serious fire for that suggestion- as I recall mainly from Les Robertson. I still stand by that suggestion, because if you don't know what your costs are then it's difficult to recoup them. If you can't recoup your costs, plus something for your time, then you are engaging in a hobby. Nothing wrong with that, but if you want knife making, (or anything else) to be more than a hobby it has to make you money, not cost you money.
 
I use a basic cost per inch of blade length plus materials/consumables to get a baseline. Adding extras such as hamon, stag, bling etc. comes after that. And as I stated before, honest research where you stand will be your final adjustment. I dont necessarily rely on an hourly labor rate.

Brett
 
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