Silly knife pricing

Red Devil

Red Devil

Joined
Dec 30, 2002
Messages
63
Recently I saw an Emerson Mini Commander in BTS selling for $179.00 in Bellevue, WA in a franchised mall knife store. I don't know if they can match prices or have the ability to come down in price.

I just saw the same knife at East County' web site for $109.00.

Does anyone else find the differences from store to store or web site to web site, annoying. I spend an hour or two just searching to make sure there isn't a better price somewhere.

Why hasn't some hardcore forumite become an online knife dealer, and start selling knives at cost plus, say $10.00 and shipping.

For one knife to range from $109 to $179.00 (higher than Emerson's own price)is just stupid.:mad: :mad: :mad: :mad:
 
Of course the dealer price + $10.00 would be a Blade Forum only thing, the prices for non forum types could be higher if the dealer so desired.
 
Do you think Spark would verify the names of BF members to a competing vendor? I certainly don't. Most members want to remain anonymous. It is an interesting idea though.
Why not buy from a trusted vendor instead of shopping around for the absolute lowest price? It seems that the lowest price vendors usually have the worst service. It cost money to run your business sucessfully.
 
it's very simple.... buy from the guy with the cheapest price, but do beware, you might be running into trouble with customer service.
Check on the exchange board occasionally, but always with caution. Also, you can never go wrong with buying from 1sks.com which supports this forum, but if you don't decide to go that route, it helps to spend a few minutes in the "good, bad and ugly" board right here.

Edited cause I can't spell worth a damn when I type one handed. :p
 
Well, thats capitalism for you. Think about it, they would not be charging $179 for that knife unless they were selling at that price.

I have also found that you are better off to find a few trustworthy internet dealers (1sks is good) and buy from them, rather then spend hours huntig for the absolute lowest price. By buying soley because of price, at best you will save a few bucks and at worst you will get burned by a bargain basement seller.
 
If someone can find a way a wholesale knives out to the general public, they would have done it already. Let's see, I spend 60 or 70 hours a week answering email and phone calls and sell 3 knives a day. Gee, $30 :confused:

But, I could charge $20 for shipping and another $10 for handling (you know putting it in a mailbox). :)

Of course, you would get very little if any customer service if you had a problem, real or imagined.

To cut internet service provider fees, there would be no pictures. After all, we won't be paying for bandwidth fees. 1SKS and other real vendors can do that for me, all I need is a model number a price.

I know this sounds a little sarcastic but, even the kitchen table dealers that were going to make a fortune and show the others how it is done have all gone by the wayside. People don't work the a$$ off for free for people they don't really know in a sales arena like this.

As for your retail price experience, do you have any idea how much it costs to have a store front? Unlike Sears and Penny's who may sell 2 or 3 pairs of jeans or shirts to one person, how many of their customers buy multiple knives? Now, take a look at store traffic. How many people come through the door? What percentage of this store traffic will buy anything?
 
I realize the cost some of these stores face.
There is a Herder's Cutlery in my local mall. They sell a variety of knives, but all for full retail only. No discount, no bargining. I've been to two of thier stores in other locations, same thing. Now, I rarely see any foot traffic in there. I'll stop in here and there to look at the pretty knives. :) But twice now, in the last 12 months, they've had a 40% everything sale. Needless to say, stuff was flying out of the store. At 40% retail, the prices were about the same that I could buy much of it for online, sometimes it was still a bit more depending on the knife/brand.
I'm sure I'm not alone when I say that I'd buy from them if they met in the middle somewhere on pricing. I'd rather buy stuff local, where I can see it, play with it, hold it, feel it, and see it very well before spending the money on it. But when you're talking about $60-80 per knife difference, sometimes more, I'll go online every time. Even my local Army & Navy store, which is on the same road as the local mall, sells some knives. The really sad thing is that with some brands (Benchmade for one since that's usually what I buy) they not only have a better selection than the cutlery store, but they also sell them at a 10-20% discount. Some of the limiteds that sit there long enough, or other ones that they're trying to get rid of, will be cheaper than I can find them online anywhere. The only problem there is that they usually have just one of each available. What's on display is what they have. When it sells, they order one in to replace it. So you get the display model each time. That's not always a bad thing, but they sometimes get kinda beat up over time.
 
I used to work in a knife store, more than a few years back, and I can definitely tell you without a doubt that running a store with half-decent stuff in stock is a large investment.

When you factor in what you have to have on-hand in the store, all the display cases, the different ways to take money, the staff to manage it all, as well as the rent on the actual space itself, it's pretty easy to see why there has to be a markup on the product that is sold. This is true with any retail operation.

The real truth is, we didn't get a lot of foot traffic. Period. We were one of two knife stores in a city of roughly one million people, with an active millitary base as well! The millitary men were a very large part of our buyers, as it seemed that they had more of an appreciation for fine knives, than 99% of the hunters in the area. I won't even get into how collectors were, because they were a rare occurance as well.

There's one major difference between buying online, and buying from a store you walk into; direct customer service. I don't think you'll get a faster response to your questions anywhere. We stood behind everything we sold, and if there was ever a problem, it was handled quickly. But again, you pay for that kind of service.

People would come in and try to haggle prices, and for the most part, it just pissed the owner off to no end. He already had a much smaller mark-up margin than anyone else in town, and people still tried to whittle him down. It was kind of sad at times. I will say one thing though; if you were a regular, good deals were made all the time. He was more than happy to deal with people that came in on a regular basis, bought things, and didn't give him the run-around. Basically, the first 2-3 knives you bought were the 'initiation'. A way for him to tell that you weren't just a one-shot deal. After that, I was amazed at the kinds of deals people got. But, all in all, I thought he was very fair overall.

I definitely think the online marketplace has had a devestating effect on the brick-and-mortar aspect of the knife business, but that's evolution. We live in a highly connected world now, and if you're not online, you're only reaching maybe 20% of your market. Don't forget, many online retailers don't have to stock a lot of anything, if they make good drop-ship arrangements, and keep their margins in line. They still have to provide decent customer service, which is something that certainly hasn't changed from the walk-in storefront.

My personal opinion; buy from who you like. If they treat you right, and you get what you want, support them! Always shopping for the best price will eventually get you just that...the best price. I wonder how many good shops would still be here to service our personal needs, if more people thought about that...
 
Ive noticed aslot of differences bewteen some retail places, and websites, ect. I just shop around and take notes, no use paying more money than you have to!!!
 
....most of us want to handle knives before we lay out cash for them. Having a local dealer is really the only way to do that. On average, it takes a 32% profit margin just to cover costs in a retail operation. All that nice lighting, display cases, heat, air conditioning, trained employees, roof to keep the rain off us and the knives, and tens of thousands of dollars in stock, costs mucho dinero.

If we want to buy exclusivly on-line, and enjoy the consequently low prices, then we must also be willing to put up with shipping problems, buying knives sight-unseen, the hassles of returning items that looked good but just-didn't-fit....

Either support on-line dealers, and deal with those challenges, or support walk-in dealers and deal with the higher prices. Please don't do the lowest combination of the two and use walk-in dealers to subsidize your on-line shopping. Pretty soon they will smarten up and charge us for each knife we want them to take out of the case.

BTW my favourite interaction, when faced with a haggling customer - usually of the "If I buy 2 of these, what can you do for me" was to ask them what they did for a living. "A dentist...that's interesting! So, if you fill 2 cavities for me, will each one be 10% cheaper?" Never worked.

Thom
 
I know a local guy that has a store with some very nice knives, production and custom. He prices the knives "higher" than MSRP(usually about $10-15 higher) and then he will "DEAL" with a customer and come of the price some! I don't agree at all with this practice and customers that are unaware, get taken advantage of....it's just not right.
But like an earlier post stated, rent is high.
Thanks
Webmaster-knifeworks.com
 
Thom,

Out of curiosity, where are you getting your 32% profit margin figure?


Red Devil,

Without different retailers offering different prices and services, there would be no competition and life would be boring. Don't try to compare apples and oranges.

Be a good consumer, and buy it from the source that makes you the happiest.

Just my $.02 :)

-- Rob
 
Originally posted by baraqyal
Thom,

Out of curiosity, where are you getting your 32% profit margin figure?
Click to expand...

This is pretty standard. You can do the math yourself and figure, like he said, rent, heat, light, employees, etc. These costs can be exorbitant, and for a dealer that sells only knives, he would have to sell a ton of knives each month just to pay the bills. Supercenters like Wal-Mart can sell for less because they buy in bulk which lowers their cost, plus they sell so much stuff for 30 cents to 40 cents over cost, that they can still sell low price items and make money. I worked at Wal-Mart for 5 years and was a zone manager for a while, so I know a little bit about retail. Wal-Mart actually sells some items on a daily basis that they take a small loss on. This is so they will have the best price, which keeps customers there to buy other items that make them a little money. You figure that a brick and mortar knife dealer that doesn't sell on the internet will have a very limited market exposure, which means he can't buy knives in bulk and get them at a cheaper price. This in turn means he cannot afford to sell them very cheap either, since he only sells a limited number of knives each month. Picture two stores with the same bills each month, and they both sell only one type of product. One store has the customer base to sell 5000 of this product each month, but the other one can only sell 1000 each month. Obviously the profit margin must be much more for the store that can only sell 1000, while the one that sells 5000 can lower his prices even more, and still stay in business. This ultimately makes the other store go out of business because he cannot compete. Unfortunately this will probably happen to the brick and mortar knife stores that can only sell knives at or above MSRP.

Mike
 
32% is the accepted industry profit margin figure for a bricks and mortar retail operation that has between two and five inventory turns per year. Inventory turns is defined as the number of times your total inventory is cycled through on a yearly basis. For example, if you had $250,000 in inventory in your store, and you had $500,000 in annual sales, then you would have 2 turn per year.

Bricks and mortar retailing is a rough and tumble business with no quarter given , make no mistakes about it. Between the margin share erosion of big box retailers and online retailers, a bricks and mortar store has to be extremely savvy with its inventory management, marketing, and cash flow just to survive. When you factor in that knives are perceived as a luxury item, and that the majority of the buying public has little or no appreciation for the finer knives that we get so excited about, then you can see how much more challenging the market is for the knife store owner. If you have a viable bricks and mortar retailer in your particular area that is willing to work with you and develop a longterm relationship with you as a good and steady customer, then by all means do your best to support them. They need your business more than you might think.
 
Well, I am not arguing that 32% is high. Coming from a background in specialty retail, 32% sounds pretty low. I don't think "brick and mortar" industry standards apply to small specialty retail in the same way that it applies to Walmart.

First, the cost of operations in an upscale mall environment is significantly higher than operating a rural box store. Rent, display, lighting, common area costs, etc are significantly higher. Furthermore, malls often sign highly advantageous leases with large chain operations that end up being supplemented by smaller merchants.

Second, the cost of training and retaining employees is higher.

Third, I would be willing to bet that knife stores have some inventory that turns far less than twice a year. Especially stores that carry customs.

Forth, large retail operations purchase in bulk, and are often able to significantly reduce product cost.

Finally, small retail does not receive the same government benefits as many large box stores. Costco and Walmart especially are good at negotiating property tax breaks, re-zoning, road and utility extensions, etc from the government in exchange for their sales tax revenue.

IIRC, MSRP for knives is at keystone, or double the wholesale price. Just because Walmart is able to operate efficiently at 32% markup certainly does not mean that a small specialty store that sells luxury items can as well.

Without a valuable lease or some other advantage, I would be very suprised if any small specialty retailer could survive in any normal mall environment at 32% margin.

Just my $0.02

-- Rob
 
I don't mind paying more than rock-bottom internet prices when buying from a B&M store. But, paying MSR price is just too much for me. Something in between MSRP and low internet prices is good for me, when buying from a store. That's fair, I think.
 
Just a rant of my I guess. Being from Canada I have to buy 4/5 knives over the internet or wait until I visit Washington. I had hoped to buy something when I was in Bellevue, so the $179.00 price really pissed me off.

I to beleive in buying from a quality dealer which is why I have and will continue to buy from 1SKS and www.bestknives, it just sucks that a $100.00 US knive with shipping costs me $180.00 CAN + the $30.00 more in duty etc... that Canada Customs dings me for.

Nobody said out hobby was a cheap one.
 
"Why hasn't some hardcore forumite become an online knife dealer, and start selling knives at cost plus, say $10.00 and shipping"

Well, let's see how this works out.

a $100 (dealer cost) knife at cost plus $10.

Inbound freight to get the knife to inventory - $.10
Inventory holding cost based on 4 annual turns - $1.25
Credit card fee to sell the knife. - $2.75
Cost of employee to pick and pack the knife - $1.30
Packing materials - $.60

That's $6.10 leaving $3.90 between the cost of the knife plus transaction costs and the selling price of the knife. That $3.90 and the $3.90 from every other transaction has to be enough to pay for company expenses - things like payroll, advertising, insurance etc etc. Oh, did I mention returns, credit card fraud, an average of one telephone call for every other order? How about all the costs related to running a web site like hosting, site maintenance, search engine work? Well then there's always equipment maintenance and replacement, little things like paper and toner for the printers? I could go on and on.

Oh, and what about $15 knives? Would you still be able to get cost plus $10? Not on this internet. The $100 knife is certainly an easier issue than the $15 knife.

By the way, I'll admit that my e-commerce business does a lot more volume than my retail store but, contrary to what some may think, it costs me about $5000 more per month to operate than my retail store does. The internet is an efficient way to distribute products. No doubt about that. But it sure isn't free of costs.

Sorry for the minor rant, I couldn't resist. Take my experienced advice and don't volunteer to be the guy to sell knives on the internet for cost plus $10 plus shipping.
 
There is a big difference between a 32% markup and a 32% profit margin. On $1000 a 32% markup would be $1320, while a 32% profit margin would give you a price of approximately $1470. Just about any store should be able to make money with a 32% profit margin.
 
.... i don't know... many knifedealers (brick and mortar) don't necessarily offer knowledge or anything else. I walked into an Erehwon in Chicago, the counter lady knew didly as she showed a Microtech LCC to a customer... I sold the knife for her! Told the customer I had a Socom, blah blah blah, he bought the Microtech right then and there. THEN, i asked him where he was going, and recommended a Marine TuffCloth... now this sales clerk surely should've been trained to sell 'add-ons' regardless of the product! I think there is nothing wrong with wanting to shop for a better price online. Yes, dealers have expenses.. and so do clients. People shop for better prices on cars, diamonds, you can tell them 'service' all ;you want, but they'll still go elsewhere... sometimes. I wish there was a decent dealer in Chicago, I WOULD patronize them. Corrado Cutlery used to sell just a touch below manufacturers' list... just not competitive.
 
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