Spyderco moving to MAP pricing!

stabman said:
As a history major, I see a LOOOOOONG line of people going back thousands of years (and likely into prehistory) who've been moaning about the world changing/ending/"Back in my day..."

Yet we're all here, living longer, healthier lives, with the leisure time to argue with strangers about high-priced knives, using magickal electronic devices that allow us to transmit our thoughts around the globe in ways that would give mystics of centuries past a raging boner of pure delight and amazement.

So relax people, it'll all be fine...although I am getting tired of waiting for my jetpack...and where's our moon-base?
They promised us a moon-base!!!
Click to expand...


And there has been massive changes over the past 10,000 years, massive.

The only thing we can count on in the end is that things will change.
 
Ankerson said:
And there has been massive changes over the past 10,000 years, massive.

The only thing we can count on in the end is that things will change.
Click to expand...

For the better. ;)
There weren't any Spyderco knives ten thousand years ago. :eek:
Corn was really, really small.
Electricity was only found in lightning, and wasn't good for your health.

I would have been really bored back then...except that I would have died in childhood from all those horrible illnesses I had that modern science was able to get rid of.
 
stabman said:
For the better. ;)
There weren't any Spyderco knives ten thousand years ago. :eek:
Corn was really, really small.
Electricity was only found in lightning, and wasn't good for your health.

I would have been really bored back then...except that I would have died in childhood from all those horrible illnesses I had that modern science was able to get rid of.
Click to expand...

The problem is that things usually tend to get much worse before they get better as history has shown us.

Peaks and valleys.
 
I think I get it, MAP is one solution that helps keep manufacturers and small retailers from being bullied by the large retailers... but make no mistake, consumers DO pay the price. But we aren't the only ones - it also prevents small honest retailers from competing with each other on price, and using volume to fuel growth. It basically helps defend the status quo. Small retailers stay small, large retailers stay large.

Think about it this way, if I own a small business, let's say if I charge market price I can sell 50 units a week at 50% markup, of which 20% is overhead and 30% is gross profit. I then buy 50 units per week from the manufacturer to replace the 50 I sell every week, pay my overhead, then as the business owner keep the 30% gross profit so the business nets no profit. I can make a comfortable living that way, sure.
Or, if I compete on price, I can sell 100 units a week at a 45% markup, which is, say 25% overhead and 20% gross profit per unit. Yes, my profit per unit was less, but I sold twice as many units! Of course, my overhead per unit went up because I had to hire an employee! But if I then re-invest some of the profit in growth - keep say 15% and re-invest 5% in the business. I as the business owner kept the same amount of dollars... 30% of 50 = 15% of 100... but the difference is I ended up with 5% net profit to re-invest by buying more units. So eventually my capacity is greater... and now more customers know about me because I offer such great prices... so eventually I get up to 150 units a week at 45% markup........ And I hire more people, I rent a larger builing and warehouse, I contribute more to my local economy, and I do it without losing money.
Oh wait, I can't do that because of the damn MAP. So I'm stuck with my 50 units per week and I can't leverage volume to grow my business. Instead, I take out a loan and use debt to grow my business.

Oh, I get it now.
 
Last edited:
danthaman1980 said:
I think I get it, MAP is one solution that helps keep manufacturers and small retailers from being bullied by the large retailers... but make no mistake, consumers DO pay the price. But we aren't the only ones - it also prevents small honest retailers from competing with each other on price, and using volume to fuel growth. It basically helps defend the status quo. Small retailers stay small, large retailers stay large.

Think about it this way, if I own a small business, let's say if I charge market price I can sell 50 units a week at 50% markup, of which 20% is overhead and 30% is gross profit. I then buy 50 units per week from the manufacturer to replace the 50 I sell every week, pay my overhead, then as the business owner keep the 30% gross profit so the business nets no profit. I can make a comfortable living that way, sure.
Or, if I compete on price, I can sell 100 units a week at a 45% markup, which is, say 25% overhead and 20% gross profit per unit. Yes, my profit per unit was less, but I sold twice as many units! Of course, my overhead per unit went up because I had to hire an employee! But if I then re-invest some of the profit in growth - keep say 15% and re-invest 5% in the business. I as the business owner kept the same amount of dollars... 30% of 50 = 15% of 100... but the difference is I ended up with 5% net profit to re-invest by buying more units. So eventually my capacity is greater... and now more customers know about me because I offer such great prices... so eventually I get up to 150 units a week at 45% markup........ And I hire more people, I rent a larger builing and warehouse, I contribute more to my local economy, and I do it without losing money.
Oh wait, I can't do that because of the damn MAP. So I'm stuck with my 50 units per week and I can't leverage volume to grow my business. Instead, I take out a loan and use debt to grow my business.

Oh, I get it now.
Click to expand...

Spot on.
 
If a knife company goes out of its way to protect an unnecessary dealer markup on the backs of its consumers, then I can't say I like that policy.

And punishing Amazon by whipping small dealers seems like it's counterintuitive. If Amazon wants to undercut its competitors, it will find a way to do so. So in the end the MAP pricing policy only really hurts the small dealers and consumers while defending big knife specific dealers who already have a broad customer base. If I was a small dealer I'd drop any brand that goes out of its way to prevent me from growing my own business how I see fit. Especially if their policies favor my true competition.
 
While I do appreciate your interest and opinions on the subject, I don't agree with your logic. I'm sure that you will agree that we went through the mentioned scenarios in our discussions. I guess we'll have to wait and see what happens.

sal
 
One thing I'm sure of is that you considered every angle on this decision, Sal. And frankly, your implementation of MAP pricing is a whole lot easier to swallow than those of your competitors. As a fan of yours and of Spyderco Knives, I wish you continued success.
 
Last edited:
danthaman1980 said:
I think I get it, MAP is one solution that helps keep manufacturers and small retailers from being bullied by the large retailers... but make no mistake, consumers DO pay the price. But we aren't the only ones - it also prevents small honest retailers from competing with each other on price, and using volume to fuel growth. It basically helps defend the status quo. Small retailers stay small, large retailers stay large.

Think about it this way, if I own a small business, let's say if I charge market price I can sell 50 units a week at 50% markup, of which 20% is overhead and 30% is gross profit. I then buy 50 units per week from the manufacturer to replace the 50 I sell every week, pay my overhead, then as the business owner keep the 30% gross profit so the business nets no profit. I can make a comfortable living that way, sure.
Or, if I compete on price, I can sell 100 units a week at a 45% markup, which is, say 25% overhead and 20% gross profit per unit. Yes, my profit per unit was less, but I sold twice as many units! Of course, my overhead per unit went up because I had to hire an employee! But if I then re-invest some of the profit in growth - keep say 15% and re-invest 5% in the business. I as the business owner kept the same amount of dollars... 30% of 50 = 15% of 100... but the difference is I ended up with 5% net profit to re-invest by buying more units. So eventually my capacity is greater... and now more customers know about me because I offer such great prices... so eventually I get up to 150 units a week at 45% markup........ And I hire more people, I rent a larger builing and warehouse, I contribute more to my local economy, and I do it without losing money.
Oh wait, I can't do that because of the damn MAP. So I'm stuck with my 50 units per week and I can't leverage volume to grow my business. Instead, I take out a loan and use debt to grow my business.

Oh, I get it now.
Click to expand...

He does get it. Nice discussion Dantaman 1980.
The only positive about this change in Spyderco policy is that map doesn't t result in an immediate large price increase for customers as other manufacturers have had. And after reading the post from Spyderco for this month, I believe a lot of thought was given to the customer s welfare as well as that of the retailers. Keep taking care of us knife enthusiasts, Sal, with high value knives. Much appreciated.
 
Sal, I'm sure you won't go into too many specifics and trust, even before you stated such, that you and your people put a lot of thought into this decision. I see the validity in the decision and understand the opposition as well.

There are two things I would like to know. They kind of work together, but are separate questions.
-Do you envision more brick and mortar speciality stores or more established stores like Dicks, Gander Mountain etc. selling more Spydercos? If so, what percentage of your product line? You have a huge product line, I don't ever see a Gander Mountain carrying more than 10 Spyderco's. Now, I would love a B&M like GP in Indianapolis selling @ 40%! I've only been there a few times, but I was in heaven.
-Do you see this as protecting the KW's, CS's, GP's, KC's, BHQ's of the world? My perception (I trust you looked at it with numbers) is that they carry and sell more of the higher end Spyderco's and can and do complete with Amazon and Walmart in those areas.

I see the long term merits of this, but get the sense that Spyderco has mulled this over for a while and doesn't just want to prevent future problems, but wants to change some things right now. (I saw that Jim Howe is going to get back in the game!)
 
I operated a small business from 1970 until 2001. During that time as a buyer I ran into several attempts by manufacturers to keep the playing field even. In almost every case a larger retailer would ignore the policy and sell items at a discount. Once the manufacture realized they stood to loose on volume they would relent. My policy was if you insist on dictating my sale price then I will only stock your items on consignment. Once I bought something and paid my bill within 10 days then I owned it and therefore I could give it away if I felt like it. Creativity in sales is not only good it's necessary. The end user will find choices.
 
wazu013 said:
I operated a small business from 1970 until 2001. During that time as a buyer I ran into several attempts by manufacturers to keep the playing field even. In almost every case a larger retailer would ignore the policy and sell items at a discount. Once the manufacture realized they stood to loose on volume they would relent. My policy was if you insist on dictating my sale price then I will only stock your items on consignment. Once I bought something and paid my bill within 10 days then I owned it and therefore I could give it away if I felt like it. Creativity in sales is not only good it's necessary. The end user will find choices.
Click to expand...


Marketing and customer service is very important on the retail end of things, trying to get a loyal customer base can be challenging especially these days for the B&M stores.

Competing with the Monsters that are Walmart and Amazon can be very difficult to impossible for the smaller mom and pop stores so they have to find a way to offer things that the monsters don't offer.

They can bury the smaller retailers if they choose to in smaller areas until the smaller retailers go under because they have the revenue and shear volume and buying power to do it.

Walmart can operate in the red in the smaller areas as long as they need to until the smaller ones go under, the smaller retailers can't outspend Walmart. ;)
 
Last edited:
Hi Danthaman,

I think you left out a part of the equation. You purchase 50 widgets to sell and find out that you can't sell any at any percentage of profit because ABC company is advertising the widget for less than you (or they) can purchase it for.

sal
 
Kinda like the large company that I used to work for. :)

The Mom and Pops would buy stuff from us when it was on sale because it was cheaper for them to buy it from us than buying from the manufacture and or the distributor.

They would just let me know when they needed the items so I could make sure we had enough for them.

We always did our best to help out the Mom and Pop stores and support the community as much as we could. :thumbup:
 
Last edited:
nccole said:
Sal, I'm sure you won't go into too many specifics and trust, even before you stated such, that you and your people put a lot of thought into this decision. I see the validity in the decision and understand the opposition as well.

There are two things I would like to know. They kind of work together, but are separate questions.

-Do you envision more brick and mortar specialty stores or more established stores like Dicks, Gander Mountain etc. selling more Spydercos? If so, what percentage of your product line? You have a huge product line, I don't ever see a Gander Mountain carrying more than 10 Spyderco's. Now, I would love a B&M like GP in Indianapolis selling @ 40%! I've only been there a few times, but I was in heaven.
Click to expand...

My crystal ball is usually pretty accurate, but in this case my crystal ball has cataracts. Large B&M stores will usually carry a small selection of Spyderco's. Understandably so, we have a large offering. We have a large offering because that's what you, our customer asks for. But it's difficult for large B&M's to hold inventory for a long time, so they cherry pick.

It is difficult for any smaller B&M store to stock all because their available traffic is small. Internet dealers have greater traffic and can move the volume necessary to stock all models, or at least most models and there are distributors available that will quickly ship what they need. That gives them the best odds of sales due to large schools of traffic. I would hope to see specialty B&M stores capable of carrying all, but it really requires some passion.

Also keep in mind that there are internet dealers that are also passionate and will quickly provide information if needed. We've been dealing with some of our customers for decades that have both the passion and the history for our brand. Jeff is such an example although there are many others. We also have B&M mom&pops Like Country Knives that carry all and have the passion, knowledge and history, but they have to charge more. They have also extended the time and effort to establish a customer base that appreciates their information and can also handle the models. The internet has changed the business game in; availability, growth and complexity.

nccole said:
-Do you see this as protecting the KW's, CS's, GP's, KC's, BHQ's of the world? My perception (I trust you looked at it with numbers) is that they carry and sell more of the higher end Spyderco's and can and do complete with Amazon and Walmart in those areas.
Click to expand...

I don't know that it will protect them. Their greatest protection is their own abilities. I'm a capitalist and believe that competition is good, but by the same token, I would like to keep us and our customers out of the gutter. Sometimes competition can spiral down to depths of questionable ethics and morals, an area in which we choose not to play. We have our principles which we won't compromise for money.

nccole said:
I see the long term merits of this, but get the sense that Spyderco has mulled this over for a while and doesn't want to prevent future problems, but wants to change some things right now. (I saw that Jim Howe is going to get back in the game!)
Click to expand...

As I'm mentioned before, Spyderco works for the End Line User, as does our entire business chain. In the business world, sometimes the love of money exceeds the love of fairness, honesty, integrity and the partnership that exists between producer and customer.

sal
 
wazu013 said:
I operated a small business from 1970 until 2001. During that time as a buyer I ran into several attempts by manufacturers to keep the playing field even. In almost every case a larger retailer would ignore the policy and sell items at a discount. Once the manufacture realized they stood to loose on volume they would relent. My policy was if you insist on dictating my sale price then I will only stock your items on consignment. Once I bought something and paid my bill within 10 days then I owned it and therefore I could give it away if I felt like it. Creativity in sales is not only good it's necessary. The end user will find choices.
Click to expand...

Hi Wazu,

We're trying to control advertising, not prices. (Price fixing is illegal, as I understand) Also, one must determine where one will draw their lines. We have more than once had to lose a volume customer trying to force us to be unfair (to them or us).

sal
 
I agree that the only constant is change itself. However MAP pricing model is an attempt to fight and hold back the change instead of going along with it.

In this day and age of internet and ever more technology being invented that interrupt and upset traditional business models, such as B&M stores, MAP is trying to preserve B&M store's "competitiveness" by upholding a price where everyone can make money. However, logically this will not work, not for long as it's going against the tide of change.

Walmart killed traditional mom and pap stores and now Amazon is killing Walmart. Uber is killing the taxi business, AirB&B is doing the same thing to hotel chains. The small knife stores and shops will cease to exist if they can't compete, and they won't be able to compete with large retailers with economy of scale.

MAP pricing is a desperate attempt from manufacturers to help the smaller dealers, all this will do is prolong the agony of their money loosing streak, their demise is inevitable.

Ankerson said:
And there has been massive changes over the past 10,000 years, massive.

The only thing we can count on in the end is that things will change.
Click to expand...
 
You must log in or register to reply here.
Back
Top