The Blade Show-A LOT of Overpriced Customs

[raker]

Hello John,
You got me back in on this one and I think I may have an answer to part of it. I do know of several full timers that have gone back to working for someone else.
Of all the great knife makers that have been mentioned, I don't think any of them started out to make knives for collectors. If they were like me, they had no idea that they could even produce a good skinning knife till they tried it or had a friend that was a knifemaker. Granted, today things have changed a lot as it seems every one wants to make a knife that is collectable. One reason is that they can do it and another is the price. Usually more for the amount of time invested in each piece. Kind of like the starving artist paintings that are sold for $30.00 each. I am definitely glad that there are people that can produce brilliant designs using intricate methods to produce some of the finest looking knives that have ever been produced. They are a source of pride of ownership and hopefully there will be others that share the desire to own such pieces. This will provide a continuing market for such pieces. I can understand most of the prices that makers have put on their knives. They will often relate to others in the same catagory of knives and add or subtract the extras and figure in the amount of difficulty that the average knife of that style will bring. Personally, I would have a problem charging someone $400.00 to $500.00 for a couple of hours work. Lawyers don't seem to mind but that is another can of worms that needs left unopened. That is why to me that there are some that will charge more for the same (looks like it anyway) knife than others. They believe that it is worth it and hope that some one else will believe that also. I try to be realistic in my pricing because I want a lot of people to own one of mine and use it. That is one of my goals in knife making. I would like to again thank all the contributors to this thread for a very good read and a slew of ideas.
Ray Kirk

 

[RWS]

Maybe the economy has spurred an increase in folks who were laid off, pissed off or whatever and decided to try their hand in the knife business. I am just not sure.

Or, maybe in a lot of situations, the wife works her tail off at work while her retired lazy-assed husband sits at home eating bon bons while watching Oprah. Then, all of a sudden the guy realizes how low his opportunity costs are and begins to think how "easy" it must be to make knives and decides to enter the industry. Hell, he has nothing to lose.....

 

[J A Martin]

Or... maybe the guy just loves knives and has loved them all his life and has worked hard to learn enough to make a decent one and will charge what he thinks the market will bring. Its a good thing all the full time makers don't have other jobs or they could ask any price they want and if it didn't sell they could afford to keep it or give it to charity for the write off. I'm praying the new faces are in it for the love of the craft and not to count coup with dollars. I'm married with 2 kids and I'm not seeing a return on my investment in them. Will trade for a Russian bride? I think anyone who buys a knife should expect some value and the points here are very valid. From the maker side if you do it just for money you will be disappointed.

 

[Keith Montgomery]

If they had other jobs then they wouldn't be full time makers, they would be part time makers. Many of the part time makers that I know actually charge less for their knives, because they don't need the money to live.

I am a collector of custom knives and I only have a few that I use. So for me getting good value out of a knife has nothing to do with its utilitarian virtues. Good value to me is as much the enjoyment and pride I have in owninership as it is that I got a great knife for the right price.
Knives will probably never be an investment to me. I have learned enough from people like Les, Steven, Roger, Joss, Peter, Gus, Megalobyte, Anthony, Murray and others that I now am confident in my ability to choose knives that will probably hold their value. Along with what I have learned from the afore mentioned, I have also done a lot of research. To me, the research is a very enjoyable part of the hobby.

What I am trying to say is that I think I have learned what it takes to be very good at picking knives that will offer great value to me. If people want to get to the stage that I am at, or beyond, then everything is there for them to be able to do so. There is nothing I have learned that can't be learned by anyone with a modicum of intelligence. That way when you go to shows, just like Anthony did, you will be able to recognize when the knives on a makers/dealers/purveyors tables do not offer good value.

As has been stated before, makers can ask what they want for knives. It is up to the collectors to learn enough to pass the poor values by. When a maker has a bunch of knives left on his/her table at the end of a show they will either learn from this and make the needed adjustments or they will soon get discouraged and stop making knives.

 

[Kevin Wilkins]

Good post Keith!

Most collectors are pretty much in the same boat as you are: buying knives they like with an eye to value in the hopes of not loosing their shirt on any one piece. You've spent a lot of time, energy and money learning knives and the market, but this has been done as a hobbiest not as a businessman. Taking a hobby seriously makes you a "serious hobbiest" not a knife investor.

Anyone buying and selling knives primarily to make a profit is in the knife business and will have to approach it like work and not like a hobby. Buying knives you can make money on doesn't mean you have to like them. It means you have to know what you're buying, when to buy and when to sell. The game is the same for any collectable, whether it's knives or rare books or whatever.

Dealer buy back and investment gaurantees are just so much sales hype as far as I'm concerned. They're fine as long as the dealer stays around and doesn't just up and change their policy. It's like the electronics stores who offer "find this TV anywhere else for less, and we'll refund you TWICE the difference." In the end, knife dealers want customers to spend money buying knives. (As a knifemaker, I think that's a great idea!)

 

[Steven Roos]

I have a friend who commissioned the King Tut Dagger. He likes Egyptian stuff, and somehow convinced Buster Warenski to make the thing for him. He had Kruggerands, and this got turned into the knife. He had this thing made because it had never been done before, and he felt compelled to do it. If he did not realize a substantial profit on it, that was not really the point.

I predict that this piece would bring somewhere in the realm of $200,000+/-, if sold at auction. This is an educated guess, but just a guess.

Believe it or not, but I was over at Herman Schneider's house last week, and the Tut Dagger came up in conversation. He said he actually recieved a request from someone (not Phil Lobred) to make a reproduction of the Tut Dagger. Herman even researched it and was trying to make arrangments to handle the original, but the original buyer backed out. Phil Lobred heard about the project and wanted Herman to go ahead and make the knife, but after all the fighting with the Egyptian museum trying to see the original up close, Herman was tired of the project. Herman suggested to Phil that Buster do it, and sure enough, he did. Take it or leave it, but I thought that was an interesting bit of info about what is probably the finest custom knife ever made.

Story aside, I've seen estimates of as much as $150,000 as the original selling price for the Tut Dagger. I even think something was noted in the Darom book, but I can't recall what it said. Anyway, I'd bet the Tut Dagger would fetch more than $200,000, not that Phil Lobred would ever sell it.

Also, beat me to the correction on the Onion/Bogi/AKI bit. Glad to see someone else out there noticed that.

 

[Les Robertson]

Hi Kevin,

You wrote:

"Dealer buy back and investment gaurantees are just so much sales hype as far as I'm concerned"

Curious statement. A maker who works with a dealer who has this policy (and by the way that policy has been in effect for 11 years...so much for "fly by night" type business). This policy lets the dealers client know that no matter what they stand behind the maker and their work. To the point that they will take any knife they sell made by that maker back in trade and give them what they paid for it in trade. What electronics firm will let you do that?

Do you have such a guarantee? If not not, why not? Don't you feel your work should hold its value over time?

The trade in policy is in no way, shape or form hype. If it was then every dealer in the world would offer that (which is what the electronics stores do).

The dealer who offers such a trade in policy understands the dynamics of the custom knife market. Collectors tastes change. A trade in policy allows collectors to change direction or move up to more expensive knives. In many cases these collectors want to buy more expensive knives from the same maker...say Kevin Wilkins. This "hype" policy allows you as the maker to sell more expensive knives and have your collectors move up to them without going broke each time they do it.

There is a down side to this, but only for the dealer. If the maker does not do their part to continue improving their position in the custom knife market. The demand will go down for that knife makers work and savy collectors will start to dump this makers work. The dealer selling this makers work is then put into a sensative situation. They have to extricate themselves from working with this maker. Sell their knives for retail so as not to annoy those clients who have preiously bought knives from this dealer. On top of that they then are liable to take back in trade that makers work in the future.

This is why it is extremly difficult for anyone to offer this guaranted for an extended period of time, say two years. Any one can do this for 6 months, but how many people in custom knives can look 2,3 or 4 years into the future?

Not only does the dealer offering an extended trade in policy have to understand the makers position in the current market. They have to be able to forcecast the makers potential and their ability to create demand in the primary market. As well they have to be able to forecast the makers substainability in the aftermarket. This is one case where the primary and secondary market have to work in sync.

As it costs 20 times as much to get a new customer as it does to keep a customer. A trade in policy that will bring in new customers and maintain current clients is hardly "hype". This is a sound marketing practice that puts the customer first.

WWG
Who after reading Roger P and Samhell's post is now reconsidering custom knives as an investment. :thumbup:

 

[Kohai999]

Believe it or not, but I was over at Herman Schneider's house last week, and the Tut Dagger came up in conversation. He said he actually recieved a request from someone (not Phil Lobred) to make a reproduction of the Tut Dagger. .....Herman suggested to Phil that Buster do it, and sure enough, he did. Take it or leave it, but I thought that was an interesting bit of info about what is probably the finest custom knife ever made.

Anyway, I'd bet the Tut Dagger would fetch more than $200,000, not that Phil Lobred would ever sell it.

Also, beat me to the correction on the Onion/Bogi/AKI bit. Glad to see someone else out there noticed that.

1. Let's just say that the way that Phil explains the way the knife came about is slightly different than Herman's account. The crux is the same, but the Devil is in the details. It is doubtful that Herman would have learned all the skills to reproduce the knife itself, and would have farmed out the enamel and repousse work.

2. I don't know about the "finest custom knife ever made". Phil commissioned it as a piece of art. It is made of solid gold, it will not cut for beans. It is a close reproduction of a very cool antique. I was able to sit with Phil and compare the work on the handle and sheath to a close up photograph of the Tut dagger that did not exist when Herman was considering the project. It is close, but not exact.

3. I certainly would not ask Phil what he paid for the knife, because it is none of my business, but at todays prices, that is roughly $20,000 in gold. I doubt that Phil paid Buster $130,000 to do the project, but maybe, $100,000. Maybe it will come up in conversation someday, if it does, and I get permission, I will share the information with you privately. I was simply throwing out a figure in the concept of an auction. It depends upon how many people want it, and for what price, doesn't it? Everything gets sold at some point.

4. Since you were at Hermans, let me ask you a question. How do you consider the QPR of his thumbprint dagger compared to Bob Papp's?

Best Regards,

STeven Garsson

 

[Kevin Wilkins]

Hi Kevin,

You wrote:

"Dealer buy back and investment gaurantees are just so much sales hype as far as I'm concerned"

Curious statement. A maker who works with a dealer who has this policy (and by the way that policy has been in effect for 11 years...so much for "fly by night" type business). This policy lets the dealers client know that no matter what they stand behind the maker and their work. To the point that they will take any knife they sell made by that maker back in trade and give them what they paid for it in trade. What electronics firm will let you do that?

Do you have such a guarantee? If not not, why not? Don't you feel your work should hold its value over time?

The trade in policy is in no way, shape or form hype. If it was then every dealer in the world would offer that (which is what the electronics stores do).

The dealer who offers such a trade in policy understands the dynamics of the custom knife market. Collectors tastes change. A trade in policy allows collectors to change direction or move up to more expensive knives. In many cases these collectors want to buy more expensive knives from the same maker...

What's curious about my statement? Looked pretty clear to me. BTW: I never suggested ANY dealer was fly by night, so whoever you were quoting there, it wasn't me.

I've been in the advertising and graphic design business for almost 30 years and that's one area I do know about. Buy back /trade up / price guarantee type offers are nothing new, they are sales tactics from the stone age - and they are ones that still pull customers which is why they are so commen in retail sales of consumer goods. Perhaps "hype" was a poor choice of words on my part, sales tactic is better.

These sales tactics aren't about goods holding their value over time. They try and give the buyer a sense of financial security about their purchase, which is only as real as the seller's ability to make good on their promise. Customers think, "Gee, that sound too good to be true." And it is. These sales tactics work on the principle that only a very small % of buyers ever make use of them. If everyone brought back their products and traded them in the seller would go bust or rapidly change their tactics.

I've used such tactics for clients in advertising and they work; I don't use tactics like that to sell my knives because after spending years BSing in advertising I use old fashioned high quality and honesty in my knife business. It works for me. I've found my customers are adult enough to decide for themselves if they want the knife and can afford it. I do have a "2 week money back is not satisfied" policy which allows the customer to return a knife for a refund if they are unhappy.

My customers seem mature enough to take responsibilty for their own decisions, their finances and their tastes so I don't need to hold their hands. Perhaps I have more "users" than "investors" but the vast majority of ALL customers seem happy with their purchases. And since I have a very high % of repeat customers with many owning more than 2 knives, I know I'm happy.

If a trade up / buy back policy is working for a knife dealer, more power to 'em. If their customers feel it's important in their decision to buy, then go for it. However for myself as a consumer, those tactics don't mean squat in my decision to buy and aren't a factor in choosing one dealer over another.

I also do not see such a sales tactic as any standard by which dealers should be measured, allthough obviously those using this tactic will try and proclaim it to gain advantage over their competition... which is of course one reason they use it in the first place! Personally, I look for honesty in a dealer. If I find that, I have no trouble "investing."

 

[Daniel]

Good post Keith!

Most collectors are pretty much in the same boat as you are: buying knives they like with an eye to value in the hopes of not loosing their shirt on any one piece. You've spent a lot of time, energy and money learning knives and the market, but this has been done as a hobbiest not as a businessman. Taking a hobby seriously makes you a "serious hobbiest" not a knife investor.

Anyone buying and selling knives primarily to make a profit is in the knife business and will have to approach it like work and not like a hobby. Buying knives you can make money on doesn't mean you have to like them. It means you have to know what you're buying, when to buy and when to sell. The game is the same for any collectable, whether it's knives or rare books or whatever.

Dealer buy back and investment gaurantees are just so much sales hype as far as I'm concerned. They're fine as long as the dealer stays around and doesn't just up and change their policy. It's like the electronics stores who offer "find this TV anywhere else for less, and we'll refund you TWICE the difference." In the end, knife dealers want customers to spend money buying knives. (As a knifemaker, I think that's a great idea!)

BTW: I never suggested ANY dealer was fly by night, so whoever you were quoting there, it wasn't me.

This is pretty close to "fly by night".

Good thread and it brings up great information!

 

[Steven Roos]

1. Let's just say that the way that Phil explains the way the knife came about is slightly different than Herman's account. The crux is the same, but the Devil is in the details. It is doubtful that Herman would have learned all the skills to reproduce the knife itself, and would have farmed out the enamel and repousse work.

2. I don't know about the "finest custom knife ever made". Phil commissioned it as a piece of art. It is made of solid gold, it will not cut for beans. It is a close reproduction of a very cool antique. I was able to sit with Phil and compare the work on the handle and sheath to a close up photograph of the Tut dagger that did not exist when Herman was considering the project. It is close, but not exact.

3. I certainly would not ask Phil what he paid for the knife, because it is none of my business, but at todays prices, that is roughly $20,000 in gold. I doubt that Phil paid Buster $130,000 to do the project, but maybe, $100,000. Maybe it will come up in conversation someday, if it does, and I get permission, I will share the information with you privately. I was simply throwing out a figure in the concept of an auction. It depends upon how many people want it, and for what price, doesn't it? Everything gets sold at some point.

4. Since you were at Hermans, let me ask you a question. How do you consider the QPR of his thumbprint dagger compared to Bob Papp's?

Best Regards,

STeven Garsson

I don't think Herman would have outsourced anything on the knife, and I think that is part of the reason he thought Buster should do it. I think he realized he wasn't the best person for the job.

Pardon my ignorance, but what is QPR? Anyway, I have not handled Bob Papp's version, but I do know that the Schneider fighter I have is the finest knife I own, no contest.

 

[Joss]

This is not fly by night. Fly by night means a dishonnest or structurally unprofitable or super risky business. Les Robertson is probably none of that.

Kevin is correct in pointing out that the guarantee is only as valuable as the capacity of the dealer to meet it. Les Robertson is not the US government, and his guarantee is that of a very small business with small cash flows, one whose financial situation is unknown to anyone here. Furthermore it is a business which is based on a single individual not facing any major health issue, etc.

All that to say that the guarantee can end up being worthless, and this is much more likely than it would be for a small publicly traded company (generally deemed "junk" status), itself less safe than that of a large publicly traded company, itself being much, much less than most governments (with the US at the top).

 

[raker]

Steven,
I think it is the Quality/Price/Ratio. If the quality is high and the price is low, it is a good buy. The opposite would be true where the quality is low and the price is high. At least that is my take on it.
Ray kirk

 

[Wulf]

Sorry, guys, but I just can't resist this opportunity to quote one of my favorite movies of all time, Tommy Boy



Tommy: Let's think about this for a sec, Ted, why would somebody put a guarantee on a box? Hmmm, very interesting.
Ted Nelson, Customer: Go on, I'm listening.
Tommy: Here's the way I see it, Ted. A guy puts a fancy guarantee on a box 'cause he wants you to feel all warm and toasty inside.
Ted Nelson, Customer: Yeah, makes a man feel good.
Tommy: 'Course it does. Why shouldn't it? Ya figure you put that little box under your pillow at night, the Guarantee Fairy might come by and leave a quarter, am I right, Ted?
Ted Nelson, Customer: What's your point?
Tommy: The point is, how do you know the fairy isn't a crazy glue sniffer? "Building model airplanes" says the little fairy, well, we're not buying it. He sneaks into your house once, that's all it takes. The next thing you know, there's money missing off the dresser and your daughter's knocked up, I've seen it a hundred times.
Ted Nelson, Customer: But why do they put a guarantee on the box?
Tommy: Because they know all they sold you was a guaranteed piece of shit. That's all it is, isn't it? Hey, if you want me to take a dump in a box and mark it guaranteed, I will. I got spare time. But for now, for your customer's sake, for your daughter's sake, ya might wanna think about buying a quality product from me.
Ted Nelson, Customer: [pause] Okay, I'll buy from you.
Tommy: Well, that's... What?

Les, please don't take this as a slight - just some much needed levity

 

[Steven Roos]

Steven,
I think it is the Quality/Price/Ratio. If the quality is high and the price is low, it is a good buy. The opposite would be true where the quality is low and the price is high. At least that is my take on it.
Ray kirk

Well, if that is what QPR is, then I'd say the QPR is high. The knife wasn't cheap, but the quality is off the charts, plus it was an award winner and a one of a kind variant of his well known design. I more for the knife than for my (used) truck, but it was worth it if you ask me.

 

[Kohai999]

Well, if that is what QPR is, then I'd say the QPR is high. The knife wasn't cheap, but the quality is off the charts, plus it was an award winner and a one of a kind variant of his well known design. I more for the knife than for my (used) truck, but it was worth it if you ask me.

Yes that is quality to price ratio.

I find/found Herman's work to be, as you observed, of the highest quality, but very expensive. In the case of like almost $3,800 at the Pasadena show, last year. I don't think that I could find anyone to pay me close to double that. I might get lucky at $5,000. He also had two knives for sale at the end of Saturday, when the show opened on Friday at noon.

Papp's costs maybe $300-$500, and can sell for close to double. I found the designs more evolutionary, and contemporary, as well as just "feeling" better, ie slimmer, and quicker.

Handle some of Bob Papp's work when you can, I would be interested in your feedback.

Best Regards,

STeven Garsson

 

[Les Robertson]

Hi Kevin,

Ok, I get it. Your guarantee on the value of your knives is two weeks. You expect your buyers to be full grown adults, mature enough to understand that they are buying something that is neither a collectible nor an investment. However, through little or no help by your, the could become one. Simply it is yet another commodity that can be purchased in the open market. Your clients seem to understand this and so far so good.

Hi Joss,

Yep, Les could get hit by a bus and then where would you be? As for guarantee's they are as good the paper they are written on. Take Enron or WorldCcom for instance, former Fortune 500 Compaines, giants in their repsecitive fields. How did those companies work out for their employees and those who invested in them?

Joss it is the small business's that offer the best guarantee. The ones where you actually get a human being on the phone, not a menu of options. Where one person is accountable and will actually solve your problem or handle your issue without bouncing around the company.

Kevin and Joss you are both right on several things.

1) Custom knives should only be bought for the pleasure of owning these knives. This works out well to have a ready made excuse when the knife doesn't hold it's value.

2) Custom knife buyers are at best "Serious Hobbyist". As such they should expect no return on their money at all. After all they are full grow adults mature enough to understand what they are purchasing. Then why should they purchase custom knives? (see #1).

3) Makers should offer no guarantee on their work, except for mechanical failures.

4) Dealers should not be held accountable for anything that they sell. After all the people purchasing these knives are full grown adults who should be mature enough to understand what they are purchasing.

5) It is not the maker or dealers responsibility in any way, shape or form to understand the market place and the makers position in it. After all you are meerly purchasing a shiny collectible and as such you should not expect anything out of this knife other than get a warm fuzzy feeling when you pick it up.

6) Why does this forum exist? I mean what is the point. I have been shown time and time again that collectors should expect little or no monetary return on their collectibe. Why has this thread run so long? So we can meerly pass on to each other which knives we like and what makers you should buy from? that hardly would get 15,000 views.

Fortunately 22 years ago I met a dealer named Paul Basch. He wasn't meerly selling a commodity. With the price of the knife you got 30 minutes of knife education that you couldn't get anywhere else. If you wanted to trade a knife back into him he was happy to take it back for something else.

He could do so because he understood. He understood the makers, the market and collectors. He did not believe that custom knives were just another commodity to pushed onto the public with the attitude that "Sorry you are a full grown adult mature enough to know what you are doing with your money."

He took time and joy in educating collectors. It wasn't about hype, it was about his love for what he did. Im sure a smart guy like Paul could have made more money doing something else, but it would have not given him the same satisfaction.

I can relate to that.

This thread has clearly shown me that knives are not investments. That there is a long list of why they are not. There is a long list of why those who make and sell them don't feel any reason why they should promote them as such or stand behind them past a few week "inspection" period.

It is thoughts and deeds such as these that will forever keep anyone from thinking that they are investments.

It would appear that the original post by Anthony is correct. Most of the custom knives at the Blade Show were overpriced pieces of steel. Most of these knives will be bought by "hobbyists" who not knowing any better will hand over the money to a maker who will smile and think to themselves "Thank God I got rid of that one". Whew!!

WWG,
Finally talked into taking a postion as a Financial Advisor.

 

[Steven Roos]

Being a one of a kind award winner I think some day I might be able to turn it over at a significant profit, but I bought it because I loved the knife and Herman is a good friend. Probably the only thing that would prompt me to sell the fighter would be if I got a hold of a Cobra knife.

 

[Joss]

Hi Joss,

Yep, Les could get hit by a bus and then where would you be? As for guarantee's they are as good the paper they are written on. Take Enron or WorldCcom for instance, former Fortune 500 Compaines, giants in their repsecitive fields. How did those companies work out for their employees and those who invested in them?

Joss it is the small business's that offer the best guarantee. The ones where you actually get a human being on the phone, not a menu of options. Where one person is accountable and will actually solve your problem or handle your issue without bouncing around the company.

WWG, there's no point in bringing fraud in this (which is what Enron and WorldCom were). No one is saying that Les is more likely (or less likely for that matter) to commit fraud.

The point is that the value of a guarantee depends on the structural strength of the guarantor. (BTW, this guarantee is the financial equivalent of a Put option: the right, but not the obligation, to sell the knife for its original price.)

Contrary to what you say, small businesses are less structurally solid than large ones. This is why they have to pay higher yield on their bonds and stock. There's amounts of empirical evidence to back this up. To give a specific: if Les is striken by lightning, the guarantee is worth nothing. The business evaporates overnight. If anyone at GE or Wal-Mart is hit by a bus, the company will not not evaporate. It might loose much value, but it will be limited.

 

[Kohai999]

Uniformly the ones I lost on were from those makers who got out of the business despite making excellent knives. I have a beautiful ivory-handled piece that is engraved by Buster Warenski from a maker who was the Best New Maker at one of the Dallas Guild shows. He left the business, and the knife is virtually worthless today, even though the engraving would probably cost $2000 on any other knife.

Being a one of a kind award winner I think some day I might be able to turn it over at a significant profit, but I bought it because I loved the knife and Herman is a good friend. Probably the only thing that would prompt me to sell the fighter would be if I got a hold of a Cobra knife.

Not that Herman has gotten out of the knife business, but he is hardly a name on everyone's tongue. Primary reason is lack of self promotion.

There was a guy that Danbo is friends with who has an Andrew's Bowie that got the Peck Award at Blade a few years back. He felt that this fact made the knife command a $500.00 premium over going aftermarket prices, and communicated as such. I e-mailed him back "thanks, but no thanks" and encouraged Danbo to have his friend not hit the crack pipe so hard. To the right person, $500 is pocket change, to the wrong person, it is a month's worth of groceries or more.

To the right person you THINK you MIGHT be able to turn it at a significant profit, but you should KNOW.

I can relate to the good friends part. I have some knives that I could care less if I sold, as I have said before, some are VERY special to me.

Best Regards,

STeven Garsson