The Myth of the Overpriced Knife

It's only worth what someone is willing to pay! That simple. As long as people are willing to pay it knife makers will continue to sale for what there customers are willing to pay. If there customers were to quit paying it well the knife maker would either lower his price or find a different occupation. Customers set the price almost always. There is nothing wrong with people's prices charge what you I want I'll pay it if I think it's worth it just like everybody else on the forum. I just bought a used ZT for 100 bucks today some guys would say it's a deal while others would say I got had that's just reality. There is no answer to this thread because everybody decides for themselves how much is to much. If I make a million dollars. Year I will guarantee you my knife would change more often and I would buy different products but hey the kids need shoes and I don't care who makes it and even most high end knife makers would tell me not to buy a 500 dollar knife if my kids don't get the shoes they need it's not worth it.


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22-rimfire said:
That's interesting, who can determine this? I don't know if the manufacturer can determine this until after the fact sales figures. Can the custom knife maker determine this? I doubt it at least on a market basis other than something sells. Think I'll up the price $40 and see what happens? It sells.... think I'll do another $20 and see how it goes....

A manufacturer will probably estimate their costs and add a mark up. They will compare that to other models they might sell. Then they roll the dice with the consumer and see how it goes.
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There's a bunch of different pricing strategies that can be employed in attempting to maximize profits. You can use cost-based price modeling if you want, but often the ideal price is elsewhere. Generally, businesses use their knowledge of their target market and brand image/positioning to determine what approach makes the most sense. But in all cases, some degree of study and experimentation is necessary. Cost tracking does help in establishing accurate contribution margins, but in this case it's serving more to establish the break-even pricing as your floor and then working from there.

Jens Schuetz said:
You could sell the same object in different places at different price points and thus get some numbers which allow you to calculate the optimum price. Of course that was easier before the Internet days.

Also an optimal price for one particular product might still water down a brand as a whole.
If Busse or CRK suddenly sell an Opinel like knife at its most profitable price point people might come to think of all their other knives as cheap stuff too and then it would be harder to justify the higher prices for those. If however that Opinel like knife were sold at a bigger premium it might not be the optimum price for that one product but it'll be less disruptive for the perceived value of the other models.
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That's one of the reasons why you won't see Busse or CRK release such a knife. That's not their market segment. ;)
 
If I make a single dollar more than breaking even, I'm happy. On the other side of that coin is the duty I have to my collectors ... To maintain (or increase) the value of their current CMFTW holdings and not devalue them (cough, Hindered... cough, Marfione) by making similar knives and selling them for less.
 
FortyTwoBlades said:
There's a bunch of different pricing strategies that can be employed in attempting to maximize profits. You can use cost-based price modeling if you want, but often the ideal price is elsewhere. Generally, businesses use their knowledge of their target market and brand image/positioning to determine what approach makes the most sense. But in all cases, some degree of study and experimentation is necessary. Cost tracking does help in establishing accurate contribution margins, but in this case it's serving more to establish the break-even pricing as your floor and then working from there.
Click to expand...

Always important to calculate your break even point. I agree with what you said and adding a simple markup is just a step in the process of setting a price point. But after you determine a break even point, you play with markups (easy with calculator) and see where it leads relative to other knives in the manufacturer's line and their knowledge of the competition.

A knife that I really like is the Spyderco Kiwi 4. It's a smallish VG-10 Wharncliffe lock back that runs around $110 retail. I have one. But I always felt with all the super steels around, the pricing was a bit high (like $15-$20). But that didn't stop me from buying one. Did I over pay? I guess I did if I were dissatisfied; I'm not. I am mostly commenting on the price here and using it as an example. I think the price point is based on a G-10 handled made in Japan Spydie.... which Sal has said labor runs about the same as the US. The Spyderco name is important and I feel sure the pricing reflects that as well as what they feel the market will bear (aka maximizing profit).

Pricing things is an interesting subject as I do it with my little business all the time. I know when my price is going to be a bit high. But I make a judgement as to whether or not I really want to do the job for less at the risk of not getting the work (sales volume). Most of the times, I read things about right.
 
Otto Carpenter said:
A fine piece of inductive reasoning, my friend.
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Actually its simple Economics 101. :)

And if a knife is a tool there are many that are over priced, and some that I just can't afford. To me the value is mainly in the performance, and much less in the art. Not that I don't appreciate the art, but I'm much less likely to pay for the art.
 
Every new knife bought in a shop is over priced as the second its bought its worth less. Generally, once second hand worth 1/3rd less even if BNIB.
Is it overpriced if the labour costs in one country is x5 that of another, skill levels being equal?
Where does the raw material base costs get added value?
When a market is flooded what level is the market price?

I do think modern day manufacturing and marketing has got to the point that most knives are over priced. Most of the ticket price has nothing to do with the product but more to do with additional costs like tax, standards of living, and marketing. The consumer is just at fault as anyone, as they have expectations that includes paying a certain amount that takes all these factors into account.
When enough consumers don't "then its the economy stupid".
 
22-rimfire said:
Always important to calculate your break even point. I agree with what you said and adding a simple markup is just a step in the process of setting a price point. But after you determine a break even point, you play with markups (easy with calculator) and see where it leads relative to other knives in the manufacturer's line and their knowledge of the competition.

A knife that I really like is the Spyderco Kiwi 4. It's a smallish VG-10 Wharncliffe lock back that runs around $110 retail. I have one. But I always felt with all the super steels around, the pricing was a bit high (like $15-$20). But that didn't stop me from buying one. Did I over pay? I guess I did if I were dissatisfied; I'm not. I am mostly commenting on the price here and using it as an example. I think the price point is based on a G-10 handled made in Japan Spydie.... which Sal has said labor runs about the same as the US. The Spyderco name is important and I feel sure the pricing reflects that as well as what they feel the market will bear (aka maximizing profit).

Pricing things is an interesting subject as I do it with my little business all the time. I know when my price is going to be a bit high. But I make a judgement as to whether or not I really want to do the job for less at the risk of not getting the work (sales volume). Most of the times, I read things about right.
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Yup--gotta' track those costs! I'm just saying that it's only one factor of many that can influence pricing strategy decisions. :)

Rapt_up said:
Actually its simple Economics 101. :)

And if a knife is a tool there are many that are over priced, and some that I just can't afford. To me the value is mainly in the performance, and much less in the art. Not that I don't appreciate the art, but I'm much less likely to pay for the art.
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Yup.
 
JR88FAN said:
Charlie Mike said:
I feel sorry for everyone who bought a production Hindered for $800+ ... Now people have trouble selling them at $350 :D
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Agreed, but sadly nobody could see the future.

Like many things, they where very hard to get and everyone wanted one....that leads to one thing.

I don't think anyone at the time knew that RHK would change the way they sell knives and flood the market.....
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That's why I have avoided the "flavor of the month"/latest craze in anything I've ever collected.
 
HyPnOtIk said:
Yeah, I have a friend who swears his $20 Smith and Wesson is just as good as my Spydercos and Benchmades. He always says I spent too much just to get a name lol. He doesn't understand blade steels and quality knives because he is such a cheap a** that he wouldn't spend the money on them anyways. He is the same way with his guns too...he builds his guns the cheapest he can because he thinks the cheap stuff is just as good as the premium name brand stuff.
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I've had and have Spyderco and Benchmade, but for the last couple of years I've EDCed an old Ulster slipjoint and a Victorinox SAK. The two cost me less than $50 altogether. They just happen to serve me better.

My favorite, and one of my most accurate, squirrel rifles is an 80 year old Marlin 65/Ranger 34 single shot turnbolt. It's monetary value today is $100 or less.

I got 434,000 miles out of an old and cheap Toyota HiLux P/U. When it was 34 years old, I sold it to a man who changed its oil right then and there and drove it off.

Inexpensive stuff is often as good as "premium" stuff. Sometimes it even serves you better.
 
trevitrace said:
Unless it's a CR priced incorrectly for $32 though, right?
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Was it a "flavor of the month" the last few months? If so that was a coincidence. I only bought the knife because it was too good of a deal not to. I'll never even use the knife. Too big. Too thick. Too heavy. Not my cup of tea. Not at all, but it'll make a great gift to someone one day when I give it away.

Tom Mayo helped me design then made me a true custom for $125 in the mid-90s. Most I've ever paid for a knife for myself. Can't imagine I'd ever pay more for a knife for myself.
 
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Old story...

Two young fish were swimming down the side walk and met an old fish with a grey beard. The old fish greeted them, "Good morning boys. How's the water?".

"Great, thank you", one of the responded.

After the two young fish got further down the sidewalk out of ear shot, one turned to the other and asked, "What's water?"


We tell ourselves that we live in a FREE market and in doing so, blind ourselves to the influences that surround us.

We humans have a deeply rooted need to establish our ranking in society and group. Our economy is a consumer economy and has been intentionally so since the end of WW2. Literally, as a matter of national policy, we are encouraged to define ourselves by what we own and as a result, we seek out consumer goods at price points that make us feel good about our selves.

Savvy marketers understand our primal need to establish our status in the pack and exploit it.

How's the water?

Video pick of the day: "The Story of Stuff".
 
pinnah said:
Old story...

Two young fish were swimming down the side walk and met an old fish with a grey beard. The old fish greeted them, "Good morning boys. How's the water?".

"Great, thank you", one of the responded.

After the two young fish got further down the sidewalk out of ear shot, one turned to the other and asked, "What's water?"


We tell ourselves that we live in a FREE market and in doing so, blind ourselves to the influences that surround us.

We humans have a deeply rooted need to establish our ranking in society and group. Our economy is a consumer economy and has been intentionally so since the end of WW2. Literally, as a matter of national policy, we are encouraged to define ourselves by what we own and as a result, we seek out consumer goods at price points that make us feel good about our selves.

Savvy marketers understand our primal need to establish our status in the pack and exploit it.

How's the water?

Video pick of the day: "The Story of Stuff".
Click to expand...

This makes no sense whatsoever..... fish don't have sidewalks underwater!

The rest of it makes scary sense. I've never been into popular culture, music, entertainment and otherwise and so thought myself immune to a lot of advertising, but by the virtue of trying to identify myself as an outsider I've simply fallen into another form of consumerism. Which isn't to say I don't enjoy my music because I don't share it with anyone and I collect and listen just for me (in fact going out of my way NOT to play it and bother others), but it goes a way to explain the obsessive knife thing and why I want so many of the damned things when one or two would suffice. Great parable (sidewalk aside). Thanks.

Video pick of the day: The Brain by David Eagleman (a series of 6). "What Makes Me?" would probably be most appropriate to this conversation, but I just saw "Why Do I Need You?" and, man, talk about some scary revelation into human behavior...
 
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We spend money we don't have to buy shit we don't need to impress people we don't like.

Bill Hicks said that (I think).
 
FortyTwoBlades said:
There's a bunch of different pricing strategies that can be employed in attempting to maximize profits. You can use cost-based price modeling if you want, but often the ideal price is elsewhere. Generally, businesses use their knowledge of their target market and brand image/positioning to determine what approach makes the most sense. But in all cases, some degree of study and experimentation is necessary. Cost tracking does help in establishing accurate contribution margins, but in this case it's serving more to establish the break-even pricing as your floor and then working from there.



That's one of the reasons why you won't see Busse or CRK release such a knife. That's not their market segment. ;)
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Also related to the post you quoted...

Some other influences on pricing: competitive models from other brands can also influence price (not always down), and also market timing.

In tech, we often see people paying more when something first comes out, less when it starts making it's way to everyone, even less when the sales start drooping, and then skyrocket as the few people that want a discontinued product can't find any and pay extra for someone willing to give it up.

Also, maybe one year people want purple with pink polka dots, and the next year they want pink with purple polka dots. Same knife, different prices for the ones in higher demand at the time.

Generally speaking, something is only worth whatever someone is willing to pay for it.
 
Scott321 said:
Also related to the post you quoted...

Some other influences on pricing: competitive models from other brands can also influence price (not always down), and also market timing.

In tech, we often see people paying more when something first comes out, less when it starts making it's way to everyone, even less when the sales start drooping, and then skyrocket as the few people that want a discontinued product can't find any and pay extra for someone willing to give it up.

Also, maybe one year people want purple with pink polka dots, and the next year they want pink with purple polka dots. Same knife, different prices for the ones in higher demand at the time.

Generally speaking, something is only worth whatever someone is willing to pay for it.
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All part of the product life cycle. I've always been a fan of those goods that manage to defy the normal cycle of birth, maturity, and death. The ones that, like turtles and sharks, managed to hit on some fundamentally good thing and haven't had to change much in millions of years. :D
 
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