What is the "real" cost of a knife?

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I'm wondering what it costs a company like Benchmade to make a Griptilian or Spyderco a Delica/Endura.

Initially I was just thinking about how much the materials cost but it would be cool if a knife maker or Sal or someone in the know could tell us how much the materials for a knife cost then how much it costs in labor to make a single knife then how much in total a knife costs when all overhead is included and finally what the markup is between actual cost and MSRP.

Anyone able or willing to comment?
 
An interesting question, and one I ponder occasionally as well. I doubt we'll see an answer to it, just because of "trade secrets" and all that. What is more interesting to me would be the variance across the entire spyderco or BM line of knives as to overall cost of manufacture. How much more is it to make a Rock Lobster vs an H1 Ladybug vs the Jumpmaster vs the Delica etc etc etc...

Again, we'll never see those numbers, and I don't have a problem with that, but it's interesting questions to ponder.
 
There are SO many different factors that go into this. I would love to hear a dollar amount as well
 
Cool :eek: Most companies consider such cost info confidential. An employee divulging it to a competitor might be fired.
 
Generally speaking, manufacturing cannot be sustained unless the item cannot be made at about 60% of the selling price or less. That includes raw materials, assembly, marketing, etc. This does vary greatly, but after about 60%, it falls apart quickly.
 
Running your own business big or little has lots of costs. Employee health care, workman's comp. taxes both state and federal, and lots more like leases, maintenance costs such as house keeping, utilities, water and sewage, and then of course materials and shipping as well as salaries and commissions of employees and contracted out help. I'm sure I've forgot a lot or don't know of some too. So how much does a knife really cost to make? Taking all things into account is it any wonder prices are what they are? I think not. I know I was caught staring at two small plastic bags of groceries the other day just shy of $100 worth thinking how $40 used to buy the same thing so there is that also.

STR
 
The only MSRP price that I have paid for a knife was for Strider and Sebenza. Benchmades can be had from online dealers for much less than MSRP. The last knife I bought was BM 913 with retail price of $150. I got it from online dealer for $92 plus $8 for shipping. Assuming the dealer has made some profit on the knife, lets say conservatively 15%. That gives us the dealer's cost of the knife of $78, which is about 50% of MSRP. This price should absorb the cost of all overhead that includes labor, marketing, cost of equipment, utilities, taxes and legal fees, marginal profit to expand production, enginering, design, warranty work and many others. So to make the knife may cost very little to a larger company such as Benchmade, but to keep it's production running it takes a lot. Now for smaller custom maker there is not much overhead, but the price is getting high because of low volume of production and higher labor cost due to a hand work that takes more time to make one knife with fit and finish close to perfection.
 
I'm going to be a little cynical here but costs do not = selling price. The adage "what the market will bear" still applies.

One of the network bandwidth expanders manufactured by the company I worked for had actual material cost of <$10. All the overheads - R & D, labour and skilled hand assembly, warehousing, shipping, inventory, sales & marketing and warranty still meant that a decent profit could have been made had they sold for $500. MSRP was $3700 (and you needed at least 2 - one at each end). Price was not considered excessive because our only other competitor was even more expensive, and I had no problem justifying this solution to my customers who were grateful because the alternative was re-cabling, which would have cost at least x50, taken months to instal and caused major operational disruption. One client had a cable that ran under Railway Square in Sydney - the cost of upgrading just that one would have been 7 figures.
 
Antonio, but if you only have one competitor that's a little different from a knife business, where competition is very agressive, especially now days. People who buy knives usually don't have unlimited funds unlike the costumers of your company and they can shop around for a better deal.
 
This is just a guess, but I don't think that the average knife that retails for $100.00 would cost more than $30.00 to $35.00 to produce. That would be the total cost of manufacture, promotion and warranty. The reasoning behind that guess is that I often see knives in this price range selling for under $60.00 from internet dealers. The dealers are making some money and probably bought the knife from a distributor that is also making some money. Even if that's only $15.00 between the two of them, that would mean that the the original selling price from the manufacturer was no more than $45.00, and probably less.

By the way, most companies have a very good idea what their competitors products cost to manufacture. It is the buying public that they want to keep that information from. It would be extremely foolish for one of them to post that information on an internet forum, and about the only time you may see it happen would be from a disgruntled former employee.
 
Have you ever tried making a knife?

I make fixed blade hunting knives for my buddies by buying a blank and putting a set of scales on them. That's about as simple as it gets.

Even so, if I made $2.00/hr, I couldn't afford to feed a goldfish.
 
autoopen said:
I'm wondering what it costs a company like Benchmade to make a Griptilian or Spyderco a Delica/Endura.

Initially I was just thinking about how much the materials cost but it would be cool if a knife maker or Sal or someone in the know could tell us how much the materials for a knife cost then how much it costs in labor to make a single knife then how much in total a knife costs when all overhead is included and finally what the markup is between actual cost and MSRP.

Anyone able or willing to comment?
Click to expand...

It's tough to get a straight answer to a question like that. Companies manipulate that information depending on the desired effect. For example, if they're trying to justify a seemingly high sale price, they'll include all business costs, like start-up costs, machinery, employee health care, insurance, cars, travel, vacation time, interest on business loans, time, etc. in the cost of a product. I've even seen where they'll factor in the challenges and sacrifice faced while building the company and factor in compensation for that as part of the cost of the product.

On the other hand, if they're trying to show how efficient their production is to a potential buyer of the business, or business partner, they may only cite production costs such as materials, employee salaries, etc.

So to answer your question, 1) You would get alot of different answers depending on the chosen scope of the company's perspective, and 2) You would need to define what you include in "costs."

Taxes?
Cost of money lost by staying in the U.S.?
Loss of investment interest on moneys "in play"?

Heck, I know someone who is in a creative field, worked for a celebrity company, and did a friend's wedding invitations for free. She still presented the typical invoice for her work, since she charged for the paper. It was a 2-page invoice, with charges for stuff you would never think of, like: Creativity fee, origination fee, consulting fee, design fee, procurement fee, retainer, licensing fee, etc. etc. We joked around that she should have charged a fee for baby food to raise her so she could make the invites. Goes to show what a Beverly Hills type of company will include as the "cost" of producing a product.
 
After the millions in real estate and manufacturing equipment, hundreds of thousands in training and employing people, hundreds of thousands in consumable supplies (abrasives, heating fuel/electricity, knifemaking tools, blade steel, handle materials, lock materials), and tens of thousands in advertizing, I bet they're pretty cheap.

I'd rather buy my linerlock/framelock knives from Kershaw and lockback and compression lock knives from Spyderco than do it myself.
 
Most knives wholesale for around 40% to 60% of MSRP, with the most around 50-60%. So, let's say a $100 knife wholesales for around $50. Of course, larger dealers will cut out the middle man and offer retail prices that are right around what a smaller business can buy for wholesale. I know this because when I got Moteng and other price lists with my Tax ID number, I could get almost anything they offered for within five bucks of the wholesale price (usually within two) on knifecenter.com or eBay. The only exceptions were semi-custom stuff or very high end production stuff that was always on shortage.

Figure that the wholesaler gets them a bit less than that, and marks them up enough to make a profit, and you're probably looking at a cost to the wholesaler of around 30-40% of the MSRP, if I had to guess. So, the wholesaler probably paid around $30-40 for that knife.

That'd put the production costs probably around $20-25 for a $100 production knife.

The wholesale and production costs are pretty much SWAGs though, as it's impossible to predict the profit margins that are being operated at, and it probably varies within the industry.

Custom or semi-custom knives toss most of that out the window.

Edit: On the other hand, although production knives are pretty high margin items, I'm still amazed at the quality of blade we can get for the money nowadays every time I handle my Benchmade mini-grip or any Victorinox SAK... and I paid full retail for both.
 
I am amazed that a quality knife doesn't cost more. I like to compare the cost of things.
1 month cell phone $64.00 vs BM Mini Grip which will last a life time.
4 hour round of golf $46.00 vs Buck 110 @ $30.00 which will last a life time.
This could go on and on. You get my point.
 
I have heard that every time an item changes hands the item goes up twice in price. Don't know where I got that from but it seems to make sense.

Also I don't know if this helps but I got a sneak peek at some dealer's price lists directly from a manufacturer and our favorite internet retailers are often working with a very, very low margin. I've tipped more than the margin they work off of! (Assuming all dealers get the same price.)
 
What surely costs is designing and developing, making the knife shouldn't be that huge process... but that's just my assumption. Most of what we buy, we pay for the actual developement of the product.
 
I don't know what all the tools and equipment required to mass produce knives would cost, but I'm sure laser or water cutters and 3D machining equipment of industrial grade are quite expensive. Insurance, maintenance, monthly bills, employee costs, marketing, lawyers, accountants, buildings, etc. at infinitum.

Raw materials, probably $5-$10 for a general purpose, mass produced knife. Maybe $50-$500 for a rare material custom knife. But add all the above necessary expenses for running a business and the costs skyrocket.

...or you can opt for a stamped steel piece that comes from China and only have to pay $5-$10 total. It may have 25 cents in materials and 50 cents in labor charges, $1 in packaging and shipping and the rest is profit for Hu Jintao. :D
 
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