What makes a production knife expensive?

[cutitout]

I love my Zero Tolerance knives, (0560, 0300 and 0350) in the folders for my working knives which cost between a hundred and $220 new. But I really wanted a Hinderer XM24 gen 4 which seems to run about $800 or more if you can get them. I have a very nice Shun folder for my "gentleman's knife" which I paid about a hundred for new, but I really would have preferred to get a CRK Sebenza which is about $400. In both cases, the knife I would prefer is several hundred dollars more. Both the knives I settled on and the knives I wanted are very nice quality well designed and functioning knives, but I'm just curious what makes the disparity in price so wildly different in production knives. I am not putting down any brands because I am very happy with the knives I have and even if or when I do buy my more expensive "dream" knives, I will still keep and use the ones that I settled on.

You could actually carry this to even more extremes since many knives use high quality steel and grip material and hardware and charge relatively little where as others using say a S30v steel which is a common steel get really premium prices but are not much more functionally superior as far as I can tell. I know there is a lot of junk out there so I am really not referring to those. I am mostly looking at reputable knife makers like Buck, SWK, Kershaw, etc. who make some pretty nice inexpensive models with pretty good steel and other materials vs Well known and regarded makers like Hinderer, and Chris Reeves and many others.

Just wondering.

 

[marcinek]

Apple and oranges. That's like asking why a BMW is more expensive than a Toyota. They are both production cars.

 

[Moosez45]

Tooling cost, labor cost, shipping, delivery, design development, material investments, and product development are just a few.

Then, lets add in distribution cost, dealer cost, and market value, and you have a formula that will get you close to why knives cost what they cost.

Believe it or not, knife companies are in the business to make money, and if they so happen to make history, great, but it is a business, profits are the point. You want a good knife, they want to pay their investors dividends, and keep their jobs.

A knife cost is not just the sum of its parts, this steel, that steel, g10, micarta, nomex, etc. That is the cost that we see. I've been through the looking glass, and I wish I could come back.

All of my experience and love of knives stem from use, I was a user, pure and simple. One day, I got an invitation to visit a knife manufacturing facility. It was amazing, but when you make knives for a living, then it soon will become a job. You make a product.

My 0561 is in my pocket right now, and I love it. After seeing what it takes to make something like this come to life, and the narrow profit margin that the manufacturers actually make off of a single sale, it would make one believe, there is no way companies can stay in business.

Keep in mind, there are people making these knives, and they aren't doing it for the fun of it.

Moose

 

[MajorLonghorn]

There are a ton of variables, not the least of which are the materials used. Kershaw is one of my favorite budget brands. They make a great product, but they are able to keep costs down because, among other things, they don't typically use exotic materials.

This discussion is not complete without incorporating economies of scale. A large knife company will simply be able to negotiate better pricing for their raw materials than a small knife company, regardless if they're both considered "production" knife makers. A large company will likely have streamlined manufacturing processes and distribution, better advertisement, and ultimately greater sales numbers. A small company cannot hope to compete with volume, so they make it up with markup. What you get in return is arguably better craftsmanship and more attention to detail.

 

[cutitout]

I sort of anticipated that someone would make the BMW to Toyota comparison. It was the first thing that came to my mind when I asked the question, but I am not sure that comparison works. Cars have thousands of moving parts at very small tolerances and use some very expensive components in electronics and comfort features and even though both cars (any cars) both use similar parts, there is so much R&D and precision engineering that goes into cars, it is hard to see a true comparison where a folding knife is basically a flat piece of steel sharpened on one edge on a pivot between two other pieces of hard material like Titanium or G10, etc. There is some R&D and precision, but not thousands of moving parts and very expensive components.

 

[Moosez45]

I sort of anticipated that someone would make the BMW to Toyota comparison. It was the first thing that came to my mind when I asked the question, but I am not sure that comparison works. Cars have thousands of moving parts at very small tolerances and use some very expensive components in electronics and comfort features and even though both cars (any cars) both use similar parts, there is so much R&D and precision engineering that goes into cars, it is hard to see a true comparison where a folding knife is basically a flat piece of steel sharpened on one edge on a pivot between two other pieces of hard material like Titanium or G10, etc. There is some R&D and precision, but not thousands of moving parts and very expensive components.

You've never seen where a knife is made then. You see the final product, you don't see the milling tables, grinder, laser cut/water cut tables, machines running constantly, and assembly area where dozens of people are building and boxing knives, putting screws in, sharpening, etc. Millions of moving parts, to make a simple tool, that has only a few.

Moose

 

[nccole]

Everyone is making great points, but few will say this, the extremely high cost knives (Hinderer, CRK you mentioned) cost what they cost in part to the fact that those companies are always busy, and they simply can charge that much. They will have higher tool, material, and all the other things people noted costs, but I believe they are artificially higher simply because they can demand that premium. They built a reputation, and produce the best of the best, and they are rewarded for it.

Take for example a Spyderco Sage 2 and a small Sebenza. The price differences is $150 vs. $400. Same exact materials and tooling. I would bet that CRK buys enough Ti that his raw material price is not much more than Spyderco. The fact that the Spyderco is made in Taiwan will be a big reason many will give you, but I say not a big difference. Take for example, the Sage 3 (Taiwan) and a Manix XL S30V. Very similar design, materials, and outcome, but about the same price. Having the knife overseas does not mean your labor is cut in half and if it is, you have to pay transportation costs. Spyderco does overseas more just to increase capacity as they grow in Colorado and are maxed out. There are a bunch of other points, but the two main ones in this example are imo debunked. So what makes up the $250 difference? The tighter tolerances, and quality control probably plays a role, the small vs. bigger company as well, but the CR name and reputation is surely in the price disparity.

I made a similar statement to your breakdown of cars when someone said CR is like Ferrari where you are just paying for a name, and while Ferrari demands a premium for the name and prestige, Ferrari puts more R&D into their cars than anyone, and you are surely paying for that along with all the other complexities that could take a long time to discuss.

 

[kreole]

You've never seen where a knife is made then. You see the final product, you don't see the milling tables, grinder, laser cut/water cut tables, machines running constantly, and assembly area where dozens of people are building and boxing knives, putting screws in, sharpening, etc. Millions of moving parts, to make a simple tool, that has only a few.

Moose

Adding to this, there's a great How It's Made on the Victorinox factory. SAKs aren't the most expensive knife, but that might make it more impressive to see everything that goes into building one.

edit: It's the show Megafactories, not How It's Made, and it's on Youtube: http://www.youtube.com/watch?v=hTMiktx_8Vo

 

[parbajtor]

There's also a difference between production and production.
Some production knives are still entirely made by one person.
Some are stamped out by machine and a person puts a grind on it.
Chris Reeves has 17 employees.
http://www.chrisreeve.com/comments.htm
Benchmade has a few more
http://www.benchmade.com/company/history.aspx

 

[marcinek]

I sort of anticipated that someone would make the BMW to Toyota comparison. It was the first thing that came to my mind when I asked the question, but I am not sure that comparison works. Cars have thousands of moving parts at very small tolerances and use some very expensive components in electronics and comfort features and even though both cars (any cars) both use similar parts, there is so much R&D and precision engineering that goes into cars, it is hard to see a true comparison where a folding knife is basically a flat piece of steel sharpened on one edge on a pivot between two other pieces of hard material like Titanium or G10, etc. There is some R&D and precision, but not thousands of moving parts and very expensive components.

The number of parts is irrelevant. The percentage price difference between the high end and medium end productions is in both cases is quite similar. The comparison does work....and for the very reasons you listed.

 

[dcmartin]

Cutitout, I think (IMHO) the one thing that has not yet been mentioned in this thread is the demand placed by consumers on that particular maker and model.

You have to take into consideration hype, reputation and of course supply and demand. Anybody here remember the 0560's that sold for $400-$450 on the exchange about 2 months before their release to the U.S.? You take a great knife like ZT's 0561 & 0561.... make everyone wait about 1 year (in ZT's defense, we waited willingly) and let them out slowly, don't flood the market. BAM! You now have a rabid following. It took a good while before they came down in price.

Hinderer, those guys are no joke... take their superior product and make it in small batches, I was told by Rob Orlando that they only make approximately 1500 knives per year. If we do the math and supposing they are divided evenly, that's only 500 per model. (I could be wrong, these numbers could be off or have been updated)

What it boils down to is: Superior product + hype + reputation + limited supply = High $$$

I don't think i've ever seen a $500+ knife that was a mass produced model. Sure there are "sprint" runs from each maker like Kershaw and Spyderco and of course the Benchmade Gold Class knives but they are limited productions with much lower numbers than their regular production counterparts.

Just remember if there were high numbers of these knives in production and available, the shelves would be stocked at all times with 3" XM-18's and Micarta Insingos and DGG Striders and and and......

 

[cutitout]

Just curious, since I am somewhat new to this whole knife collecting thing, do high demand knife resale values fluctuate like gold values where for example, if I buy a large Sebenza today, could I realistically plan on reselling it for about what I paid or hopefully more in the future? Or is it more like house prices where they get so inflated that it becomes harder to sell them at some point because they price themselves out of the market. I suppose knife makers have that in mind when they decide how many to distribute in a given period. But it means a tradeoff for them. If they make a lot, demand is slightly dissipated and they have to reduce their price which lowers the resellers price and thus lowers demand for the knife which has a diminishing return creating a sort of life (value) cycle. I think in the knife collecting community, resale value plays a big part in the determination as to whether to buy and collect certain brands.

 

[stabman]

I think in the knife collecting community, resale value plays a big part in the determination as to whether to buy and collect certain brands.

It shouldn't.
Certain brands hold their value well, and there's the off chance you'll get one which increases in value, or that you can find an idiot willing to pay more than it's worth (there's no shortage of idiots).
I just remember things like that comic The Death of Superman. Pre-internet, and it was up to $400 a few days after release.
Now you can find them for $20 sealed in the bag still. I'm sure the people who bought on the upwards swing feel moronic now.

Buy what you like because you like it is my advice.

 

[eisman]

I've never really understood the concept of paying for a production model once the cost surpasses that of a truely custom knife. But cost is only driven by one thing; the ability to get a customer to pay.

 

[dcmartin]

if I buy a large Sebenza today, could I realistically plan on reselling it for about what I paid or hopefully more in the future?

Cutitout, I think that depends on one or two factors. If the knife company in question upgrades their knives like Strider did with their SMF and SNG models to a better design.... Here we are talking about a change to enhance performance and longevity of said blade.
Previous owners of same models may see a dip in values mainly because everyone wants the "new" design. Strider upgraded their lock face, and now when people want to trade for a specific SMF or SNG they are stipulating that they want the "new" lock face. I've also seen the values dip just a bit for striders with the old lock face. Not all of them but certainly the regular Lego Striders have seen a dip in value.

Chris Reeve Knives will probably see little to no dip.... Most of the improvements are aesthetic not so much functional except for the steel being used. What i am curious to see is if the new pivot on the Unmunzaan is going to drive the prices up or down on the Umnumzaans with the older style pivot.

The other point is timeliness: Not too many knives (folders especially) can sit in the safe for 5+ years and be worth a whole lot of money if they were production pieces. For some reason they just seem to go down in value. Not all, some still retain their value +$$ I have some 1st generation numbered Yojimbos and a numbered Ronin. At one time before the 2nd gen Yojimbo came out, they were fetching around $250-$300 on Ebay. Not so much anymore...

If it's a custom or has some kind of significance and or following.... Time won't matter, Just take a peek at some 5 and 10 year old Emersons hand ground by Ernie himself or Some Hinderers made by Rick... Super big $$$ (that is if you can get the owners to part with them)
Randal Knives (a fixed blade ) also not only keep their value but because they have a 5 year waiting list usually are worth more than what is paid for them either immediately or in 5 years.

So will your Sebenza be worth what you paid for it in 5+ years? More than likely... with the caveat being, as long as a newer and much improved model isn't selling for the same price as what you paid for yours.

 

[bdmicarta]

Everyone is making great points, but few will say this, the extremely high cost knives (Hinderer, CRK you mentioned) cost what they cost in part to the fact that those companies are always busy, and they simply can charge that much.

I think this is the key, and maybe not just for knife companies but for other industries. All products require research and development, all companies have to pay employees, buy materials, buy equipment, ship their products, sell at reduced cost to stores or distributors, etc. Some products will require more expensive materials, more R&D time, greater hand labor in production and fitting, etc. and this will lead to their products being more expensive. I think a key to this is that if a company has to compete with other companies, then they will spend more time to make their R&D and production processes more efficient, and they will look for ways to economize with their material costs. If a company has a high profit margin then there is no reason for them to be more efficient in their internal costs because they still make a lot of profit. So there might be areas of a ZT 560 that are just as good in quality as a Hinderer, it is possible that it costs Hinderer more money to achieve the same product. But for sure if people weren't paying $800 for the product they wouldn't be selling them for $800, they would figure out a way to make them for less and sell them for less. If Hinderer was forced to sell that knife for $400 in order to sell them I would bet that they would figure out a way to produce the same knife or almost the same knife for that lower price. They would make their processes more efficient, they might or might not skip a few steps but if they are driven to produce the quality that they produce now I don't think they would markedly change the quality in the process of making them less expensive.

I have a Spyderco Tenacious and a Spyderco Paramilitary 2. The Para 2 cost about 5 times what the Tenacious cost. If you compare the knives closely you might expect that the additional quality that goes into the Paramilitary 2 would account for twice the price, the better materials maybe a little bit more than that, but not 5 times. So it is hard to argue that one knife costs 5 times as much as the other because they have people assembling the knives, they have milling machines, etc. It essentially takes all of the same milling and drilling and screwing operations to make one as it does to make the other.

 

[cutitout]

Thanks DCMartin, good info. I saw a Zero Tolerance that I would love to get my hands on, it was a 0350 Elmax composite limited edition. Unfortunately the production run ended and people are hoarding them in hopes of getting disproportionately high resale value. So I decided to pass on that model for now. There was another one, the 0777 which looks really nice and was going for about $700 new. Now they are about $1500 and Microtech has made an almost identical version which I think is being challenged for copyright infringement for about $1500 also.

On the other hand I also like and want the Hinderer XM24 which now has a 4th generation and that is what I want despite the fact that the 1-3 gens are probably just as good for much less. So it does sort of make sense not to buy for value of resale unless you are a pro and really know just what you are doing.

 

[bdmicarta]

Just curious, since I am somewhat new to this whole knife collecting thing, do high demand knife resale values fluctuate like gold values where for example, if I buy a large Sebenza today, could I realistically plan on reselling it for about what I paid or hopefully more in the future?

It really depends on demand and on what the market wants at any given time. Right now for instance the sprint run Spydercos are in high demand and sell for much more than their original price. That might change in the future and they might be worth a lot less. ZT's were in high demand for awhile and sold for premium prices but now the production seems to be caught up with demand and they are selling for something like 15-20% less. I have bought a few Benchmades recently and for the ones that I wanted it was hard to find them for significantly less than new prices, but OTOH I have a couple of older limited production models that right now are not in demand so they sell for significantly less than their new prices.

I think in the knife collecting community, resale value plays a big part in the determination as to whether to buy and collect certain brands.

A person should buy and collect what they want and not worry so much what it will be worth in the future, but so many collectors are fickle and change their collections over time. We want to buy something that we can sell in the future without much loss of our investment. I'm somewhere in the middle. I've bought a lot of custom hunting knives knowing that some of them might increase in value but others probably wouldn't. I don't buy that many folding knives but I buy the ones that I want to actually use thinking that I would never sell them.

 

[bdmicarta]

you don't see the milling tables, grinder, laser cut/water cut tables, machines running constantly, and assembly area where dozens of people are building and boxing knives, putting screws in, sharpening, etc.

But this could apply to the cheaper brands as well as the more expensive brands. I like to make the comparison between a Spyderco Tenacious and a Spyderco Paramilitary 2. They use similar materials except for the specific blade steel, they have about the same number of parts, same milling operations, same assembly and boxing operations, yet one costs significantly more than the other. I have one of each and I've compared them side by side. I don't see that much difference in the quality of the machining and assembly. The Tenacious is a bit heavier, has a stronger blade detent, and has a cheaper blade steel, but that should not make it 1/5 the cost of the Para 2. The Tenacious is made in a different country and this would account for a big part of the cost difference. The rest is that the blue Para 2 can be sold new for $180 and people will pay it, but they would only pay about $40 for the green or blue Tenacious.

 

[2 shot]

There was another one, the 0777 which looks really nice and was going for about $700 new. Now they are about $1500 and Microtech has made an almost identical version which I think is being challenged for copyright infringement for about $1500 also.

I would be interested in where you got the information on the 0777. It is not out yet. Most dealers are advertizing them for $480.