When "Suggested" Retail Prices Are Mandatory

Well, I cannot speak for Chris Reeve Knives, but I will offer an opinion.

I've known Chris and Ann for many years. We worked together when Chris was in South Africa.

A CRK knife is not a custom knife, nor is it a production knife. They are in a class by themselves. They've taken many years to develop their reputation.

Each piece is custom made by skilled custom makers. CRK tolerances and standards are the highest I've seen in processes like surface grinding and heat treat. There is a limit to their production capacity.

Chris is pretty anal on quality. "Quality is time. = Time is money". He pays his craftsmen a fair wage, and he charges a fair margin, he gives the world a product like no other. Chris and Ann work hard and they make a good living. "Enormous profits" is an inside joke that Chris and I laugh about. Frankly, I think they'd feel guilty if they made too much money.

The "Market" will determine if his business strategies work, regardless of what they are. If they don't work, adjustments are made....that's how businesses survive.

BTW, the flip side of a "bargain driven" market is manufacturers are forced to import product (export jobs) from China to compete in the need for the "lower price". More complications.

sal
 
Thomas W said:
You have your opinion Ben, but this form of "racketeering" (yes I'm offended), is perfectly legal in this free society.
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I'm sorry if you are offended. And you're probably correct about small manufacturers like CRK. Obviously, if you're with Kershaw. (I have two Kershaws, BTW:) ) you know this particular market niche beter than I do.

I was considering the entire market. And in many areas of the market, MSP and MAP are rigidly enforced by enormous multinational corporations SOLELY as an anti-competitive measure!

Check out the price of Swarovski (an international corporate giant) rifle scopes and binoculars, for an example. The same price at every dealer in the country. I don't believe this is right. :grumpy:

IMHO, the consumer benefits from competition.
 
Ben Dover said:
I was considering the entire market. And in many areas of the market, MSP and MAP are rigidly enforced by enormous multinational corporations SOLELY as an anti-competitive measure!

Check out the price of Swarovski (an international corporate giant) rifle scopes and binoculars, for an example. The same price at every dealer in the country. I don't believe this is right. :grumpy:

IMHO, the consumer benefits from competition.
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The competition is between Swarovski(for example) and other manufacturers such as Nikon. If the price difference is greater than the perceived performance difference, the cheaper alternative will be bought in droves and the high-priced manufacturer can be in trouble. There are a limited number of customers willing to pay 10X the price for a 10% quality improvement and a limited number that equate price with quality and will pony up. It's a really difficult place to position yourself as a manufacturer and not at all risk-free. More power to them if they can pull it off.

It's easy to lose sight of the fact the fact that 99% of the world thinks that we're nuts to drop $40 on a folding knife, let alone $400. If all I wanted to do was cut stuff cheaply, I'd probably even agree with them.

Gordon
 
Incidentalist said:
My family owns a retail business. ... I hate Minimum Selling Price policies. It ties my hands as a retail establishment. I have since sold far less of these certain products. I'm half inclined to drop their entire line over this issue. The only thing keeping me from doing it is that our biggest selling product of theirs does not have the MSP policy attached to it, yet. Once it does, I'll move to a different manufacturer.
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Amen, brother. You hit it right square on the head. I only used Benchmade in my previous posts for convenience. It could very well be any other company with any other product.
 
Confederate said:
Amen, brother. You hit it right square on the head. I only used Benchmade in my previous posts for convenience. It could very well be any other company with any other product.
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Then this thread should have been in Whine and Cheese.
This forum is for talking about knives.
 
Thomas W said:
Big Ben you missed the point. It isn't to protect the B&M outlets, it is to protect yourself.

I'm also unsure what you mean by "artificially inflating" prices.
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First off, thanks to all for a very lively and informative discussion. The participation by industry guys like Sal and Thomas is one of the things that make this forum so great.
That said, I have a question for Thomas. In the quoted post above you said "It isn't to protect the B&M outlets, it is to protect yourself." Are you referring to "yourself" as the manufacturer or the consumer? I can see where mandatory price floors work to help the "mom and Pops" from aggressive large retailers or low overhead Internet sellers. But it is less clear to me how an artificially high price, higher than one that the market would ordinarily support, is beneficial to me as the consumer. This strategy is what DeBeers uses to make sure that we all pay much more for diamonds than their rarity would otherwise support. Are you saying that greater profit margins provide extra funds that spur research and development, which spurs innovation? And how could you be sure that these extra funds went for R&D and not Ferrari's and the like?
Thanks again for the explanions.
 
fudo, if you go back and read post #32 you will see where I mention "yourself" and was referring to the manufacturer themselves.

There is no issue with large retailers in this type situation, as the specialty retailer does not have the capacity to satisfy their bulging appetites.

You will rarely see a manufacturer that requires skilled labor artificially inflate their price. Most work on margins, and the price comes out where the price comes out.

The market in this case has proven that CRK's are not in fact higher than the market is willing to support.

I've come to believe that the knife industry is not a place one comes to make your financial dreams come true. It's a tough business to be sure.
 
Thomas W said:
You will rarely see a manufacturer that requires skilled labor artificially inflate their price. Most work on margins, and the price comes out where the price comes out.

I've come to believe that the knife industry is not a place one comes to make your financial dreams come true. It's a tough business to be sure.
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I agree.

Knarfeng,

I guess you could say that discussion of the "knife industry" is talking about knives. Besides, you are not likely to see Thomas or I participating in "Whine & Cheese".

sal
 
Sal Glesser said:
I agree.

Knarfeng,

I guess you could say that discussion of the "knife industry" is talking about knives. Besides, you are not likely to see Thomas or I participating in "Whine & Cheese".

sal
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Sal, you quite correct. You and Thomas (and most of the rest of us) have been talking about the knife industry. But the post I was replying to was expanding into generalities outside of knives. And I did not like to see arguments that may be valid for other areas sliding into a knife discussion by the back door.
 
I have not seen any mention of choosing your market segment.
By controlling your price bracket you choose where you place yourself and your product in the market.

The message is you pay for what you get.
You want quality, then you will pay for it.
You want top quality then you will pay top buck.
Of course the product must be able to match the price.

So I understand when a company controls its retail price to maintain its market image, and then its market segment.
Then compound that by having limited supply.
 
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