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  #1  
Old 11-24-2003, 11:21 AM
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Les Robertson Les Robertson is offline
 
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Makers How Do You Feel About Dealers Undercutting Your Retail Price...Part II

Ok, The previous thread got a little off track.

So I thought I would start again.

Judging by the last thread, only two makersresponded. Both said they would stop doing business with the dealer.

I was surprised at how few makers responded.

Does this lack of response mean you don't care?


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  #2  
Old 11-25-2003, 08:30 AM
Russ Andrews Russ Andrews is offline
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undercutting prices

If a knifemaker is willing to devalue his/her work by cutting

prices, the door is then opened for the dealer to do the

same thing.
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  #3  
Old 11-25-2003, 12:44 PM
J.R. Fraps J.R. Fraps is offline
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If one of the folks who currently, as one of "my" Dealers, were to underprice my work, I would be shocked...and I am not talking about a Dealer giving a top repeat customer a financial consideration for being a top repeat customer.
If another Dealer gets ahold of some of my work and intentionally underprices it compared to my current pricing and / or my main Dealers' current pricing, that Dealer would have achieced 4 things:

1. Harmed his ability to get "full price"
2.Harmed my "good" Dealers' ability to continue to obtain "full price"
3. Harmed my ability to continue to maintain "full price".
4 And worst of all....Harmed the current market value that I and my Dealers have worked to maintain to protect the value of the knives that our CUSTOMERS purchased.

I consider it just as harmful to ALL parties when a Dealer puts a "Sale" price or reduces the price of a knife and advertises it as such. That Dealer is saying he/she can't sell the piece at the originally asked for price, thereby admitting a lack of marketing savvy or market knowledge. While I understand that pricing can be affected by market changes, particular knife qualities, etc., I'd have a difficult time doing business with a Dealer who routinely practices putting Sale Pricing on knives.


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  #4  
Old 11-25-2003, 07:53 PM
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Geno Geno is offline
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To hear from a maker

Hello Les,and all who might be interested,
I have been a custom/handmade/fulltime knifemaker for quite a while now compaired to the odds.
I'm sure that I may once again be the exception here, but if you want to hear from this maker this is my tale.
The concept of ANYONE else selling my work seams strange to me.
There may be a "price game" out there somewhere, but I don't belong to it.
I make knives(and blades) because I love the work, and it helps me eat.I don't make particular "knife models", and each work is one of a kind in creation.
A knife is not worth"X" amount of money just because of a name.
That name has to mean something before it is worth anything, yet each knife has some value for the value of the knife alone.
I may spend the same amount of time on two different pieces, even that does not mean they are worth the same amount.
Price and worth are two different things.
I never try to sell a knife for what I think it is worth but rather what I think it will sell for. The real worth may come from the forth or fifth owners.The artist makes less than anyone.
A dealer who wants a 1200 dollar knife does not pay 1200 dollars for the knife and turn around and sell it for the same 1200 dollars, right?
If I understand this correctly...
The maker gives the dealer the knife at some 30 per cent discount to be resold at said"worth"price.again, the maker makes the least.
If a maker (or seller) offers a 30 per cent discount to the public it is assumed"his stuff is worthless because it can be discounted".
I don't follow.
America was built on a principle called "Supply and Demand".
Buy low and sell high is the theory of how it works, but things are not always the way they are suppose to be.Sometimes you have to do what you have to do to stay afloat in this game.
Pricing is the hardest part of this game for me, but the game is simple, "Sell what you can, for what you can, whenever you can, and keep going".I don't even consider what I think something is worth, I price it to be absorbed into the knifeworld and let nature take it's corse.My work will stand the test of time or my name will fade away like so many others, but the value or "worth" of a particular blade or knife is governed by the market, not what I or you think about it. The value or worth of that same blade will increase or decrease in the knifeworld as time goes on.Then and only then will the name on the side mean anything.
So to the "dealers" here, I ask this question,
Who determines these prices you are talking about, repeat (robot)makers or original artists, the dealers, the buyers,the market?
I don't want to sound ignorant here, I simply don't know.I'v only had one dealer approach me about selling knives for me and I really don't care how he gets rid of them, just SO he gets rid of them and comes back(and he does quite well)
If you have customers that believe a particular knife is worth 1200 dollars just because you said it was worth it , well, I guess I missed that crowd.
I'v found that customers in general(just like you guys) want a price break to handle the risk.What's wrong with that?
Again it is the artist who losses out, not you, or do you feel you simply did not make enough money off "OUR" work you are selling "for us"?:confused:

Last edited by Geno; 11-25-2003 at 08:18 PM.
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  #5  
Old 11-26-2003, 11:07 AM
cactusforge cactusforge is offline
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Geno, Very well said and you are not the exception here. I have the same attitude. The Knife Dealers need to pay attention to new makers and to help them along. This is what A.G.Russels Cutting Edge did and he lowered the price of a makers knife all the time and he SOLD knives and he was the BEST thing that happened to me in my knife making career till I was run off by the new management as well as others in the same position. How do I know this? The New management told me.
New makers have a lot of trouble selling there product and are often the biggest collectors of there own Knives. Les put your self in the position of the maker, he has 12 or 14 knives finished thy are a decent knives, better than factory knives but could use some improvement, they are users, what is he to do give them away, he needs to by more supply's and needs money. He has put a price on his product that may be a little high as he is uneducated. He finds a Dealer that will HELP him and as the dealer will take all his knives the maker gives him a 50% discount
he sells the knives and then the dealer sells them for 20% under makers list price. It seems to me that every one is a WINNER!!!
Thy were both entrepreneurs. It is better to make a little money than none at all.
There are a lot of different knife markets, some will be at full retail and others at a discount, I feel that a maker should price his product at a profit at the discount price and sell where he can sell. As he gets better his product gets better and he moves into better markets, we start at the bottom and work at getting to the top. If we are a top of the line maker and are back ordered for several years there is no need to sell at a discount period and then I would not do business with a dealer who discounted my product, but I am not in that category yet so I sell where I can.
Sales are hard to come by and I think that Dealers should pay attention to the Makers that are on there own trying to make it
instead of brushing them off and leaving them hang out to fail.
One of the Dealers who sells my knives never sells any thing at retail everything factory folders to custom Bowie's and he keeps me afloat a lot of the time in fact and right now I am back ordered to him.
I feel that the question here is to put a minimum price on the knife that represents a profit to you, it is the discount price add to that the mark up for a dealer for say 3 or more knives then make knives and SELL SELL SELL!!!!!!
Years ago I was in this position I went selling in the markets (remember that I live in one of the largest flee markets in America with every thing for sale, dealers big and small from all over the world) I sold all my knives to a knife and gun dealer from Texas,
his attitude on a couple of the knives were some one will by them, this dealer was a entrepreneurs.
Gib


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  #6  
Old 11-26-2003, 11:55 AM
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Kevin Wilkins Kevin Wilkins is offline
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If a dealer is dumping knives at vastly reduced prices, that means one of two things:

1. The dealer is desperate to raise cash and the sale has nothing to do with the maker. This usually means the knives of more than one maker are discounted.

2. The dealer cant sell the maker's knives at the prices he started out with and is reducing the price to try and move the goods.

There is a third reason, but it's not too likely: the dealerr is pissed off at the maker and doesnt want to do business with him anymore.

As a maker, I would be dissappointed if a dealer started dumping my products at discounted prices and certainly if the dealer hadn't contacted me beforehand to discuss the problem. I would hesitate to sell knives to this deale in the future.

But my main concern would be: "Why didnt my knives sell?"

If it was price, then what can be done about that.
If it was quality, then better fix it and fast.
If it was style / design, then you better get closer in touch with the market and your customers.

Les, one point you made about reducing prices to be more competitive: This is fine, as long as you are making a profit on each unit sold. The idea that one makes more profit with a smaller margin and higher sales is fine... as long as you are makinga profit. It's better to sell one knife at a profit than ten at a loss.

Knifemaking is an extremely labour intensive endeavor, using expensive equipment and materials. It's tough to make a profit, as seen by the really very few people who make custom knives as full time job and dont have another source of income or a rich wife. :-)

As a knifemaker you have to design and make a knife that you can sell for a profit that exceeds the costs of materials. Your time has to be paid for too. If you cant do that, then you better start looking for rich gal to marry.

I dont sell knives through dealers because I am already at maximum production (making each knife myself) and no margin to give to a dealer. For me the 10 or 100 sales is not relavant because I need about 3 years to make a 100 knives! :-) I'm happy if I get 10 done... and I do sell those 10.


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Old 11-27-2003, 07:18 PM
RJ Martin RJ Martin is offline
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I don't work with dealers who discount the price of my knives. I don't discount the price of my knives. I also don't work with dealers who sell my knives more than 5% over my retail.

The bottom line is that I want all my customers to be treated the way I want to be treated-fairly. Customers who see me at a show know that my prices will be the same on Friday, Sunday, or next month, and, if they purchase one of my knives from my authorized dealers, the price will be the same from them.

Putting a lot of consideration into the final selling price of any knife model is a main consideration. After a while, this becomes easier-you have history and sales data to draw from. When in doubt, I still start low. If the knife is a fast seller, increasing the price is a viable option. This benefits the customers who stepped up and bought the knife when it was new.

Working with quality dealers you can trust benefits everyone. Good will works both ways-You wouldn't believe how blown away customers are when I tell them that I don't mind if they buy a knife I have in stock from a dealer who also has it in stock. Either way, I'm going to sell another knife, and that's what really matters.

Yes, many consumer products are marketed on the basis of continually varying price structures. Ever buy a new car, and then see it for $2000 less next month? It can be frustrating. Buying a knife doesn't need to be like that.

If you want to give a good customer a deal, upgrade the steel or give them a premium piece of handle material. Hell-I usually do that if I'm late on a delivery. Offer to pay the shipping cost-Just don't play games with the price of the knife. Eventually, someone will find out, and then what?


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  #8  
Old 11-28-2003, 11:20 AM
cactusforge cactusforge is offline
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It seems to me that if there is no room in my knife pricing to give a dealer a discount then I am already selling knives at a discount, a mark up needs to be added to the sale price to arrive at a list price. Les, is this right?
There is also another factor in this conversation that needs to be considered and that is location. Makers living near or in a large population center or/and to the northern part of the country will find better prices for there product, here in the southwest a long way from a large city and with limited funds we have a tendency to take what we can get. This price discrepancy is more noticeable in the north east, prices are just higher there.
I sell where I can and each sale is a landmark occasion. Selling cost money and a dealer for me is the best way to go.
Now lets look at this another way. A customer comes to me to by a knife, do I sell him a knife at a discount NO, if he wants to by several we will talk about it. I won't under sell a Dealer.
Les, I looked at your consignment site and did not find a Bowie class how come, try them you will like them.
Gib


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Old 11-28-2003, 12:23 PM
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Les Robertson Les Robertson is offline
 
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Hi Gib,

I was in your position at one time. Can you belive when I first started out there were makers who wouldn't sell knives to me at a discount!!!!!

I had to buy them at full price and then mark them up.

When I first started out I went to a lot of NKCA Shows. Mostly, because they were close to home and the table fees were $35.00

I can remember getting excited about making $25 on a knife. As I understood that I was the new guy. I had to prove myself to both the makers and the buyers.

At first I was doing nothing but buying and reselling. My knowledge base of both custom knives and marketing/sales was limited. I learned by not just attending shows, but setting up at them. Two - Three days at a time several times a year behind a table. Doing nothing for 8 - 10 hours a day talking knives and learning about them.

During the course of the first 7 years I answered tens of thousands of questions. Handled tens of thousands of knives. And asked tens of thousands of questions to makers, customers and other dealers.

Another thing started to happen, I was being approached by makers to represent their knives. Even some who were extremly rude to me early on.

So like makers, dealers have to pay their dues as well.

Coming up the way I did I was taught a lot of valuable lessons.

One of these is that makers do not understand pricing and its consequenses both negative and positive.

Question: What is your knife worth?

Answer: What someone will pay for it.

What most new makers fail to understand are the components that make up what someone is willing to pay for a knife.

One recommendation I make to makers who ask me or those I work and have worked with. Is that you never, ever negotiate on your price.

I don't care if you bought too much handle material, spent more on food at a show than you thought, you wife is going to give you hell when you get home if you don't sell anything, etc. You can pick your excuse out of thousands to "DEVALUE" your work.

Every time you comprimise on your pricing you are telling the buyer you do not belive in your own work.

Stop right there. Don't tell me I don't understand. Remember I was the guy who used to make $25 on a knife and was happy to get it.

Custom knives are a product that no one needs. We sell our knives to those who appreciate something better and are willing to pay more for a better product.

To those makers who continually discount their knives. What the market is telling you is that your knives are to expensive for either/or the quality or position you occupy in the market you are competiting in. It is as simple as that.

Why is it that you will reduce your price on Sunday but not start at that price on Friday?

When you go to the next show, do you start out on Friday with the price you had on the previous Sunday or do you play the "game" again?

One major difference today then when I started almost 19 years ago is the amount of makers. There has probably been a 300- 400% increase. While over the same time frame there has only been a 50% growth in dealers. Most of that growth has occured in the last 7 years.

So many makers wrongly think that dealers don't or won't do business with them because they are not established.

This is not to say that some dealers don't have that attitude.

However, there are so many makers out there, with more showing up every day. It is viturally impossible to keep abreast with all of these makers.

I am constantly on the look out for new makers to work with. With Quality for the money being my first criteria. There are several other criteria, many which include the makers business strategies.

One of these strategies does not include price fluctuations depending on daily conditions of the makers situations.

Quiet frankly this is not fair to my clients and it is not fair to my business plan.

Question for Gib and others. Why is it that none of the other major custom knife dealers will not give their clients full price of what they paid for a knife. In trade for another knife they want to purchase from that same dealer?

Why am I the only one who offers that to my clients?

Makers, it is up to you to insure that your knives are priced fairly. That you initially charge a fair price. That your dealers charge full price. That you as the makers do not compromise on your prices at shows, just because it was a bad one.

You are not being fair to your clients.

If you want to reward a good client, RJ had some good suggestons. Upgrade the steel, free shipping, better handle material, etc.

This creates good will with your clients and the casual client cannot complain.

Knifemakers are ultimately responsible for their position in the makert...good, bad or indifferent.

Yes, you should work with dealers. I say that not because I am a dealer, but because I understand how helpful they can be. You also need to attend shows, get your own web site and advertise in the custom knife magazines.

Starting your own business can be challenging and excting. However, the Small Businessman's Association that 6 out of 10 makers reading this will be out of business in 5 years or less. Another 2 will be out of business within 8 - 10 years.

Growing you client base and improving your position in the custom knife market long term is a challange that most makers are not up to. Want proof? Write down on a piece of paper how many knife makers you know that are full time. Now put a line through those makers names who's sole support is the money they make from the sale of the knives they make. Yes, their wife can have a job. I mean those who do not have a pension or any other source of income.

Talk to those makers. They will tell you they don't discount their knives $5. Why, because that is the same as taking $5 out or wallet and giving it to someone.

Should you give a discount to dealers? Yes. However, you need to know what they are going to give you for that discount.

Have you put together your team?

An excellent example can be found on pages 24 - 31 of the current issue of Blade.

This is an excellent example of a "team". Mike Haskew was the writer. He contacts me, as well as Dave Ellis and Dan Delevan for an article on "Ground Breaking Tactiical-Folder Makers". From the perspective of "Veteran Industry Observers".

After that article was written, Blade needed photo's for the article. Steve Shackelford contacted me for some knives. Fortunately, the tactical knife business is so good, I don't have any of these knives.

However, a client of mine Dan Magrino has an excellent collection. I put Steve in touch with him. Dan sends Blade Magazine all the knives they can stand.

Had I not been part of Steve Shackelford's and Mike Haske's "Team".

I would not have been contacted. Had I not been contacted, they would not have access to memebers of my "Team" and this article may or may not of had the excellent examples of these makers work.

In the three big box quotes with the Names of Terzuola, Crawford and Carson and my name. Will be the focus of the article of the casual observer just leafing through the magazine.

Even though Bob, Pat and Kit do not need the advertising, you can be sure they are happy their name showed up.

Question for the makers out there.....how much did it cost these makers to have their names, a little bit of what they have contributed and photos of their knives cost them?

The answer is $0.00

What do the dealers get out of this? Future phone calls looking for knives from these makers. We show the makers we work with that we are holding up our part of the bargain. We also benefit from having our names in the article...free advertising.

This article is a win-win situation for all those involved.

I know this has gone a little astray from the idea of the thread.

But I wanted to show that I too was once the new kid on the block. I was discrimated against because I was not a "name".

I had to prove myself and pay my dues to get to the position I am today.

More to the point, I have to contiune to prove myself daily. As I am a full time custom knife dealer with no other source of income.

I have all the bills most of us do, as well as two daughters. I admit I have been tempeted to undersell a knife on more occasions than I can remember.

However, I have learned that short term gains are never a subsititue for long term success.


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Old 11-28-2003, 12:28 PM
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Les Robertson Les Robertson is offline
 
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Hi Gib,

This one will be shorter.

What I recommend to makers is that they figure out what they need to get for a knife to make a decent profit. Add 25%.

This way you can sell to dealers and it won't hurt your profit margin.

Additionally, the knives you sell for full retail will help to cover your expenses when shows or times are a little slow.

Also, if you have a good client and he is buying 5 knives then you can give him 10% off. You won't hurt you or your dealers that way.

Also, if the shows in the big population areas are better....then go to one of those.

As for Bowies on CKC, there should have been a category for those. I love Bowies!

I try to keep some in stock all the time.


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Old 11-28-2003, 02:39 PM
cactusforge cactusforge is offline
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Les, for once we are on the same page and you put into words what I have always thought about a team.
Went to CKC and looked agian and did not find a Bowie class.
Gib


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Old 11-29-2003, 05:40 PM
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SVanderkolff SVanderkolff is offline
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Les
What you say about maintaining a price makes perfect sense if you know what your knives will sell for. I am a fairly new maker but have already established a price for my hunters and bird knives...but... I still make a lot of one offs or completely different knives. With these I have no experience and even after looking carefully at the market there is a very wide range of prices for that type of knife. Specifically I posted an S guard bowie recently on the display board. stag handle damascus blade, guard,ferrule and butt cap. I will be selling this knife but have no idea what to charge for it. I do not depend on knives for my lively hood, it is strictly a hobby that pays for itself (for now) and provides me with an outlet for my need for permanance. So I could give it away and it would not effect my ability to make more knives, on the other hand I was raised and firmly believe that what you get monitarily for something should be a fair representation of what the buyer places its worth at. (not very well put). I could price the knife at $1000 and would certainly be enjoying it for a long long time, I could price it at $100 and it would sell in a heartbeat. So somewhere between the two is the real price. If I put out it out there at too high a price to begin with should I hang on to it forever or do I lower my price to find the market?
Thanks
Steve


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Old 11-29-2003, 06:04 PM
J.R. Fraps J.R. Fraps is offline
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Steve,
You are in a position many of us have been in at one time or another. Suggestion: Decide on a Dealer you would like to do business with. Call him/her up and explain your situation, espec. re marketing and pricing. Make arrangements to send the knife to the dealer. HAve him/her help you set a reasonable price to meet your expectations... somewhere that keeps the value high, to the price that moves it quickly depending on your goals and objectives.
Then work with that Dealer to move your piece and help create your niche in the marketplace. If Les is the right guy for you to do that with, fine. If not I'll bet he would be the first to recommend another Dealer being a better match for you to deal with.
You have a dilema we all face at one or more times. Best Of Luck In finding your solution!


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Old 11-30-2003, 02:39 PM
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Les Robertson Les Robertson is offline
 
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Hi Steve,

Most new knife makers have difficulty pricing their knives. Mostly because they are not familiar with the market they are trying to compete in.

If you were selling your Bowie for $1,000, that might be appropriate. If the work was competitive with others in the same market. Also, if your reputation and desireablilty were comensurate with your competition.

Most makers take some sort of "short-cut". There are two very common ones.

1) They ask other makers. The question is why would you do this? Most of them don't know what your knives should sell for either. Usually after you tell them the price they tell you that your selling them "to cheap".

A side bar to this. I actually witnessed this. A new maker came up to an established maker to ask a question about price. The established maker told the new maker he needed to raise his prices. The new maker thanked him and said he would do that.

A few minutes later a customer walked up to the established makers table and asked about a knife. The customer said he thought the knife was a little "high". The established maker gave him the short version of his history. He ended his speech by telling the customer to go check out the "new" maker. He told him "his prices are almost as much as mine and he has only been making knives a few years".

Remember, your buddy is also your competitor.

2) Dealers. Without a doubt the best source for pricing information. Im not saying this because I am a dealer. But because as a dealer it is my job to look at thousands of knives at every knife show I attend. I am always looking for quality for the money knives to buy.

I, like every other dealer out there has had their share of makers asking questions about pricing.

Most new makers are over priced. Many who I tell this too are offended. Ironically many who ask my opinion because they feel I have some degree of knowledge of the subject matter. Are the same makers who look at me like I don't know what I am talking about when I give them a price.

When I speak of new makers I am generally talking 7 years or less. I say 7 years because obviously part time makers will make fewer knives than those who are full time during those 7 years.

I tell makes in this time frame that it is important to get your knives in clients hands.

Understand that for (especially the first few years) these people are buying your "mistakes". They are paying you to learn.

Consequently, you should reward them with a fair or even a more than fair price.

By starting with a more than fair price, this allows you to increase your price every 18 months or so. No one will complain. Your work is getting better and your name is out there a little more.

Additionally, those who bought early from you are rewarded as their knives are now worth more.

An additional benefit is that you can now make more knives in the same amount of time as you did earlier. Which means per knife...you have given yourself a raise. Without a substantial raise in the price of your knives.

It has taken me over 19 years being ivolved with custom knives to get to the point I am now. Every day I find areas for improvement.

Market position is about constant and consistent effort.

There are three types of analysis you should conduct for your business. Again, it is not essential you do these. The world need ditch diggers to:

1) Market Analysis: Marketing sizing, segmentation, dynamics and trends at all levels.

2) SWOT Analysis: Strengths, Weaknesses, Opportunities and Threats.

3) Competitive Analysis: Study of Competitors to understand the dynamics of the market, anticipate their moves and prepare your responses.

For those who acutally think there might something to this marketing stuff.

Get a copy of Knives 2004. Go to the maker section and find out which other makers live in your state.

Next find their names in the maker section. This will list their specialties.

Find out which makers build knives like yours (Hunters, Folders, etc.).

Find out their price range, materiasl used, etc.

Gather as much information as you can about those makers in your state.

Next go to the states that surround you and do the same thing.

Eventually you will find out your competiors strengths and weakness's.

This will help you idenify your strenghts and weaknesses as compared to the market you are in.

Then you start your SWOT Analysis.

Then you put together a marketing plan and then your business plan.

Pretty soon you know where you are at, where you want to go and how to get there.

At this pricing is a no brainer. You know what the market will bear for a particular style with particular materials. You know how many other makers build knives like this, you know their price ranges, their delivery times and even which shows they attend.

Shows you attend should be brought into the equation as well. Gun and knfie shows...cheaper knives. Meaning less thrills, plaine sheaths, ATS-34 will be fine as few if any could tell the difference between that and S30V.

But you have a few higher end knives in S30V, for that one or two educated customer that will come through the door.

If your going to a larger custom knife show. You see three of the main makers in your market will be there. You cant compete with name recognition (yet). You can compete with materials and price points.

Many older, established makers are slow to change and follow the market. Why...because they have a good positio n in the market and they feel it is not necessary (This would be a weakness in your SWOT analysis). Additionally, if they always bring the same style of knives, then the customers may be tiring of that. They may pass that maker by as they got one of those knives last year or have one on order.

This is the client you are looking for. Now how are you going to get him to your table and introduce him to your knives?

However if you haven't done your market research you won't even know that client is out there. Let alone how to get them to your table.

The good news is that if you do take the time and effort to do market research you will be way ahead.

As there are some makers out there who still think all they have to do is show up at a show. Put a table cover on the table, put their knives and business cards out and the world will come to them.

Those are your best competitors, as they won't be here 5 years from now.

Want proof?

Take that same Knivess 2004 and then get a Knives 1999. Go through page by page and look at all the makers that are now listed and those that are no longer listed. Where did they go?


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Old 11-30-2003, 06:03 PM
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Les Robertson Les Robertson is offline
 
Join Date: Jun 2002
Location: Georgia
Posts: 4
Looking back at the last post. I think I wrote my next book. Whew.


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