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The Business of Knife Making A forum dedicated to all aspects of running, managing and legal operational issues relating to the custom knife making and custom knife selling industry.

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  #16  
Old 11-30-2003, 08:48 PM
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Keith Montgomery Keith Montgomery is offline
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Thanks Les. I'm not a maker, but that was a good lesson in marketing that applies to any business.


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  #17  
Old 12-01-2003, 01:29 AM
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This is a great thread! Les, thank you for taking the time to make these long posts.

One point I think plays a big role in knifemaking as a "business" is the large amount of "hobby" knifemakers and knifemaking. The line between business and hobby is often very much blurred. I know that when I started out designing and then making knives almost 10 years it was a purely artistic - hobby - endeavour and I wasnt concerned about turning a profit. Then when I began selling knives and doing the first few shows, I was happy to (more or less) cover expenses.

I think there are a lot of makers who are retired from another job, work part time, have other sources of income etc etc. And a lot of folks are just happy to make some extra money to help cover the costs of their hobby and keep the wife off their case.

There aren't too many other "industries" where a fulltime "business owner" has this type of competition!

I mean, take the car wash industry. How many people open and maintain a car wash simply because they love clean cars! AND pump in money out of their own pocket to buy and maintain equipment because the low prices they charge dont coverr their operating expenses. So if you have a car wash down the street and are trying to feed a family from the profit, this would give you fits, right?

Welcome to knifemaking!


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  #18  
Old 12-01-2003, 10:49 AM
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Chuck Burrows Chuck Burrows is offline
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Les I may not always see eye to eye but I do always read and heed.

Kevin - "hobbyests" have an even greater impact on sheath makers. A sheath is usually a second hand thought to many makers and then you get the guys who have a neighbor or a friend who can make one for him for "practically" nothing so..... Luckily I have a clientele base that isn't necessarily of the "knife world" and are willing to pay for a good looking sheath even if the knife isn't the best in the world. In my experience a GOOD sheath and even better a good looking sheath will add to the value of a knife far beyond it's intrinsic value alone - it's a package thing - and remember what Madison Ave says about packaging.


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  #19  
Old 12-05-2003, 11:27 PM
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Hi Kevin,

Most business's aren't bothered by part-timers. As they either buy them up or put them out of business.

The key word here is business. Most custom knife makers do not treat their knife making like a business. As I suspect this takes some of the fun out of it.

It's the same for collectors who don't want to do homework when they start buying knives. They just want to buy what they like.

This is fine.

However, too many makers get their ego's involved and get upset when they don't get an article, picture, award, etc. They want the reward and noteriety, but are slow to put forth the effort on the business side.

I wrote a thread here over a year ago about how to get your knife(s) in magazines. The cost for this guaranteed information was $100.

Only 2 makers contacted me and were actually willing to pay the $100.

I was amazed. First, the $100 is a tax write off as a business expense. Second, if you got only 1 order from the picture you more than covered the $100. On top of this you got the much sought after "magazine exposure".

This goes back to the team idea and why once again I am featured in Blade Magazine as a "expert" in the field of custom knives.

This leads to the Blade Show where once again Bob Neal and I will be conducting our seminar. As well, I have already been asked to be judge for the custom knife competiton.

You want to talk about a dream job for a custom knife dealer! Every maker (who wants to enter) puts their very best work in one room, side by side! For me, that is as good as it gets.

I make note of who enters, as well as who doesn't.

I make notes of who's work is not there any more.

I make notes of who's work is there, and people don't know about yet.

Some people actually think that it is an "ego" thing being picked to judge at the show. Only non-business types would think that way.

My self and the other judges (usually all dealers) understand that these awards can mean money in the pocket of the makers who win these awards. So we take it very seriously.

As with makers who don't want to put forth the effort. It is the same with collectors. Those who buy what they like. Which of course is the first rule of custom knife buying.

However, over the last two years for various reasons. Many collectors have been selling their knives in the aftermarket. What many have learned and are still learning are the lessons of the School of the Painful Truth of the Aftermarket.

While the Internet may not be the best place to learn which knives to buy. It is an excellent resource for which knives not to buy and which makers not to buy from.

Personally, I do market research daily in the for sale forums all over the Internet. It is a treasure trove of information.

This attention to detail by the collector is rewarding some makers and hurting others. Yes, they are still buying what they like. However, if you like two knives the same. You might as well buy the one that has a better chance of maintaing it's value.

If you as a maker are not watching how your knives are doing in the aftermarket....Your wrong.

Kevin, the main advantage a professional maker has over the hobbyist....is their business savy.

They are the early adopeters. Whether it is a new steel, technique, handle material etc.

How many makers out there still use ATS-34 when most collectors want S30V? Are you still using nickel silver or brass? How about those still using Ivory Micarta!

Successful makers understand it is not about what you want. It is about what the customer wants.

Kit Carson has the best Quoteable Quote concerning steel. He was asked "what is your favorite steel to use". Kit's respones "whatever the customer wants".

Kit is an example of an early adopter. he was using Stellite and Talonite before most of us knew what it was. He has been sent more than his fair share of "exotic" materials as his knowledge is sought after by Manufactures, other makers, dealers and customers alike.

RJ Martin is another early adopter. I love his business attiude. I have come to him with some crazy ideas. His respone is not 35 reasons why it can't be done. His response is let me figure this out.

Kevin, this is what seperates the hobbyist from the professional. Their professional business attitude. They understand that if your going to wash cars then you make sure that it is going to make a profit. You spend the money for the equipiment, advertising, and quality people to put on your team.

A part timer can have a professional attitude and business sense.

Kevin, you are correct. It is difficult to compete with someone who will build knives and consistently lose money.

However, for most of these makers. There comes a time when someone realizes that the hole they have been throwing money into is getting deeper and deeper.

It's then when the maker finds out that after "giving" them away for so many years. It's tough to acutally try and sell them for a profit.


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  #20  
Old 01-13-2004, 08:01 PM
Howard Rich Howard Rich is offline
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I am a newbie so you can take what I say for what its worth.
My favorite artist is Picasso, he was well known as a terrible business person and now known as one of the greatest artist in the world.
I have done metal casting for sculpture artist for several years and never have had meant an artist yet that is a business savy professional. And I have a garage full of art to prove it.
This thead is an argument that has been argued for hundreds of years in the art and crafts world.
I have had my career and now I make knives becaues I want too. I have earned my way here.
Howard Rich
PS;
Some day I hope to make a knife good enough to need a "Wild Rose" sheath.

Last edited by Howard Rich; 01-13-2004 at 08:04 PM.
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  #21  
Old 01-13-2004, 08:45 PM
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Chuck Burrows Chuck Burrows is offline
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Some day I hope to make a knife good enough to need a "Wild Rose" sheath.
Thanks for the compliment Howard - helped brighten an otherwise trying day.


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The beautiful sheaths created for storing the knife elevate the knife one step higher. It celebrates the knife it houses.

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  #22  
Old 01-14-2004, 06:43 AM
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Hi Howard,

You got a little side tracked. This thread is about how do makers feel about the dealers they work with selling their knives for under retail price.

Not are knife makers good business people or not. As with any business venture some are and some are not.

My point to these threads are to provide an insight into the business side of custom knives. These lessons are the ones I have learned over the years. These are not lessons brought from another art form or business. These are lessons learned directly from the buying and selling of custom knives.

I have never had a problem with those artists who want to make what they want. Sell a few, give some away, etc.

What irritates me are those makers who claim to be artists. Then start complaining when another maker gets any form or press or popularity.

It is at that very point that the "artist" becomes a businessman. As such you have to act accordingly.

Perhaps if some of the great "artists" of all time had been better businessmen. They wouldn't have hacked off body parts, died penniless or commited suicide.

As for meeting a great artist who is also an exceptional business man. I would encourage you to meet and talk with Jerry Fisk. Jerry is without a doubt the best business man among custom knife makers in the world. Also, you should buy a copy of the book he wrote on the knife business.

Your a newbie now, but you don't have to remain such.


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  #23  
Old 01-14-2004, 07:15 AM
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I have been following this thread for some time and I felt like expressing whats in my head now. Very good stuff by the way, I must thank everyone who has posted so far.

I learned to respect Les Robertson a long time before I first really got into the custom knife world, just by looking on his website and hearing about his reputation.

To be simple, I am a new kid on the block right now. I sold a dozen knives so far and run a small association of makers through a website called Brazilian Bladesmiths. And my methods are diferent, and have been working great for us so far.

I have, of course, to consider the fact that the economy in my country is fairly different from the USA, and the living style (and the means to support it) of every maker here was highly influenced by the price someone would pay for a custom knife. Things are thight here, machinery is much more expensive and usualy you have to build them, and I mean from belt grinders to power hammers, so the makers do need a lot of investment to start with. Heck, really gifted guys like Rodrigo Sfreddo have been on the local market for more than 10 years and look at his knives! And look at his prices!

This reality in our local market is even worst. local collectors are usualy squeezing the makers for as much as they can, and the results are there are less makers making a real living out of it in the local arena.

That is how Brazilina Bladesmiths was born. After Jerry Fisk came by with his seminar, and Sfreddo, Vilar and Luciano started selling overseas through his contacts, I saw the need of an agent to start selling other good people and thus help the local market to develop in quality and value of the pieces.

You would be atonished that, not long ago, a 52100 integral gaucho camp knife, hand forged (there was no power hammer at that time on the makers shop) was priced US$ 175.00! And the buyer was still trying to squeeze!

I think it is important to say I was studding bladesmithing with Sfreddo at that time.

The deal we all have is that we will help to promote each other, we will only take consignment and the price of the knife is discussed with the maker and the percentage I take on the deal is fixed. It does not change. And once the price is disucssed and we have an agreement this price cannot be lowered anymore, not by me, not by the maker, except in one of the given situations of special costumers, etc. But even then, we do have to agree again, maker and dealer. I can use a lower percentage because I am not using my money to buy and re-sell.

The only problem I face, and we are still working on that, is that I do not keep stock. I am selling faster than they can produce, and therefore I have to invest in rasing new members, by helping them adequate their quality to the international market and price their knives fairly, as well as telling the world about them.

Long post, I know, but I felt like sharing this mainly because the problems I am facing are related to the buyers, not to the makers and I think it is a good thing to adress. It is dificult to build a solid reputation and I am working pretty hard on it, as well as all the makers we have on the team. I have been contacted by some Dealers and asked for discounts that were kindly, but strongly, denied, and so life goes on.

Hope this little bit (or big long dificult reading bit LOL ) is of some use.


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  #24  
Old 01-15-2004, 02:01 AM
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Kevin Wilkins Kevin Wilkins is offline
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Les, this is a really interesting thread!

One thing I thought about: in the manufacturing industry, the production unit is usually sperated from the sales/marketing unit in terms of responsibility. By that I mean, there are usually MBAs who figure out sales, marketing and cost accounting and another department who figure out how to engineer and make the #### whatevers that are being produced and sold. The engineers may say, we want to use this material and make it like this. Then the sales/marketing guys calculate how much each unit would cost and what they have to sell them for to make a profit and pay everybody's salary. If sales says, we cant sell the stuff in the market at the price we would have to charge, they go back to enginneeering and say, guys, gotta make 'em cheaper!

In the "industry" of custom knives, usally there is one guy - the maker - who has to wear all these hat and figure all this crap out! ####! MBA... Master tool and die maker... expensive equipment... as the NYPD guys at the shooting range used to say (many moons ago) looks like it's time to eat your gun!

So Les, I agree in theory with you, the advantage a Profi Maker has over a hobby maker is the profis business savy, BUT if the professional maker ain't got no business savy, or traiing in business administration... ouch.

But as Raymond Chandler once wrote, "... down these mean streets a man must go..."


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  #25  
Old 01-15-2004, 08:27 AM
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Hi Kevin,

I guess my perspective is skewed. I have been a full time dealer for almost 9 years now. It is my only source of income and has been for the last 9 years.

As such I have to treat it like the business it is. Consequently, I look for makers who are of a like mind. Specifically those who understand "market position, competitive pricing and meeting deadlines".

After 8 years in the Army, I knew I was getting out by 10. I also understood that if I wanted to be competitive in the corporate America I would need an MBA. As the main thing you hear from potential employeers when you are coming out of the Army is "but you have no business experience".

They were right to a degree. For my first five years my job was to kill people and break things. For my second five years it was to provide the intel to those people who kill people and break things.

My intent when I signed up for the MBA program was to give me an advantage over other Captain's leaving the Army.

My undergrad degree was in Criminal Justice. Again, nothing to do with business.

However, what I found in Grad school was that while I had no "formal" education in business. Having run my business for 7 years at that point. I found I did have "real world" business experience.

I had been doing accounting, marketing, production management, project management, etc.

What I found was that by understanding and applying basic business principles. It helped me understand how to improve my business and make me more competitive.

You don't need an MBA, you don't even need a BA in business. However, it is in your best interest and the interest of your business to apply the basic principles to your business.

This is why this thread came about. If the dealers you work with are undercutting your retail prices. Then ultimately they will cut into your bottom line. As pricing for your knives will take on a production knife look.

That is to say, you will have your MSRP. However, everyone will know that is not the "real" price. As such, your retail prices will ultimately go down.

This will force you as the maker to make a business decision. Either live with it or stop doing business with the dealer(s).

However, if you wait to long to stop the undercutting it may be too late. You may find your customer base expects this discount. If you don't give it to them, they may go to one of your competitors who will.

Ultimately, you will spend time re-training your customers to pay full retail. Good Luck.

I won't work with knife makers who allow undercutting of their retail prices. As it puts me in a position that I also have to undercut the retail in order to be competitive.

I understand that these makers have hit a plateau. Subsequently, their knife values will stagnate. Consquently, it is a waste of my clients money to purchase a knife made by this maker.

I was interviewed last week by the editor of Blade Magazine, Steve Shackelford. Regarind an article on the 10 Ten Collectible maers. Collectible in the sense that their knives go up in value.

The names I gave Steve (as I suspect most of these names will apear on the lists of the others Steve talks with) had a couple things in common.

1) Excellent Knife Makers
2) They give back to the custom knife community.
3) Their pricing is fair, given their position in the market.
4) They were innovators
5) They created their own unique style
6) No one would ever think of selling their knives for less than retail.

Kevin, everyone who runs their own business has to do everything. Nothing new there.

Yes, it helps to have a business background. However, if you don't there are numerous books, tapes and CD's avaialble to help. A good CPA cannot be overlooked.

I would recommend to all those who have not done so. To buy one of the many business/marketing plan software programs out there and write a business plan.

You can make it as basic or advanced as you like.

It is recommended you write you plan for a 3-5 year time frame. I agree. Then update it annually. I update mine every 6 months. Yes, the cusotm knife market is moving that fast.

Which styles, materials, shows, magazine advertising, internet paticipation, etc. Are all things that need to be addressed.

The nice thing about working for yourself is that you determine where you business is going to go and what it is going to do.

You can work as much or as little as you like.

The down side is, if you don't produce...you don't get paid.

It's your business and you are responsible for everything. Good, bad or indifferent.


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  #26  
Old 01-29-2004, 11:47 AM
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Dusty Moulton Dusty Moulton is offline
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Dealers,Pricing & staying afloat

Hello Les
Was reading the posts while eating lunch and found them interesting, especially about knife makers who come & go. They find that generally this is more than a fun hobby as they thought in the beginning. For some of us it is very hard work with hours much longer than a regular job, for me it is generally a straight 7 day week. As for dealers that would discount my knives, if I had one doing that I would quickly say goodby. I have worked to hard & to many years to have a dealer short change me. Fortunatly I do have some very quality dealers that know their business well, but have had 1 or 2 come & go that said we can't sell your knives very well and can I buy them on credit or some other ridiculious offer that only some one who doesn't want to be in business long would accept. Well the beans & corn bread are gone so back to the shop to work on some engraving. I am going to include a link to the About Me section of my web page you may find it interesting as it goes long with some of your observations a bit Hope the link works.
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  #27  
Old 01-31-2004, 10:06 PM
severtecher severtecher is offline
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Great thread Les, and i think everyone respects your expertise and willingness to share. (my favorite knife community trait).
Dusty, If you had a guy tell you he can't sell your knives , he is not a dealer but a buffoon. "Your" product sells itself.
I am a small time collector and i am not in it for speculation. I buy what i like. Like Les pointed out,no one needs a custom knife.There are many good production knives on the market but it is not the same. I do have a few "manufactured" knives which i use at work and as EDC's but if i am going out on the town i like to carry a unique and classy blade. The fact that someone put their heart and mind into that very piece means something to me.
I do not buy a lot of knives(DO NOT consult my wife on this matter) so price is third or fourth on my priority list. I have paid $200 to $1700 for members of my collection and can't say i like my $1700 piece better than my $ 200 dollar piece. I do realize that more work went into the $1700 knife.
Soooo, back to the topic. I have purchased about 25% of my knives from a local purveyor( who since my recent move is now in walking distance. Wifes choice!) and probably half from Makers. The #1 key to selling me a knife is getting ahold of the thing. This has made more than one sale. My purveyor carries knives from guys i would not likely come in contact with and i am glad to do business with him. His prices are as good or better than advertised rates i see on the internet. Even if they were higher i would still buy there as i appreciate HIS investment in a storefront and that saves me a huge amount of travel money going to a show to see a particular maker or two. I have passed on shows to have the money to buy a particular knife. ANYWAYYY, he rambles, this is an art and a business and there is a place for all those involved. I let the maker and dealer work out the finances as a collector i am glad they are both in the game.
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  #28  
Old 02-01-2004, 10:28 AM
Larry Harley Larry Harley 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

les
there are sstill makers who wont sell to u at a discount
i feel a maker should get full price from everyone!!!
then the price should go up from there
dealers scare new makers into discounts and it skews the whole mkt
any other kind of business
art etc
the price goes up after its initial creation
harley


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  #29  
Old 02-01-2004, 11:46 AM
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I agree with that, as long as a maker is in the top 5% of the demand market and their quality can sustain that value over time.

The problem I see is that the 6-20% group that exist behind the very best (name recognition and collect-ability) also want the same deal, which doesn't work. The reason it doesn't work is because the dealer absorbs the additional cost of advertising and marketing those pieces from these lesser demand makers and this comes from their markup, not from cost.

In fact, shared by every maker who uses this channel, when you're selling through a notable dealer, you're freeing up your time and effort from the sales process and also gaining another market, their market. They also have the added expense of investing in exposure for your work, which is a peripheral benefit that affects your future value as a product and something you would have to invest in to create anyway. And, in most cases, they are buying from you in ongoing volume, which allows you to plan your growth more carefully.

What I don't get the sense of is that most makers, those in the 6-20% group, never state the benefit of being represented by top level dealers in these threads, so I assume they don't know enough to understand it's effect on the credibility of their work. In mast cases, it's to be considered an "honor" to sell through certain dealers, because you're being associated with the group of other makers in their lineup, which can put some makers on the collector map, frankly.

I'm not saying the above from some outsider perspective. I work directly on backend operations with several of the most visible dealers on the planet, and I have personally seen the effect their representation has had on a makers value, exposure and current demand. In most cases, it's enormous in terms of benefit to the maker for that small percentage of discount they give up.

This thread was started with the question about "how should a maker feel about a dealer who discounts their work." As a businessman, I'd tell you in a heartbeat ... "I'll hold the price as long as I can, but when the piece becomes stale, or I inspect it closely and discover it's not that great in terms of craftsmanship, etc, I'll move it for whatever price I have to to get rid of it." I mean, I'd also have the value gained by my buyers to consider, which no one ever discusses in these discounting threads, like all of this work is perfectly represented by the maker when selling them to me, which can differ greatly. I've seen it!

At the end of the day, it's a business ... the same thing applies to the biggest art dealers, galleries and auctions on the planet.

In fact, if you were outside of that top-5 list, the "only" way I would pay you full price for work on a volume basis, is if you met the following demands:

1. You only sold through me ... not even directly!
2. You agreed to stay off the internet, out of the magazines, etc., where one slip of an inexperienced tongue could leave my company holding a bag of metal that the public decided they no longer wanted, because they no longer liked you, your positions or attitudes!

Again, at the end of the day, from a dealer's perspective, "it's business, nothing personal!"

Alex


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  #30  
Old 02-02-2004, 02:44 PM
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Larry,

Once again your myopic view of the custom knife market skews the value of your opinion.

Scare, is that the word you used...Scare.

Personally I have never used a weapon, threat of a weapon, bodily harm or threat of same to gain a discount.

So what method do these "dealers" use?

Larry, more to the point This is about dealers undercutting a makers price. So put down the cherry flavored refreshment and try to focus on the topic at hand


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