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  #1  
Old 07-18-2004, 09:47 AM
Frank J Warner Frank J Warner is offline
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Question Down-payments on knife orders

What is the general rule for down-payments on knives a customer orders but haven't been built yet?

Someone ordered three knives from me for Christmas presents. As we both agree on the type of knives and price, I asked for 1/3 down-payment before I could begin, which the customer agreed to.

My partner thinks I should get full payment, for knives that haven't even been built yet.

I'm curious about what others do in this type of situation.


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  #2  
Old 07-18-2004, 10:28 AM
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Chuck Burrows Chuck Burrows is offline
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Frank for what it's worth here is six pages of discussion on the subject of deposits...http://knifenetwork.com/forum/showthread.php?t=9569


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  #3  
Old 07-18-2004, 10:36 AM
DC KNIVES DC KNIVES is offline
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Frank, I usually only ask for a deposit if the knife is out of the ordinary and might not be as easily sellable to someone else. I will also ask for a deposit on orders that require expensive materials that I might not normally stock or use.I usually charge 30-50% depending on the request.Communication with the customer is the key and most understand that a large outlay by the maker isn't always possible.
Many makers have gotten themselves into trouble by taking full deposits.Problems, delays whether or not their fault can make things go from bad to worse.Customers will be alot more understanding when their money is not tied up.Just my opinion.Dave
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  #4  
Old 07-18-2004, 12:56 PM
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Don Robinson Don Robinson is offline
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Hi, Frank. I always ask for a 20% deposit when I'm ready to start the knife. I've never had anyone object, and I've had 2 or 3 people back out when the knife is finished. The deposit is non-refundable and covers a little of my cost until the knife sells again.


I also give the customer a firm estimate of the time to finish his knife and always beat the estimated date. I've never been late. To me an obligation comes first always.

When the knife is delivered as promised, I'll refund all the payment including his deposit if he isn't satisfied with the knife when he receives it.
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  #5  
Old 07-18-2004, 01:32 PM
SL Knives SL Knives is offline
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Speaking only as a part-time maker, I refuse to accept deposits at all. Once you take the customers money, he owns a piece of you. They can bug you repeatedly about completion dates, etc. legitamately, and in the meantime you have probably spent the deposit and therfore you don't have the same incentive to complete the knife when you are only going to receive half of what the cost is when you are done. If you have none of their money and they get mad about it being late, and just can't understand or work with you on it, someone else will be glad to get it when you do get done.

Not to say that you should ignore estimated completion dates. You should always try to give accurate guesses as to completions and stick to them. This is easier if you don't have many orders, of course. but many things such as your job situation, family concerns, etc. may conspire to delay your estimated completion date.

The more orders you have, and the farther you get behind, the harder it is to accurately guess estimated completion dates, and you don't want to have to feel guilty about being late on a pre-paid order. It takes some of the fun out of it.

Also, if you are behind on orders where the customer owns a piece of you, it makes it less likely you will be able to work in knives for shows, something for fun, or just for yourself just because you want to.
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  #6  
Old 07-18-2004, 01:50 PM
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SharpByCoop SharpByCoop is offline
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Quote:
Originally Posted by Frank J Warner
My partner thinks I should get full payment, for knives that haven't even been built yet.
Wrong, wrong, wrong! Please have your partner read every post here and in the lengthy thread that Chuck pointed out.

It's simply bad business for both sides.

Coop


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  #7  
Old 07-18-2004, 05:15 PM
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Ed Caffrey Ed Caffrey is offline
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Here's my method, and my advice. Never take deposits on knives! There was a time that I took 50% deposits, but I found that it put me "under the gun" in that once I accepted a deposit, it forced me to create a knife and have it ready on a set delivery date. Now that doesn't sound like a bad thing, but Mr. Murphy is alive and well, and if it can go wrong it will. I also would have customers who had put down a deposit calling me every day asking how their order was coming..........I know they were excited about getting their knife, but it was to the point where I was spending most of the day on the phone, and no work was getting done. I have also learned over the years (at least for me) that if something is not working out, it's best for me to close the shop and walk away for a while. If a knife is due, that I have taken a deposit on, then I can't do that. I'm forced to make that knife even if things are not going as well as they should...........and in the end I believe the customer doesn't get the best product I can produce. If deposits are taken, I feel it puts undo pressure on you to produce something in a set time frame. If your the kind of person who can do that, it's OK, but I'm not that kind of person.
I can agree on the point of taking a deposit on a very unsual knife that may be difficult to sell otherwise, and in fact I mention that point on my website. On knives of this type I require full payment in advance, however, this is fairly rare.

Not taking deposits also gives you some leeway when a customer who has placed an order gets out of line. One that comes to mind for me was an individual who ordered a piece, we agreed on the piece configuration, and a price. A couple of weeks later I started getting emails and letters telling me he wanted this or that added to the piece. When I replied that the "extras" would add to the price, the individual got angry, and wanted to know why it would cost more when we had agreed on a price! These were not "minor" items. It started with precious metal inlays, and then to engraving/carving/texturing. I told the individual that I do not engrave or do gold inlay work, and that the piece would have to be sent out for these "extras", and that he would be charged the cost of the work plus the shipping to and from the outsourced work. He insisted that he should be getting all he wanted for the inital quoted price. I even gave him the names of a couple of other makers whom he could get quotes from for a piece similar to what he was demanding.......... he persisted with wanting the extras for the inital price, and after a couple of months I just ignored him. Had I taken a deposit for this piece, it's very likely that I still would be hassling with it, but not having taken a deposit, it kept me from being trapped.
On the other end, I give a seven day inspection period for all knives I deliver (with the exception of my EBKs). Once I recieve payment, the knife is shipped and the funds are held for seven days after the client receives the knife, or until they tell me they are satisfied. If they are not 100% satisfied, then they send me back the knife and I send them thier uncashed check of Money Order. If I do not hear from them at the end of the seventh day, the funds are deposited, and my warranty kicks in.

Taking deposits may be necessary for some, but for me it's a big NO,NO. I think that most customers who purchase handmade/custom knives are turned off by deposits too...just one more reason I don't do it. Of couse each maker must do what is best for them.


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Last edited by Ed Caffrey; 07-20-2004 at 06:56 PM.
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  #8  
Old 07-19-2004, 06:52 AM
george tichbour george tichbour is offline
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I am with Ed on this, deposits create stress, stress is bad...no deposits.

Given my way I would not take orders at all but in this business customizing is one of the big selling points. Really off the wall designs or exotic materials can sometimes require deposits but for the most part full payment before shipment, refund if unsatisfied and full warrenty suffice.


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  #9  
Old 07-19-2004, 07:11 PM
Jason Cutter Jason Cutter is offline
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I don't take deposits. Exactly for the reasons laid out by SL Knives and Ed Caffrey. I haven't yet starting using "a lot" of expensive materials like exotic damascus and upper-$$ handle materials, but based on what I now know, it's unlikely I'll ever take deposits even for knives using those materials.

My own process to date has been - I take an order, agree on a rough price AT THE TIME OF MAKING THE ORDER, NOT AT THE TIME OF DELIVERY, which I will abide by. I put the customer on my "waitlist" which gives a reasonable idea of the waiting time to delivery. When it comes time to start work on the knife in question, I contact the customer, to confirm the details of the project and that they still want it. When the knife itself is completed, and sometimes even of work in progress, I take photos for presentation to the customer and for display on the various forums. DO THEY LIKE WHAT THEY SEE ? If YES, we arrange payment. By the time payment is fixed up, I would have completed the sheath, etching and everything is ready to be shipped.

Its worked for me so far. It interferes minimally with the "art" aspect of the making. Jason.


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  #10  
Old 07-20-2004, 10:18 PM
Frank J Warner Frank J Warner is offline
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Thanks to all, and especially Chuck for pointing out the previous thread on this issue. FWIW, I did a search but did not use the right keywords, thus never saw the older thread.

Anyway, it seems there is no consensus, although I see many of the pitfalls of requiring a deposit, and some advantages. My partner (bless her heart) thinks I walk on water and am entitled to payment in full, up front, before even starting the knife. I disagree with her. But then, I have to live with her, too, and enjoy all the benefits thereof.


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  #11  
Old 07-21-2004, 01:10 PM
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Les Robertson Les Robertson is offline
 
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Hi Frank,

For what it's worth you should check out the other thread, I think you will find a concensus.

Additionally I wrote a guest editorial for the July 2004 issue of Tactical knives, page 55. This should be mandatory reading for makers and collectors alike. As it looks at both sides of the issue and recommends a fair comprimise for both parties in a transaction.

In the book I wrote, in the seminars I conduct and on every forum out there I have stated that there is no way....NEVER, do you pay a maker in full for a knife. The reasons are spelled out in the other thread.

I also recommend you never pay a deposit except in 3 circumstances.

1) The knife being ordered requires special materials or equipment.

2) The knife being ordered is so unusual that if the customer were not to take this knife the maker would have great difficulty selling it.

3) The buyer prefers to give a deposit to help offset the final cost.

I sell a line of exclusive knives called Vanguard knives. Before that I did a project with Bob Neal called LDC Custom knives. These two projects have to date generated over 2,500 knives. We/I assumed all the risk as I had to pay for them whether they sold or not. Not once did I request, require or accept a deposit. I was put into the one who was assuming the risk, as the makers were paid. So I have some understanding of the risk associated with being a maker.

In the long run; the benefits of not taking deposits (except in the aforementioned situations) far outweigh the benefits of taking them.


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  #12  
Old 07-21-2004, 02:29 PM
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Hello there,

This is how Brazilian Bladesmiths manages orders. We don't take a deposit. If I get an order request for any of ther makers featured on the Brazilian Bladesmiths website we set the deal for delivery date and price. Once the knife is ready we take good pictures of the knife and send them to the costumer. If he is pleased with the results, he makes the full deposit or wire transfer and once I confirm the money is here we ship the knife. We do that because international shippings and business are complicated sometimes, so we choose to share the risks equaly with the costumers. First, I assume the risk of having the knife made. If the costumer doesn't like it, I will try to sell it somewhere else. Now once it is ready to ship, the costumer has to start trusting us too. In order to do that we have a costumer care policy that inclues traking the package down through the mail tracking system and keeping the costumer updated via e-mail, selecting several reliable shipping options for the costumer to choose, and most of all agility. We have never shipped a knife more then 48 hours after the money has reached Brazil. Most fo our transactions are very fast, and that increases the trust level. The results are that several costumers come back for a second order and they also tell their friends about it.

Just my 2 cents.


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  #13  
Old 07-22-2004, 03:27 PM
N. Creel N. Creel is offline
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Quote:
Originally Posted by Frank J Warner
My partner (bless her heart) thinks I walk on water and am entitled to payment in full, up front, before even starting the knife. I disagree with her. But then, I have to live with her, too, and enjoy all the benefits thereof.
I know exactly what you mean! My wife is exactly the same way. I just got my first custom order not too long ago. As the expense of materials goes up (a few higher end materials), she gets more worried. She constantly wanted to know when I was getting paid. It is an international order, and the customer is leaving the his country temporarilly so he paid in full though I was only about half finished. I told him it wasn't necessary, but he insisted. However, I stay in constant contact with him and consider him a friend so this is an unusuall order. On the other hand, I won't be accepting any orders for a while because I will be attending medical school in a coupld of weeks.

As for normal orders, Mr. Robertson summed it up very well, so you may want to show your partner his explaination of the general good blade business practices.


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Old 07-22-2004, 03:45 PM
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Les Robertson Les Robertson is offline
 
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Hi Nathan,

Good example of another "exception to the rule".

Frank, I did have another question for you about your partner. Exactly how many knives is she buying from you? Not being a smart ass but pointing out an important difference between someone who is well meaning and a customer.

I remember having a converstation with a knife maker who explained he didn't need to work with knife dealers because he was selling everything he made to people in his area. Bob Neal then asked the asked the insightfull question "What are you going to do when all of your friends have one?"

Bob asked this question as a way of asking the maker have you thought about future customers in an expanded market place.

In subsequent years, Bob's question became prophetic. As this very talented knife makers sales slowed and his prices had out paced his quality. This was due directly to taking advice from well meaning friends who had little or no experience in custom knives.

This was probably 8 years ago. He had the potential and intended to go full time. As of today his a very part time maker. 4 years back he even asked Bob and I to carry his knives. Unfortunately, his knives were not competitively priced in the market he wanted to compete in.

I saw him last year at the Blade Show and he had changed his strategy and entered a different knife market. Sadly he did not learn his lesson. His prices were still too high. His explination..."My wife thinks my knives are worth this". I haven't seen his him or any of his knives since. Too bad, he has a lot of talent.

No matter what aspect of making custom knives or the business of custom knives. It is always best to seek out those who have experience in that area and can advise you on what they feel would be best for your business.


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  #15  
Old 07-22-2004, 10:05 PM
Frank J Warner Frank J Warner is offline
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Quote:
Originally Posted by Les Robertson
Frank, I did have another question for you about your partner. Exactly how many knives is she buying from you?
Zero. She gets hers for free. But we are in the process of adding 1000 square feet to our house and I told her the proceeds from the sale of my knives would buy her new kitchen cabinets, so she has an inherent self-interest.

She has, however, followed this thread closely, and studied the posts in the earlier thread cited above, and modified her position as a result: Minimal deposits to cover materials and as a show of good faith, payment in full in extraordinary circumstances or if the customer insists, no deposits if the customer is known to be reliable or if the knife is a standard model that is already selling well.


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