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  #1  
Old 08-09-2004, 08:14 PM
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Question Question about pricing while using exotic materials?

I am still a "green" knife maker. I have been doing it since last November. I am not to the point of smithing my own blades... yet. For now I am buying unfinished blades or knife kits. Almost every knife that I am making is sold. For now I am charging 30% above the cost of materials. It seems to be an alright method. People that pick out cheaper materials have an overall lower cost, which is good because generally they are spending less due to money constraints. However, what if I am making a knife with exotic materials? (Damascus, Mother of Pearl, Abalone, etc...) This then greatly increases the overall finished cost with a 30% markup and there isn't necessarily a lot of more work going into them. Is there a better way of going about this? (Right now my knives are going for anywhere between $50-$100 with most of them being in the $60-$70 range) If anyone could offer any insight I would appreciate it.
Chris Nilluka
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Old 08-09-2004, 08:52 PM
george tichbour george tichbour is offline
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All you have to do is break one piece of abalone or quality mother of pearl to wipe out a lot of work at 30% over cost. Increasing material cost means increased risk so I would suggest building in a safety factor for high value materials.


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Old 08-09-2004, 10:27 PM
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When it comes to exotic materials, especially fossil ivories, I charge the replacement cost of the material. Prices are constantly going up on things like fossil ivory, pearl, etc. , so if you charge what you paid, then your loosing money on the deal.


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Old 08-10-2004, 07:38 AM
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Hi Chris,

I did a seminar at both the Blade and Guild shows this year. One of the things I talked about was that collectors should have a "ball park" figure of what materials cost. Specifically Damascus and the exotic handle materials. Also, they should understand that each of these hold specific challanges to work, as such will require additional time to work. This additional labor will be added to the cost of the knife.

Some one brought up the question about materials breaking. I replied if the maker has to replace the material due to problems with the material you can expect to pay for that.

I would quote a price based on the truth, not some "hidden" built in cost. It's always best to be upfront about the cost of building a knife with exotic materials. The better your communication is, the happier both you and your customer will be.

Hi George,

So if the Ivory. Pearl, etc. does not break or have to be replaced shouldn't the maker deduct that amount from the price they quoted? If a maker didn't need to use the "saftey net" seems resonable that a maker shouldn't be paid for that?


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Old 08-10-2004, 08:24 AM
george tichbour george tichbour is offline
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If, during the course of normal events, I break a piece of pearl that I bought at $100 a set that set is ruined until I can get a matching piece. The loss is $50. If I were charging 30% over material cost I would have made $30 on the last knife that I sold. By my figuring I am out of pocket by $20 at this point and have one piece of unmatched pearl on hand. Eventually, maybe, with a lot of luck I will find a supplier that will sell me one only matching piece of pearl......not likely eh?

In that case I am out of pocket by $50 +$20 =$70 and I am still trying to make the second knife.

At $30 markup on the pearl per knife I will have to make and sell 3 1/3 knives before I cover the cost of the broken pearl. (the previous knife that I made $30 on and 2 1/3 new knives @$30 profit each)

If you doubled the cost on the purchased material you would have the cushion to cover breakage, etc which will eventually happen. Customers on the other hand would like to get knives for the cost of materials only.

You didn't say if you also include a fee to cover your time and overhead.


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Old 08-10-2004, 10:42 AM
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Old 08-10-2004, 10:46 AM
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Oops! Anyways,
Isn't that why a person would be coming to a customer knife maker, they are expecting that there will be no flaws or mishaps. The reasoning behind expensive charges is due to his or her experience or reputation as a knife maker. A person would not buy from you if you are expecting to screw up there and therefore are charging them more incase you do screw up?! That just doesn't seem right?! We are supposed to be the professionals here.
Chris
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Old 08-10-2004, 11:04 AM
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George,

I guess you were answering a question, it just wasn't my question.

My question was, if you going to double the cost of the exotic handle material to cover costs (in case it breaks). Do you refund the over charge to your customer if the material does not break and you only have to use one set of scales.


As for your time, you should get paid for that, no doubt. However, if you are padding the price to cover your time should you have to replace a second set of handle material. Do you refund that as well. Obviously you don't want to charge your customer for work you didn't do and material you didn't buy. Just as obviously the client does not want to pay you for work you didnt do or materials you didn't buy.

Im curious to see what the answers are from makers. I'm doing seminars at the BAKCA show in San Jose CA at the end of this month. Two weeks later I am doing a seminar at the Chicago Custom Knife Show in Chicago. So I will be working this into the seminar.

Thanks in advance for your answers.


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Old 08-10-2004, 01:26 PM
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My apologies!

Actually I wasn't really answering a question. More like spouting off at the mouth. And I apologize if I had affended anyone or the way they do business. I was just voicing my opionion. Which as I am still just getting in to this craft and still very green, I shouldn't be posting replies as such. Again, my apologies...
Chris
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Old 08-10-2004, 08:13 PM
george tichbour george tichbour is offline
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Chris you are doing nothing wrong expressing your opinion, keep on doing it so long as you don't deliberately try to offend people.

Chris what I was trying to get across is that during the manufacture of the knife before it even gets to the customer you or I as knifemakers can have things go wrong. This is when we can lose money on the project if we have quoted a price beforehand and do not have enough markup to cover this sort of loss from time to time.

After the sale warrenty repairs are always at our expense. Where does the money come from to cover these repairs? Thankfully this is a small percentage of our total sales if we have done our jobs properly and used quality materials throughout but this percentage has to come from somewhere.

I am not suggesting that you put a huge markup on your materials but as the value of the materials you use increases you should take a hard look at it. One error will end up costing you a lot more now.


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Old 08-11-2004, 07:33 PM
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Chris,

Overcharging for a knife in case something happens is the wrong way to do business. It can appear as a way for a maker to comepensate themselves for work they did not do...a tip if you would.

Also, understand that if someone does something to a knife after it leaves your shop. It is appropriate to ask for money to compensate you for your time to repair or maintain the knife. At a minimum your customers should understand that they have to pay for shipping both ways. It is up to you to come up with a maintenance price schedule.

Additionally, you should add a disclaimer when working with natural handle materials. Something along the lines that most natural materials can shift during the life time of the knife. This covers you from customers who want you to replace the scales six months later because they shrunk. Or gind some away because the scales expanded, etc.

Lastly, as I wrote before, it is imperative to have excellent communication with your clients. They need to understand that the price you are quoting is for one set of scales and the accompanying work. Should another set of scales be needed there will be an additional charge. Unless of course the damage is your fault. At that point, you eat the loss.


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Old 08-12-2004, 09:25 AM
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As a custom maker who uses exotic materials on the majority of knives I make, I find it impossible to have a fixed or "standard" way of pricing for such.

For example, I have a general guideline for pricing purposes using a range of pricing for a particular material (eg. mammoth ivory 150-300), however, when dealing with exotic materials, sometimes the particular piece befits particular pricing.

When purchasing these materials you can find them for a bargain occasionally, and at other times you pay more than you would like to get that special piece. I have paid real low prices for rough mammoth or fossil walrus pieces that have turned out to be spectacular when finished, and that piece is what sells the knife. If it turns out to be a very unique, rare looking piece, should I add only 30.00, for example, to the price of the knife because I got it for a steal? Something else you have to factor in is the time spent in planning on how to use the (initially) odd-shaped piece to its best advantage, and cutting and fitting it just perfectly, something you don't have to do with a flat slab of micarta where you don't have to worry about the natural surface shape, color, and texture.

On the other hand, I may have paid 200.00 for a rather plain piece, but should I charge less because of that, and lose money? The lower priced, unique piece, is obviously "worth" more to both me (because it sold the piece based on it's uniquness), and the customer (they bought the knife because of the handle, where they would not have bought it at half the price with an ordinary handle).

You sort of have to compromise based on what the value of the finished product is. The marketing folks will tell you it's worth what someone will pay for it, even though you may feel slightly guilty about charging more for the handle material than the knife itself cost- but I have found that the higher the price of the knife, if based on the uniqueness of the handle, the quicker the knife sells. That should tell those people who say "I don't use those exotic materials because I can't justify charging the customer that much extra" something.

Then again, you could probably do just as well using the "best guess" random method of pricing, as someone who spends way too much time trying to calculate a price based on some sort of mathematical formula. And then- you would have to charge some more extra for the time you spent figuring the price!! Not to mention the extra psychological stress and anxiety caused when putting out big bucks for one piece of old, cracked, dirty, odd-shaped piece of ancient ivory, HOPING that it will work for that knife you have in mind.
And you know what psychiatrists cost these days!

Schuyler (stressed from paying 1000.00 for old ivory pieces that I can fit into one shirt pocket) Lovestrand
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Old 08-12-2004, 12:32 PM
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Hi SL,

I feel your pain. Having bought more Ivory than I care to remember that ended up in the garbage can.

You bring up an excellent point about having a range. Again this goes back to communication with your customer. Explaining that some Ivory (and other materials) cost more the better the material is.

I understand about having to make money on the sale of a knife. Obviously there is nothing wrong with that. You should be compensated for your material and time.

My point was not to just double the price based on "in case something happens".

SL you have years of experience with working these materials. While I suspect that occasional mistakes still happen those are few and far between now.

You more than most makers I know can best answer the question that Chris asked.

Thanks for your insight.


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Old 08-12-2004, 03:08 PM
SL Knives SL Knives is offline
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Yeah, it's not a question with a hard and fast answer. I just touched on the obvious to myself from working with the material and the results I see from using high quality materials.

There are many other factors that can't be planned for too well, such as the demand for the makers work, and the quality and/or appeal of the finished product. You could make a knife with a piece of 300.00 fossil walrus ivory that just didn't appeal to most peoples sense of aesthetics, and you might have a hard time selling the knife at any price. Or you can plan your assembly poorly and have to grind off the unique character of the piece you paid for to get the final shape and size you want- then it's just "ordinary" again and may not elicit the "I've got to have it" response from a potential customer. And that's why you sell knives-someone "wants it" bad enough to pay for it.
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Old 08-12-2004, 07:50 PM
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Sl,

You did have, what I thought to be an interesting and usefull point. With the knives that I have sold thus far, I do give a lifetime guarantee against workmanship, which I do specify that it does not cover misuse or poor treatment. But you went a step further which I had not thought of. That is; "natural" materials do have a tendancy to, shift, shrink, or expand which could cause defects or better said, abnormalities, in your knife. I can see why you would not want to cover that under any sort of warranty. It's something you have no control over nor does the owner. However, do you feel that there should or could be exceptions to that? Say a long time customer who has bought many knives from you? I feel that this could be a good way to extend "customer service". However I also see where it could bite you in the butt... A long time customer all of a sudden decides to take advantage of your good will. I also see where this could be taken as a sort of discrimination against other customers. "You'll fix it for them but not for me?" Hmm... I don't know. I suppose consistency would be the greatest asset to a business like this.
Chris
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