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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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  #1  
Old 08-14-2004, 07:22 PM
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Keith Montgomery Keith Montgomery is offline
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The custom knife selling business

Les, how is the custom knife business right now? What styles are hot and what styles are not? I am not just asking in as far as you are concerned, but in what you know of the business as a whole. I have heard that things were pretty soft earlier in the year, but have picked up a great deal in the last few months. What say you?


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Old 08-16-2004, 03:39 PM
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Hi Keith,

I always watch with keen interest threads that talk about things like "who sells the most" currently on Blade Forums. The people posting there for the most part have no idea what they are talking about. Then it turns into "don't forget to include my favorite dealer".

Custom knives is like any other commodities market, something is always selling and someone is always making a buck. If they weren't the market would collapse.

The majority of custom knife makers are hobbiest. This is not an insult just a fact. They generally have a full time job and make less than 50 knives a year. Many of these knives are given away as gifts others are sold at a very low price. This group of makers is easily over half the makers in the US. They have little or no input into the direction of the market(s). Again, this has nothing to do with quality...it has directly to do with quantity.

There are always exceptions to every rule, to include this one.

The majority of those who buy custom knives are professionals. That is to say they have a job that affords them enough income so they have "discretionary income" to spend as they see fit.

The custom knife market like any other market it follows the product life cycle. The business side of a custom knife business has to recognize that.

Collectors/buyers have a tendency to follow trends closer than the makers do. Consequently, they are quicker to abandon a style than a maker would.

So what appears to many makers as a slowing of the custom knife makert is in fact a shift in buying patterns. So while some makers are losing sales other makers are seeing their sales pick up.

Also basing knife sales on those who particpate in only Internet forums or who have web sites is an illusion as to what is really going on. As you are not getting input from all areas of custom knives.

Here is an example of an illusion. I buy 5 of the same knife, I put the knife on my web site. Three of these knives sell in the first 3 weeks, the 4th knife sells in the 5th week. However, the 5th knife doesn't sell until the 9th week. To someone tracking that knife it appears that the knife has been sitting on my site for over 2 months and no one has bought it. Point of fact is that 4 of the 5 have been sold in a fairly short period of time.

I think over the last couple of years collectors have given more weight to a knife's performance in the aftermarket. Those makers whos knives have lost half of their value in the aftermarket will note a decrease in sales. Those makers who produce a seemingly endless supply of knives will see a decrease in sales except for their newest model(s). As you will be able to get a slightly older model for less money in the after market.

Most new makers who are promoted on the Internet forums will see an intial increase in orders and then will see the orders drop. This happens as those who got their knives first start to sell them on the same forums for less than the maker is charging. So those who are either towards the end of list or have not yet ordered. Either cancel their order or do not order because they can get the knife they want now. In many cases for less than what they paid for it.

In some cases the knives will sell for more and this may cause more orders for the new maker. Bascially doing nothing more than putting them so far behind they will never catch up....stuck making the same knife for a year or possibly two at the same price they quoted intially.

One trend I have noticed is that those who used to buy very expensive knives are still buying knives. However, they are now opting for the less expensive version. I think this is part of the reason that carbon steel bowies form ABS Master Smiths have become so popular. Same style, same maker, less money.

Additionally, the ABS has done a fantastic job promoting its self over the last 5 years. To the point that forged blades are now enjoying an ever increasing following. The forged hunter is today to the ABS what the "tactical" folder was to stock removal 9 years ago.

Both were an entry level knife that allowed collectors to explore a new market (to them) for a small entry fee. Once the collectors realized the knives value for the money, the collectors wanted more and these knives became what seemed to many as a overnight sensation.

It seems that whatever the market, the top 6 -10 makers in that category are doing well.

Makers who have/had a world class maker as an instructor/mentor are also doing very well. Why, because they can make a "similar" knife for less money.

I know for my business my sales have increased every year. So for me I have not noticed a slowing of custom knife sales. I attribute this in large part to the makers I work with. Another big contributor has been my Vanguard series. Because of the ever increasing length of delivery times, collectors are now more willing to be put on a dealers "list" and wait sometimes for over a year for a particular knife. This is a change from previous years.

I think this shows that more collectors are doing their homework before the spend their money. As such they are willing to wait to get what they want instead of just buying something for the sake of buying something. This will also hurt the sales of new or less known makers.

The custom knife market is like a big knife show. No matter what show you go to, some makers sell out, some do ok, some only sell a few and some sell nothing.


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Old 08-16-2004, 04:35 PM
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Wow Les, Thanks so much for the thoughful response. I just got an entire magazine article for free!?

BTW, can I infer that the "ABS Bowie" is one of the big sellers right now? I was at the ABS show in Reno and most everything was gone in the first few hours and most everything was bowies. I thought that was just that that show attracted those types of buyers.

Steve


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Old 08-16-2004, 08:09 PM
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Hi Steve,

The ABS show in Reno is fast becoming their showcase. Yes, part of the reason the show does so well as is because they appeal to the ABS buyers.

As for the ABS knives, they are gaining popularity as I write this.

Glad you enjoyed the "article"


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Old 08-16-2004, 08:32 PM
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Excellent commentary. Insights that are crystal clear explained, but aren't obvious overall.

Thank you.

I am always browsing the 'for sale' forums, and it is painful to see some of the losses that some maker's knives are subjected to. This is the real aftermarket in action. (It's also amusing to see the wistful write-ups on those who 'need the cash' for some newer knives.) Unfortunately, I see most at about a 40-50% loss before they will get interest.

'They' aren't alone. I am quite certain many of the knives I have purchased over the years fit into this category, too. I will say that others I have bought and sold have fared well. That said, for those who want to get some good value, the 'for sale' forums are a good deal. But it's like always buying a used car. And, it doesn't immediately support the hard-working makers.

Reality checks are harder than RC61!

Coop (Yes, I've read your book over and over. I can always stand a refresher.... )


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Old 08-16-2004, 09:03 PM
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Hi Coop,

Thanks for the complimentary response. The things I write are obvious to those who take time to examine the overall market. It's just that very few people take the time to examine the market.

Obviously my favorite courses in Grad School had to do wth marketing. So while I understand that others would rather get a root canal done daily then track the custom knife market. I find it fascinating. My kids are amazed that I will sit and watch the History Channel for hours. When one of them asked me why I replied "those who do not learn from history are doomed to repeat it".

So it goes with custom knives. If you do not understand what made certain makers successful and others unsuccessful. You will continue to reinvent the wheel. Never knowing if you are on the right path. Nothing worse than busting your butt to climb the "ladder" of success only to realize that when you get to the top....the ladder is leaning against the wrong wall.


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Old 08-16-2004, 09:24 PM
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Thank you Les, for that insightful response. And Thank you Keith for asking the question !!! Jason.


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Old 08-17-2004, 08:57 AM
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Great 'article'. I am following these piticular "pricing" threads very closley. I will be trying to sell my first knife in a week or two. I am trying to come up with a price, I settle on one then I read one of these articles then I second guess myself. What I've decided was to compare other makers knives with similar materials and come up with a close price (a bit lower though).
Any thoughts on this???

Jeremy


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Old 08-19-2004, 12:54 AM
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Keith Montgomery Keith Montgomery is offline
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Quote:
Originally Posted by Les Robertson
Nothing worse than busting your butt to climb the "ladder" of success only to realize that when you get to the top....the ladder is leaning against the wrong wall.
I like that. It says a lot.

Thanks again for the education, Les. I have learned far more about the knife business from you than from anyone else.

Jeremy, pricing their knives presents a conundrum to just about all new makers and some that have been around for awhile. You definitely want to price them low enough to interest potential customers, but not so low that you aren't making any money. That is unless this is going to be a hobby for you and breaking even or even losing a little money won't bother you.

I have seen formulas that makers have for calculating what to sell their knives for, but there doesn't seem to be a concensus on how to make these calculations. Make sure when figuring out what it costs you to make a knife that you don't forget the incidental costs like electricity, gas, water, belts, wear and tear on machines, rent for shop space, long distance phone calls, etc. These can add up to a lot and can't be ignored.


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Old 08-19-2004, 10:28 AM
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Hi Keith,

I like that quote as well. I heard that when I was taking Stepen Covey's course "7 Habits of Highly Effective People" I guess about 12 years ago now. The course is about $3,500 now. I would however Highly recommend getting the book (about $18).

It is amazing how people will work so hard without really having a plan. People don't plan to fail....they just fail to plan.

Im glad that you can take something away from the "buiness" oriented posts. Most of these that I write are for the benefit of collectos as well as makers. Collectors spends millions of dollars a year on custom knives. I think the more informed a collector is the better choice they will make. There by rewarding makers who provide value for the dollar, continue to innovate, improve and always strive to build their collector base. This last one is important to help their demand in the aftermarket. This will help maintain the prices of their knives.

I have had thousands of collectors tell me that they buy what they like and are not worried about what happens to the price of their knife in the aftermarket. This attitude has started change over the last few years. Lack of a particular knifemakers to maintain their knife prices in the aftermarket. Has done more to give the appearance of a "soft" market than any other one factor. Unfortunately, perception eventually becomes reality.

I feel it is important to give collectors ideas on what to look for when it comes to spending $200 and up on a custom knife. It is always best to look to past performance for indicators of future performance.


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Old 08-19-2004, 01:07 PM
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Les,

I'm one of those 'hobby' makers and a novice at that. I'm just starting to sell to people I don't know.

What you've taught has impacted me deeply. You see I can price a knife to what I and the customer feel are fair prices. They are exicted about getting something unique or cool or whatever, and I'm selling it for a fair price considering what other knives of similar style go for - new.

However, I'm very worried that a buyer will, in the future, try and resell that blade and because I'm a no-name, they won't get half of what they paid for it.

You see the original buyer was excited about the materials, or design and the fact that it was hand made to their specs. However, someone buying on the open market is more interested in re-sell value or any other factors completely different than the original buyer.

At that point the original buyer might well feel cheated, or that they made a bad decision. In reality he bought it for reason A, but anyone else is looking for reason B.

It's like if I bought a professional portrait of my child. It could cost me $200. But if I re-sell that portrait on the street it would only go for $10. Did that mean I was cheated? Of course not, that portrait had a different meaning to me than anyone else. Could I have bought the portait at a photography show for $10? Maybe something close, but not my child.

In otherwords, the secondary market is COMPLETELY different than the custom made market. But I still worry my customer will feel cheated. Even if he doesn't resell it, he gonna show a buddy who'll respond, "You paid that much for that knife! I saw a custom knife just like it at the knife show for half that." Now all his initial purchase thrill is gone.

Am I making any sense?

Steve


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Old 08-19-2004, 03:40 PM
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Hi Steve,

Actually you make perfect sense. As a new maker it is or should be your main priority to get as many of your knives into the hands of buyers as possible. Most collectors don't think the knives they buy are going to be worth what they paid for them. So your knives holding their value in the after market should not be a concern early on. Five years from now, yes this should be a consideration.

Again you are correct the secondary market is very different from the primary market. The main difference is that the custom knife makers are the owners of the primary market. They own it wholly. The secondary market is different in that this is where people like me patrol, prowl and help to shape the markets and a makers position in that market. The makers have virtually no role in the aftermarket....except those who take steps to help the value of their knives in the aftermarket.

Finally, you have to remember I'm at the extreme edge of knife buying. The system I use is beyond the way most collectors think about knives. Point being, you don't have to attain "light speed" immeidately. You have time to walk before you start running.


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Old 08-20-2004, 07:19 AM
jbgatlin jbgatlin is offline
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You rock, Les. Keep it coming.

Brett
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Old 08-20-2004, 09:12 PM
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Smile

Hi Brett,

It's good to be the king! LOL



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Old 08-21-2004, 01:34 AM
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