Deposits on Custom Knife Orders

[A T Barr]

If the customer is a repeat buyer, I do not ask for a deposit.

For everyone else, I require a non-refundable deposit of $25.00. In the past few months, I've had a couple of orders back out. Yeah, I know those knives will sell eventually. My problem is, I could have made a different knife that someone else has been waiting on.

When I am ready to start a knife that requires Mother of Pearl or other high dollar material, I ask for an additional deposit of $100.00. After I receive that deposit, their knife is ready for delivery in 30 days or less.

I've also had people send me the full amount, not because I asked for it, but because they had the funds available. I let them know an approximate delivery date and they agree to that. I really don't like to be paid several months ahead. One thing that does, is improve their delivery date.

A.T.

--
"Don't you buy no ugly knife."
New knives added 9.11.02
http://customknives.com/a.t.barr/availableknives.htm

[txwoodchip]

So far I haven't asked for a deposit when taking an order. I'm still new, so the orders I've received have been for fairly low end knives where the materials were not too expensive. I can see requiring a deposit if the cost of the materials is significant or the design of the knife is such that it won't have much market appeal like has been discussed. I haven't been stiffed yet, but I know it's just a matter of time so my attitude may change down the road.

[Dave Larsen]

As a buyer I've ordered two knives and paid about 50% up front. Regular communication with the maker has kept me calm during some (to me) quite long periods.

As a maker I haven't taken a deposit even on some work that would never have been marketable to anyone else. But I am fortunate in knowing who I am dealing with in every case, so have full comfort I'm not investing my time foolishly.

I think a maker should be allowed to ask for a deposit either in the case of an unknown customer or a unique project that requires some material purchase or experimenting up front.

For me as a maker a much more difficult question is pricing; how does one arrive at a correct price for a given piece?

[cockroachfarm]

Have ordered and paid for a dozen or so custom knives. I have only been asked for a deposit twice - once for about 20%, once for 50% (from a maker who could have sold my knife in a flash had I cancelled the order). OTOH, I have OFFERED to pay a deposit for EVERY knife ordered - I feel that is only fair to the maker. And, I have had specific requests from most established makers NOT to send a deposit.

In general, I feel it is fair for a maker to ask for a deposit on a piece of work. Other artists do.

[jdlange]

Just a small note and a question from someone with much less experience than the rest of you but I have not taken a deposit on anything I have done so far. I have had customer's offer to send me a deposit but have not accepted. The knives I choose to make for these people however are all very specific and I generally do not make anything I would not find an interesting task anyway. The last order I took, the customer sent me a full payment, without my request before he even recieved pictures of the final product, of course this person has had me make things for him in the past as well and trusted my work and judgement.

Should I ask for at least a small deposit from first time buyers? I don't know, first of all I do not even start working on something until I have spoken with the person for quite some time and feel that what they want is something I want to make and that they are a person I want to work with. I don't sell for very high prices so if something doesn't go through I'm not losing as much as someone who does this full time, also I gennerally do not work with extremly expensive materials as most of my work is of the primitive look and feel and those people who want me to do work for them are after that look, if someone wants expensive materials should I ask for a deposit that perhaps pays for those materials? Most of what I just said are luxeries to me though as I don't depend on this to pay my bills so my view may be a bit skewed. Just my 2 cents and my questions to those who have been doing this for a long time and have the experience.

[GANNMADE]

I DIDN'T START ASKING FOR A DEPOSIT TILL I WAS LEFT
HOLDING THE BAG. NOW IT'S MATERIAL COST UPFRONT AND
THE REST WHEN FINISHED.PEOPLE THAT PAY IT GET THIERS
THE ONES WHO DON'T, DON'T.

[Mike McRae]

Here's my take: I don't ask for a deposit. If a customer backs out on the deal at the last minute, so be it. That knife will sell to someone. I don't make fantasy stuff or thing that would appeal to a Rambo wannabe. The knife I make to order would be pretty much the kind of knife I'd make if it were strictly on spec.

I've had people insist on giving me a deposit or insist on paying in full up front, but this has been their decision, not mine.

Now to address Wulf's point. No decent knife maker is going to change his priorities just because he got a bit of recognition or a couple of good size sales. If he does, then he deserves to have his name spread around (in places like THIS forum) as being a liar and thoroughly unprofessional and undependable. If a man takes a deposit, and has any sense of Honor at all, he will stand behind his word and deliver as promised.


Mike

[Keith Montgomery]

I have no problem with giving a reasonable deposit, but when I do, that means that I have entered into a contract and the maker had best keep up his/her end of the bargain. Delivery dates should be met. I do not like it when I am asked for a deposit and the maker still misses the delivery date by two, three or more months. If you are going to require a deposit, keep up your end of the agreement as well.

Also, if the completion date is a year or two down the road, as it will be with many popular makers, I think that a deposit should not be required until the maker is just about ready to start the knife. I do not want to send money now for something I will not get for two years. Ask me to send the deposit thirty days before the knife will be started and I will have no trouble with that.

Remember, there have been some real horror stories about makers taking deposits, or payments in full and then never supplying the knives. One infamous name comes to mind of a maker that screwed so many people that he turned a lot of customers off of paying anything up front. I realize that over 99% of makers are ethical, honest people and would never do this, but once bitten, twice shy.

[cactusforge]

Keith, well said, as far as I am concerned I will only require a deposit out as far as 4 month and if something comes up that prevents me from meeting the delivery date the customer will be the first to know. Gib

[Junglejim308]

I too, didn't need a deposit until I got left holding an unsaleable knife. That was 7 years ago. From then on, it's half on order, the rest when it's ready for delivery. If they can't pay, I'll hold on to it for a year. If they can't get things straight by then, they never will. I still have 3 strange looking knives laying around here.

A year ago I got so busy I had to take deposits on standard models too, or they didn't get on the list. Why should I spend time on a model that sells slow, when people are waiting on another model. I've only had one person complain about it. Many pay in full on order, just easyer on them, they say.

When I was a part-time maker I could take things less serious.

[Ricardo Velarde]

I normally do not take a deposit. I have done it maybetwo or three time and only on knives that were very unique or different then what I normally make.
Once a customer has given you ANY money, they have a good reason to call you and keep asking you where the knife is.
It will take me about a year for delivery, and not taking a deposit, normally I am the one that keeps in touch with the customer on the progress of the knife.
I do not expect any customer to like the knife if he has not handle it, and they have the option to return it for a refund. I can always turn around and sell it. You have to keep your customers happy, and you know the ones that are very valuable.
Good luck to everyone.
Ricardo Velarde

www.velardeknives.com

[JimmySeymour]

I hate making deposits unless it is reasonable. Such as covering for materials, or if I order a knife that is definitly out of the norm with the maker. I have paid in full one knife that i have never seen nor probably ever see. I have given up on seeing it. The maker in question made a knife for me when i was in the navy and while I was out at sea sold it to someone else for substanially more money. This would not have bothered me if he would have replaced it and had it ready for me when i got back. When I asked about it he told me the circumstances, and that as soon as he got a chance he would build me another one. I have never seen another, nor am likely to ever see it. So from now on I will never pay full price for a knife till it is built. I don't mind paying deposits for materials or for an unusual request, but when I do I expect to be notified by the maker that they recieved the funds, and to at least be notified every once in awhile as to the progress of my knife. There is nothing worse than seeing in your bank statement that your check was cashed and then to not hear from the maker. Even a e-mail is appreciated.

[floridafred]

It looks like I'm out there alone on this one which really surprises me. I must qualify my remarks by saying I am fairly new to knifemaking but have been in business as a woodworker for about ten years. On orders I require payment in full at the time the order is taken. This refers to woodworking items or knives and my customers don't seem to mind. I realize this may turn some people off but it is the way I do business with no exceptions. The policy is clearly posted on my web site and told to all potential customers up front.

This helps me in a several ways.
1. Cash flow
2. Serious buyers only
3. Record keeping. I know every order I am working on is paid in full. All I have to do is ship it.
4. On credit card orders and checks there is usually plenty of time for these items to clear providing further protection.

I also give customers an estimated delivery date but advise them it is only an estimated date. I try to stick to my estimate but do run over a bit at times. I think my customers are fine with this. I have a reputation as a woodworker for being able to do things no one else can (or wants to). Still working on the knives.

This works for me and may not be for everyone.

[J.Arthur Loose]

The thread that will not die....

I'm coming to several thoughts on this general subject... one is that deposits create, as FloridaFred said, more paperwork. I'm at the point where I'm really trying to remove as much paperwork from my life as possible. The less time I spend in the office the more time I spend in the studio and the sooner I get pieces out to customers!

I'm leaning toward small non-refundable deposits to cover the time spend doing record-keeping and design on custom orders. Say, $25 - $50 or 5 - 10% plus any unusual materials if I have to custom order them. Enough to keep people from backing out without at least thinking about it and enough to cover preliminary expenses. It is also nice to have a bigger carrot at the end of the stick. I'm also not going to make anything that I think I'd have a hard time selling. From now on I'll just say no if I don't like a design request... that's the nice thing about starting to become better known.

Being paid up front creates a huge legal and psychological responsibility for me and it can make it hard when a customer cancels an order. A recent case in point for me was a gentleman who called up and spent some decent time with me on the phone special ordering a $500 knife; paying extra for a rush. Before I ran in the deposit he called back and upped the knife to $750 ( silver to gold, oosic to ivory, etc... ) He insisted that I put the full amount on his card and then proceeded to call or e-mail almost every day changing the design; the cancelling the order because he felt he was overextended; then changing his mind *again* and insisting that I go ahead with the original $750 design. I spent a day forging a sellable but not on-order blade since it was a 'rush,' ( remember... I make my own damascus and carefully plan out what is coming out of each billet for orders due... ) then the guy calls *again* and cancels entirely.

At the time I really needed the cash flow and once I got the final go-ahead I thought we had a deal. I've just finished paying the guy off and made it clear I'd never do business with him again. He couldn't understand why I was annoyed with him... :confused: I never recovered any of the time I spent working out designs or talking on the phone or answering e-mails and I only charged him for the credit card processing fee which came to $5.00, because it never occured to me that someone would back out after I'd started a unique project.

_____________

I guess I can come clean on why I started this thread in the first place, since I think Les Robertson and I are on fair terms now... When I started this thread I had just read an article in which Les stated that no one should ever pay more than a 25% refundable deposit and I personally thought it was sort of unfair to make such a generalized statement when so many knifemakers have so many different kinds of businesses. For a more production oriented knifemaker with employees, voluminous cash flow and a bookkeeper, a 25% refundable deposit is probably fine. For a self-employed knifemaker who makes more one-of-a-kind pieces it gets more complicated... and different knifemakers and different customers are going to prefer different arrangements. I just don't think the knife collecting public should expect uniformity when it comes to these things... since knifemakers here have stated why very polarized approaches work best for each individually; and customers have stated the same.

[floridafred]

As knifemakers we all have things in common. (I wish I had more in common with some of your great work) However, as businessman we have the absolute right to conduct business as each of us may please. Given of course that we are honest and up front with our customers. I have the right to set conditions of a sale and of course the customer has the right to agree or go elsewhere. I think it would be a mistake for any businessman to set up rules for his business based upon what might be considered acceptable by others in the same business. Many factors must be considered in how you run your business.

Any of us may run into a customer like J. Loose had and that is a very bad experience. I also tell customers up front that once work begins on a custom order it can not be cancelled. I had one customer call me a week after placing an order which I had started and state he had lost his job and really needed the money he had paid. I refunded his money even though we had an agreement. A year and a half later he again placed the order. Many of my customers become friends and contact me often just to stay in touch. My rules protect me from financial loss and most of all aggravation. My customers are happy. Thats what matters.