Editor’s note: This article is from the knifemaker’s point of view, but it could also be used by collectors to better understand price.
Make the Equation
Most manufactured products, whether factory or custom made, have similarities. For those of you unfamiliar with cost accounting, one of the similarities is basically what the costs for building a particular item are.
In the case of custom knives, such costs include those for the machines, belts, drill bits, saw blades, propane, tongs, hammers, etc.—in other words, anything in the shop used to produce the knife.
Other items not necessarily taken into account are those such as the cost of electricity, machine wear and tear, etc. Obviously, materials are easy to account for.
Then there is the amount of money you want—want being the operative word—to make selling your knives, followed by the amount of profit you want to make. The resulting equation is:
Shop time + material costs + maker’s pay (labor) + net profit = the actual cost (or price) of the knife
(Editor’s note: for collectors, the wiggle room on negotiation could be found in the net profit part of that equation.)
When the Price is Too High
Again, you’re a knifemaker. Are your knives too expensive? The short answer is “probably.” Over the past 32 years of asking knifemakers the question, the two most prevalent answers I get are:
1) My knives are priced on the advice of another knifemaker;
2) My knives are priced based on what others are asking for similar knives.
While makers who incorporate such pricing strategies can justify them, both approaches incorporate what I call lazy pricing. While you may not realize it, other knifemakers are your competitors.
While they may mean well, their advice for your knives is misplaced. First and foremost they are knifemakers, not knife buyers. What they know are their knives, their market and their clients. This may or may not have any impact on your knives, or, more importantly, the selling of your knives.
In some cases other makers may understand that you are a competitor and suggest you raise your prices, giving their knives more perceived value.
While attending the 1989 Knifemakers’ Guild Show, I was standing at the table of a very well-known knifemaker and checking out his knives. A new maker approached the veteran maker and asked him to critique his knives. The veteran maker asked him how long he had been making knives and for his price for one of them.
The new maker replied, “I have been making knives for two years and this knife is $250.”
The veteran maker said, “You are doing good work. I would raise the price of this knife to $325!”
As you can imagine the new maker thanked the veteran maker, smiled and returned to his table.
In the next few minutes a potential buyer was questioning the veteran maker about the $375 price tag on a particular knife. The veteran maker was quick to point down the aisle, saying, “See that maker right there? He has only been making knives for two years and is asking $325 for one of his knives. Quite frankly, my price is a bargain.”
Whose interest did the veteran maker have in mind while recommending pricing to a fellow maker who sought his advice? To date I have never had a maker using this strategy tell me the veteran maker suggested that the maker lower his or her prices. I found this to be a real eye opener, and it changed the way I looked at custom knife pricing.
When the Price is Too Low
If you are a knifemaker, remember that, early on, people are paying for you to learn your knifemaking skills—a sort of scholarship program, if you will. The object of the exercise is to get as many of your knives into the hands of buyers as possible. You can do this by utilizing value pricing. Your market position will indicate to you what the price should be.
As your knifemaking skills and following develop, your pricing, because of your rising position in the market, will continue to increase. At this point your pricing will be determined not by a friend or another maker’s similar work, but through your understanding of your position in the market and how you got there.
Ask the Author More About Pricing at BLADE Show 2018
Conducted the day before and the Friday and Saturday of the BLADE Show June 1-3 at the Cobb Galleria Centre in Atlanta, BLADE University is the most comprehensive array of classes on the subject of knives and knifemaking of any knife show.
From 9:45 to 10:45 a.m. on Saturday, June 2, Robertson will conduct the class “Knife Collecting for Beginners” and discuss what you need to know before you start buying custom knives.
For more information on these classes and others in BLADE U., visit bladeshow.com.