How many knives for a dealer discount

B

busted knuckles

Well-Known Member
Hey guys, I have recently been contacted by a dealer who is interested in my knives. I'm trying to figure out how many knives a dealer should buy to get a discount. If I ask him to buy twenty I look like a jerk, on the other hand, if I sell him two knives at 40% off and he doesn't come back for more... you get the idea.
This is my first deal with a dealer and I want to develop a good relationship with him. what's fair according to your experiences.
 
Don't get so excited about selling to a dealer, that you do something you'll regret later.
While I believe that dealers are a vital part of the knifemaking world, I have seen one or two that I consider to be downright predators. If you want to know more about that, you can PM me.

30% is the standard discount that most dealers will ask for. If they want more, I would think hard about dealing with the individual. In most cases I have a hard time swallowing that, so more often than not, I will give knives to dealers on consignment....meaning that they do not buy the knife outright....they take it, and when they sell it, they get a small percentage (usually 15-20% rather than the 30% if they were to buy the knife outright).

Personally, I have my own policy for selling knives outright to dealers.....
Buy one knife= 10% discount
Buy two knives= 15% discount
Buy three or more= 20% discount

The part that I always have to laugh about is when a dealer asks me how much a specific knife is.....then asks how much 10 would be. For me the price is the same for #1 as it is for #10....unless they would like me to only take 1/10 of the care building #10 that I did building #1. :)
 
Thanks Ed, that puts this in a different light for me, I like your discount pricing better than what I was imagining . And thanks for the warning, I'm careful about who I do business with but I was getting excited and still am, it's nice to think that someone has such regard my knives. I'll be talking to him on the phone today, if he seems legitimate I'll proceed, but with caution. In my experience it takes time to build a working relationship.

I'll post what happens so y'all can see how a newby does it. ;)
 
Some comments I have seen before with dealer negotiation is asking how they are going to earn their percentage.
(and it is a negotation, You don't have to do every sale that is offered to you)

How will they promote your brand in ways you cannot.

ie they just put up for auction in their ebay store...is something you could do and ads no value to you.

or
they advertise
they get photography done
they put on their popular dealer website
they go to shows you cannot.
 
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There are a lot of Makers nobody would even know they exist if it wasn't for dealers. Sure there are dealers looking to take advantage of you but there are makers who fall into that same category.
 
I have 2 price ranges and that is family most the time is free and friends 20 % off retail but if a friend wants more than one ill give him a buy one at 20% then the next one is 30% but dealers buying 10 knives or more would get 20 % . I like the way ED described his way and think ill change. kellyw
 
Hey BK,

First, if you are entering into a relationship with a dealer..it is a business relationship. If you are not treating your knife making as a business...don't bother working with a dealer.

If you are slow to build and late to deliver...there is no reason for a dealer to work with you. Why? Because if you can't get your dealer knives...they cannot market you. One knife every 6 months really (from a business perspective) just isn't worth the effort.

Generally if you are a new knife maker you can expect to give a 30% discount...for 1 knife...not 10.

Established makers generally the discount is 25%.

Are there exceptions..yes there are. Ed for example has a different dealer discount program. It works for him and that is fine.

That is how it was when I started as a 25 years ago. The Makers gave a discount to the dealer...the dealer marked it up...when the makers saw the dealer getting the higher price...the maker raised their price...and so it went. Till eventually (with rare exception) the dealer could no longer get the higher price...and dropped the maker. The maker then had to live with the higher price...maybe they got it...most didn't and faded away or just stopped making knives.

The problem with multiple knives to get the 20% is that the majority of the risk is on the dealers part. Especially if the majority of their sales are internet based. That means credit cards with anywhere from 2.5% to almost 5% (overseas no qualified rate).

You would be amazed at how many makers won't take a credit card from a dealer! :D Check please.....or better yet cash. Don't expect cash for a 20% discount!

Ok, so you get a 20% discount and you then raise the price to cover the 5 - 10% you really needed. Now when people do a internet search they find out the dealer is asking 10% over retail. If the maker is in demand and has a long waiting list...not a problem.

However, if you have yet to establish yourself and create a demand for your work. Those Internet surfers will just to to the makers site...and to save the money will buy directly from the maker. This could be a problem....for the dealer.

Now the question is (to the dealer)...what do I get for my 25%?

If you have a web site...and the dealer has a website how many hits do they get on that website compared to your site? If there isn't that much difference...how much of a discount is that worth?

Do they SET UP at shows...not merely attend? Setting up at shows allows collectors that you may never come in contact with to actually handle your work. How much time does and expense does that save you?

Just as a maker has a position in their market so does a dealer. Example...no one is coming to me to look for a Loveless knife...I don't carry them. So if you are selling High Dollar Art knives...maybe someone who is best known for hunters is not the dealer you should be working with...and visa verse.

Another aspect that few makers consider (and if they do few talk about) are the business and marketing insights that a dealer can help you with. Pricing is a perfect example. I see on this forum and others that makers have a difficult time pricing their knives.

I have always wondered why makers can't price their own knives. The main reason is...they don't know the market that they are in....and most don't want to take the time and effort to determine where they are in that market (and believe me it takes some time). Then again I can value price any knife in a particular market. That is to say...a price on the knife that will get it sold and offer your client a little room in the price should they want to resell the knife.

Yes...I am one of those who thinks custom knives should hold their value...and should in most cases go up in value. Check out the current issue of Knives Illustrated for my article.

Ok, so we have:

Website/photograph
Set up at shows (not merely attend)
Dealers position in a particular market
Marketing/Business advice

Lastly, the dealers ability to get you and your work into a magazine! How much is that worth? It is worth Thousands of Dollars...check out the cost of a two page, 4 color ad in one of the knife magazines when you get a chance!

Remember working with a dealer is a business relationship...if it doesn't not benefit both of you there is no reason to have it.
 
Here's a related question--how important is the volume of knives or makers that a particular dealer is promoting or offering?

I'll give a couple of examples. There is one dealer's website I've seen in the past who offers knives by only 3-4 makers. There are a lot of knives offered, but not a wide variety since the number of makers is limited. (A couple of those same maker's knives are also found for sale on Ebay--not sure if it's offered there by the maker or by the dealer.) So, being one of a few makers being "highlighted" by a dealer seems great, but if the low variety of knife styles potentially attracts only a few buyers, how good is that?

On the other extreme, I've seen other dealer's sites where the opposite is true--20-30 makers are promoted. Wouldn't you risk being lost in the crowd?
 
Hi NJ,

Excellent question.

Generally those makers who only carry a few makers work are either:

1) Taking them on consignment

2) Are selling off their collection. Most dealers start out as collectors...that was true with me as well.

On the plus side if a collector was looking for that particular maker...the dealer would possibly be "the guy" for this makers work.

On the negative side if a dealer has several 7,8, 9 knives of a single makers work. That would probably indicate that makers work is not moving too well. The last thing a dealer wants to do is be the biggest collector of a knife makers work they are trying to sell.

The website is just one aspect of working with a dealer. The main reason a maker works with a dealer is exposure. This is especially true for new makers. The object of the exercise for a new maker is to get as many knives as they can into the hands of as many collectors hands as possible.

I represent 40 +/- 5 makers at any given time. My website has a wide variety of makers and a wide variety of knives. I don't think the makers I work with think their knives are getting lost in the crowd. As I have put myself in a position to promote these makers in a way that other dealers cannot. Primarily because I am a Field Editor for both Knives Illustrated and Blade. The makers I work with, in addition to my website, I set up at several shows each year and I write articles about the makers I work with, that get published in the World's two largest knife magazines.

This goes back to what I wrote earlier about the dealers position in the market.

If the specialty dealer is working with 4 makers and they happen to be: Bob Loveless, Michael Walker, Ron Lake and Jerry Fisk....he is doing something right to get all 4 of those makers to get him/her knives on a regular basis (currently there is no dealer like this).

However, if the 4 makers are Johnny Tentpeg, Jimmy Schmedlap, Timmy Twotoes and another unknown maker...they will not draw the traffic that a site with more makers and more knives will.

Remember, collectors want to look at knives...lots of knives.

There are pro's and con's to every decision. Which is why the maker needs to decide, where they are at...where they want to go...and how do they want to get there.

This is very important whether you are a full time or part time maker.

Hope this helped.
 
Jim Schmidt once told me "You can always raise the price of your knives, but you can never lower it". He said you have to consider both the dealers and the secondary market for collectors. He said that new makers have a tendency to price them selves out of the market, then they cut prices trying to move some, and promptly upset both the dealers and collectors.
 
Hi Clancy,

Excellent post. Makers who generally gauge their prices on the aftermarket...will be short lived as viable makers. Which is why it is so important for the maker to figure out what they knives need to sell for...based on their own determinations. Not the recommendations of fellow makers or the aftermarket.
 
I both make knives and have a brick and mortar retail store. If I am going to buy a knife from you for resale, I expect a 30% discount. That is what I need to maintain my margin/profits. Now if you have a waiting list and can't build fast enough to fill demand, then you don't need to sell your knives to a dealer. Why would you? If you need the sales, then up your retail price a little and give the dealer his due. Just don't go around the dealer and sell that model you sold the retailer for less than the dealer's price. In fact, your price should be more to encourage folks to do business with your dealer. The dealer is not the enemy! They might be an opportunity for you to do much better, much faster than you might alone. Take care of them and they will make you money and keep you in the business of making knives. By the way, I've never been able to put my own knives on our own shelves. I'm going to have to figure that out one day...
 
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