Breaking out into selling to dealers and volume pricing considerations

Frank Hunter

Frank Hunter

Well-Known Member
Alright, Dogs - it's been a big couple of years and I've got the basics down. The product sells if I build it, at this point - so now it's time to ramp up for greater volume. I've got 1200 square feet to work in and some work on the bench that likely be getting myself and Black Wolf Armory published in the near future.

I'm going to be launching an ad at a few additional online sites and am shooting for one in print at Blade magazine as well. After, that, I suppose the question is are you typically contacted by knife dealers regarding your work once you attract some attention with ads or print, or do you initiate contact yourself?

I know what each of my standard models costs me to produce down to the penny, and have sufficient repetition building them that I also know how long each takes down to the minute range - I think I'm ready for whatever I can drum up. I have dealt with local stores and regional galleries in the 15-25% markup range but understand retail honestly can command closer to a 40 or 50 percent discount - which I believe that I can accommodate with the value I build into my work and taking volume discount of materials and consumables into account.

Have any of you successfully made the jump from a "on request and at galleries" career to a "get it at these leading knife sites" endeavor? I understand industry connection has a lot to do with it, and right now I'm a 1 man operation that has been self taught with a lot of forum support - any advice?
 
Might give Andy Roy at Fiddleback Forge a call. He's running a small shop with a few employees, turning out maybe 30 knives per week. He's selling through the AG Russell catalog, a couple of dealer sites, and alot on his Bladeforums personal forum.
 
Frank,
Here are just a few thoughts on this subject. We multiply our efforts through employees. That said I have had a bear of a time finding anyone to employ that First, was trainable and second and even more important had PASSION for what we are doing.

There are many fast starters, then after they have burn the heck out of their fingers or worst and eaten some grinding dust, really decide its not for them.

I wish a few of us knife dogs on KDS lived closer together, I know many could collaborate with excellent results.

Last I will close with this.
I find that as long as I am a one man shop that selling to a retailer at any large discount is really just making me work more for the same or less amount of money.

Someday I hope to find some great employees or perhaps a partner?
 
One of the custom knife re-sellers that I know of purchases the already made knives from makers at a 30% discount.
Usually at the shows he will purchase knives from makers he likes that did not sell during the show.
Seems to work well for both the maker and the end buyer.

I have seen a few makers who were asked by retail stores to make knives to meet a certain price point.
Haven't seen this work for anyone.
Seems like the retailer wanted the maker to cut corners to keep the prices down but wanted the quality of the higher priced knives.

Most of the makers I know who have consigned knives ended up asking for the knives back when they were not selling.

My thoughts go along with Laurence.
Unless you set up things for mass production you are just working for a lower wage.
Maybe sell some to the re-sellers when the cash flow needs a boost.
 
Here are my figures, and several plans I can put into action if I can find the outlets to reliably purchase the work.

Currently, I'm running a typical 3 week to 3 month backlog, depending on how hard i push the product. Right now I've got some limited search engine penetration and an ad up on Oathkeepers. Not much, but it gets enough volume to pay for the cost of the shop and other necessary business related bills. Most of the time I cover all of my own bills with it as well, and sometimes have extra to put towards more growth. Other times, I'm short and thankfully the wife works.

Right now I put in full time hours split across a 7 day week to get things done - and if I built more knives, I could send more to a few different galleries and then sell even more. It's a positive feedback cycle that I'd like to continue, but right now with me putting in as many hours as I do, I've split the shop to "Frank Hunter Knives" which is my best grade sole authorship work which gets priority, and "Black Wolf Armory" which is typically the Rimfire, my 3" skinner, and other patterns I build in 2's, 5's, 10s etc and keep as inventory at a lower price point with full disclosure that they're semi-production and although high quality aren't my work alone. I've got 2 part timers right now on that end of things who are wanting more hours themselves.

The next step is going to be finding dealers - I've got the square footage, personnel, and experience at this point to make it work, it's just getting the connections.

Just to give some apples-apples numbers so you can see where I'm at, the Rimfire in S30V with black micarta handle scales, 304 bolsters, I bill out at 3 hours @35/hr for $105.00 in labor, that model costs $25.50 in materials counting a $5.15 USPS shipping ticket and all electricity, abrasives, and other consumables. Total cost is $130.50, at that rate.

I sell this knife for $129 typically, allowing me to fit basically the entire labor estimate into my wallet every time. However, we routinely build them in the 2.5 hour range. Also, $129 for an S30V bolstered knife with the performance of my .025 hollow ground finished edge and the heavy 9 ounce sheath I ship it with is a very good deal. It's underpriced, but at the same time, I can solo-build 3 of them a day if I'm determined.

I can jockey the labor bid around a lot on these and get them out to suppliers in the less than $115 range, depending on quantity, which lets them make a cool $40 or $45 per knife, at a minimum, and still sell a bunch of them. I can easily work with a 25 percent dealer markup, possibly more.

Here's where the profit to myself, and a whole heap of additional responsibility comes in. My workers are paid $15.00 an hour, and by the time payroll gets done with it, they cost me roughly $23 an hour. Therefore, my cost for a single Rimfire (and the other patterns follow the same regiment, just some fractional hour and cost differences) is $83 dollars between my workers labor and the materials. The shop rate remains $35.00 an hour - the difference between pays the business costs and whatever is left, which varies but is always a good thing, is my profit.

I would very much like to pay several hard working people a living wage like that around here, full time, and sell many knives using this formula.
 
The numbers above are the direct dollar costs and profits I've got in play - there are also taxes which are taken out of the profit and inevitable screwups, delays, and other shenanigans. If we can produce a knife for an honest $83 dollars, sell it for a $30 profit or so after everything is taken care of, it doesn't take many repetitions of that to be able to afford the above downsides.

Every superhero has a weakness - mine is not applying the "Work hard and succeed on purpose" method. I have a tendency to apply more skill than sweat and therefore I through pure unadulterated luck have found the shop space and good employees (friends? The line blurs between when there's wages at stake and that's another business discussion entirely) who understand what we're trying to accomplish.
 
Frank, as an old man (67) with years of experience in chemical plant construction (my knife making is a hobby, pure and simple) - both from contractor's side as well as chemical plant side as engineer/project management, I can tell you've done some good thinking on this..... and have given then numbers an honest look. I do think you're using this group as a "sounding board" to confirm - or or point out possible problems with your thinking, as well as looking for ideas on how to establish new contacts.

I do think you're doing a good job of thinking this thing thru - and good luck!

BTW, do you plan to be at Blade this year in Atlanta? If so, I do hope to meet you there.

Ken H>
 
You must log in or register to reply here.
Back
Top