Taking Deposits

Travis Fry

Well-Known Member
After a recent spate of orders with absentee orderers I've been considering taking deposits, especially around tax return time. Any thoughts from the pros on this?
 
Tough Call. If they (customers) start irrating you, just make my knife, I'll probably pay.
Need more experience than I to help you there. Good Luck, Dozier
 
I'm far from a pro. but here is my 2 cents. I see no problem with asking for a deposit. If they really want you to make them a knife then they shouldnt have a problem especially if they see that you have more than one order to fill. like I said just my 2 cents. But hope it helps.
 
It's a touchy subject. I read some buyers/collectors say they won't deal with someone who asks for deposits because they've been burned. On the other hand not having a customer follow through on an order would be a drag too, especially if it's a design you don't make/sell often or involves materials you wouldn't normally keep on hand.

It's something I've been wondering about myself and I don't have a solid answer :(
 
IF the knife is a very customized design, that you would otherwise have trouble selling, then I would say that asking for a deposit is not out of line.

If it's a general type of knife that you build/sell, then the answer is NO!
Specific circumstances for each situation should be the determining factor.

What you need to think about is that once you have an individual's money, no matter what the amount, you have basically indentured yourself to that individual. In many cases no issues arise, but there is always that customer who will ride you like a rented mule once you have a deposit. It's happened to me several times.....you receive a deposit from a client, then they are calling you every single day, taking HOURS of your time, and always asking the status of their knife. Now don't get me wrong, communicating with you customers is paramount, but I literally have had someone send a deposit, then expect me to talk on the phone EVERY DAY, FOR HOURS ON END, changing everything from design to details as they go, and asking, "how much more would XXX be.....and XXX.....and XXXX. Then, when the knife isn't done when I estimated, they throw a fit. In a couple of cases I have actually sent the deposit back, called them, and canceled the order.

More directly to your situation, I keep a list of individuals who have not followed through on their orders....people who have ordered and then when the knife was completed/ready to ship, declined the knife. In those cases, the individual is required to make full payment in advance, on any future order before I will place the order on my waiting list.

It's sad that things like that have to occur, but in these times, we as knifemakers have no choice but to protect ourselves and our interests.
 
I've found it necessary to take a 10% deposit from people I haven't dealt with before. If I put someone in a slot on my waiting list and they back out when the knife is finished it creates a hole in my income, I could have been filling another order with that time. The deposit doesn't really fill that void but it discourages the customer from backing out without good reason.

There is a point where I won't take deposit's, if my waiting list get's out to more than 6 months, it doesn't seem right to keep someones money that long, so I tell them in advance that I'll contact them a couple months in advance about a deposit, if they back out then it doesn't hit as hard.

I've had people call or message me and we discuss the knife and they say ok i'll take it, they say they are sending a deposit and it doesn't come, contact them again they say oh I forgot, I'll send it out now and it still doesn't come, then I just remove them from the list.

I've been stuck with knives with weird handle material or combination's of materials that I wouldn't have made without a special request and I usually have to redo them with different materials or sell them at a reduced price, sometimes even the 10% that I got doesn't cover that hassle.

Basically, if a refused order will hurt your income, you should probably get a deposit. If it's just an annoyance you probably don't need to worry about it.
 
Mr. George, yes, that's exactly what I mean. I've had 3 of my last 5 orders bail in some way or other. Usually they've just been uncontactable, and in all cases I gave them a month before I sold the knives to others. One guy fell on hard times and was upfront about it. Mr. Caffrey, I also always get a deposit for any knife that is customized to an extent that it would be otherwise unsellable, but these weren't in that category. It's the "rented mule" scenario that has kept me from taking deposits so far, and I'm generally against doing so except in situations where it seems necessary. 10% seems reasonable though, and should help to winnow those that are merely momentarily enthusiastic from those who are really committed.

I've also considered not taking orders at all, so that I can make whatever I want to. People rarely order something other than what they've already seen me do once, and I feel like I'm getting stuck in a bit of a rut. Sometimes I'm excited about repeating an order because I liked it the first time and felt I could do better with another try (Dozier, yours falls in this category), but I've started refusing orders (politely of course) that I don't want to make for no other reason than that I don't want to make it.

I hope I haven't gotten too existential on y'all.
 
Hi Travis,

Only 3 reasons for a deposit:

1 The knife requires additional expensive materials, gold, jewels, etc.

2 The knife is so butt ugly that should the buyer back out you will never be able to sell it. In this case the entire payment up front is ok

3 the customer cannot budget their money and prefer to send you a check every two weeks. In this case...put the money in a separate account. You do not spend the money until the knife is complete.

Now that being said. BEFORE YOU BUILD THE KNIFE>>>>YOU CONTACT THE CLIENT!!!!!

That way if the backs out, cannot be reached, etc. You don't waste time and money building their knife.

This allows you to move on to the next knife with no hard feelings about the previous customer.

Remember you are selling a product that no one needs (I remind myself of that on a regular basis). :D
 
Last year I stopped taking deposits, it took pressure off me to complete deadlines, but, this year it seems more are bailing, so if it is special materials or a model that I have not been making and do not want in inventory I ask for usually at least half, If it is a model that I make on a routine basis I offer to inform them when one is complete but do not take a specific order.
 
good ideas

Last year I stopped taking deposits, it took pressure off me to complete deadlines, but, this year it seems more are bailing, so if it is special materials or a model that I have not been making and do not want in inventory I ask for usually at least half, If it is a model that I make on a routine basis I offer to inform them when one is complete but do not take a specific order.

This seems like a good way to go. As does Mr. Robertson's suggestion of letting people know prior to being a knife, get a recent commitment as it were. More than two payments on a knife, deposit & final, would just become more stuff to keep track of for me, and I got enough already. Dozier
 
I'm still working this out myself.

I have taken deposits sometimes when they are offered. I rarely ask for one, and only then if there's a really off the wall handle material or design involved.

I've had..... in about four years I've had 3 flakes, one return (just didn't click).

Generally I've kept deposits around 15-25%, though.
 
I have been doing this for over 38 years now and have never taken a deposit and only have Three knives in inventory.
My reasons for not taking deposits are. If I don't have a deposit and the customer becomes a butt head I can tell him top take a hike.(I took an order one time at the Guild Show in Orlando for a rather large Bowie and told the customer it would be 6 months befor i even started it as I had other orders in front of him and I was going to Africa hunting when I left the Guild Show. When I returned home from my hunting trip my answering machine was filled up with messages from this guy wanting to know how I was doing on his knife. He called me twice in two weeks after I got home and I told him I wasn't going to start his knife for 5 months. On the third call in less than 3 weeks I told him to take a hike. No deposit ,No Problem. Next reason I don't take deposits is I have had some medical problems thru out the years and couldn't deliver on time.If I had a deposit the customer would have had every right to complain to the Guild.(I am no longer a Guild Member as I dropped out after 28 years membership)Next reason no deposit is I have never made a knife that didn't sell.Last reason is that my wife said she wouldn't finish any knives I had on order if I kicked it.And she didn't want to have to dig into the bank account to pay my deposits back.
I have only had maybe 1/2 dozen orders that weren't picked up since I started making.
All Knives are made for someone. It may not be the person that ordered it but it was made for someone and that person will come along and just go crazy over it.
Sometimes when times were a little tough I wished I had taken a deposit so that I had the money to buy some belts or other materials that I needed but I always seem to get by with out it.
 
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I don't take deposits ever. The knives sell anyway, as BPC said. I am not a banker, and don't want that responsibility. I am a knifemaker. Also, I agree with BPC on the freedom to dismiss a customer. No deposit means I'm not beholden to the customer. I don't own him anything, and he doesn't owe me anything. Its a purer relationship. I have been frustrated with walkoffs in this economy, but so far I've been blessed that the knives sold anyway. Also, if a customer tries to order something from me that would be super costly, or out of my experience/take too much time, etc, I just turn that order down. No deposit necessary. My work isn't about Mamoth ivory. Its about working tools.
 
Question, is there any particular reason that as a knife maker you cannot contact your client prior to building the knife? This allows you to check whatever method of contact you were given (phone or email) to make sure they still work. If they don't that is probably your first hint the client is not going to buy the knife.

This allows you to double check with the client again exactly what they want. To give them a definitive time as to when the knife will be delivered (2 weeks or less). If they can't have the money in that time frame...they need to tell you now...that way you can start someone elses knife.

If you check with the client before you start their knife...and they tell you they can't pay for it...or don't return your phone call or email...the only thing you are out is probably some aggravation.
 
I've recently agreed to accept a deposit on a custom order for two knives. Here's why:

1) There's a fair amount of outsourcing involved... waterjet cutting (due to crazy sawteeth that would take me forever to cut evenly by hand), coating and some machined parts that I am simply not set up to do with my current tools and experience. This particular order falls almost completely outside my "normal" stock of materials and techniques. I COULD do it all myself, but the time/labor involved would drive costs to the point that either I wouldn't make anything or the client would pay an unfair amount for the knives. I can't afford to lay out cash, labor and time for a one-off, totally custom and out-of-the-ordinary project for free at this point in my career. I made this clear to the client, and he understands that it will add to the lead-time but keep the total price reasonable.

2) I've already invested a significant amount of time in measuring/creating workable drawings and templates, based on screenshots of knives that never existed, before any money has exchanged hands, and before the client committed to have me make the knives. (The client's ideas are inspired by a video game... not surprisingly, it's a bit of a pain to draw up a knife based on a grainy jpeg.)

3) The client is on the other side of the planet. Despite that, communication has been steady and clear, and the gentleman has kept to his original idea. He knows exactly what he wants and hasn't waffled on that.

4) The knives are not what I would normally design myself, and I'm certain I'd have a difficult time selling them if the client backed out. Again, I can't afford to eat the costs and inventory these knives, hoping someone else might buy them someday.

5) It's a challenging project that will expand my skill-set and show future clients that I can step outside my own "box" when asked. It involves project-management, budgeting/costing and several other skills that will push me to learn. I feel this will help me grow as a maker and a businessman.

6) I need the work! I generally prefer to make what I damn well please, run it up the flag pole and see who salutes. Perhaps one day I'll earn a position in the market that allows me to do that exclusively. But at this time I can't see turning down a profitable order that I know I can fulfill and exceed the client's expectations of quality. I do have to cover my behind, though, hence the deposit.
 
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Hi James,

That is one of the exceptions...the client wants you to make something unusual and/or something that requires outlay of capital (outside the norm).
 
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