Cost of "super steels"

Dan,
You are new to knife collecting, and as far as anything you have posted in the last year, are not a knifemaker.
Your business plan may work well for a video production company, but does not mold itself to knifemaking. Very few knifemakers run a "business". The vast majority of us who sell knives we make are hobby businesses just trying to cover the cost of our hobby. The ones who do sell for a living are hard pressed to make more than living expenses. I would venture that nearly every knifemaker business would make more money a year by closing the shop door and never entering again ... and going back to their old job. Most all knifemakers who don't have a day job have a spouse with one that provides benefits.

There have been hundreds of threads about running knifemaking as a business and how it actually works in the real world. New guys come up every month or two with plans on quitting their day job and getting rich in knifemaking. The guys who have done it for years set them straight quickly.... it isn't that type of business. We do it for the love of making knives, not to get rich.

I will end with two quotes that has been attributed to several famous knifemakers, and was probably said by all of the old time greats. I heard these from Bill Moran:
"The best way to end up a millionaire as a knifemaker is to start with two million."
"If I won $1,000,000 in the lottery tomorrow, I would still keep on making knives ... until it was all gone."
 
Good advice Stacy. I heard one knifemaker give some advice to a new knifemaker. He said, "Don't quit your day job".
 
Two schools of thought on selling....Price all merchandise at One Million dollars and concentrate on ONE SALE or price One Million items at One Dollar and see which one clears the shelves;)

Oh and don't quit your day job:)
 
I think you guys are basically making the same points from opposite directions.

From Stacy's PoV (if I may, Stacy), we already know that the custom knife market is limited enough and an individual maker's ability to supply that demand is limited enough that most knifemakers accept apriori that it's nearly impossible to operate as a full-time life-supporting business, with the exception of a few superstars (an even more exclusive and limited market segment). But that's not why we do this.

Certainly in my own case, I like it and it's the only hobby I've ever had that more or less pays for itself after a point. Trying to move beyond the break-even point turns it into a business that crushes the love. From that perspective, selling a vintage motorcycle to buy a KMG was one of the best financial exchanges I've ever made! o_O:D
 
Stacy E. Apelt - Bladesmith said:
You have an XHP nikiri for sale at $650 that I would guess has $60 in blade/handle materials. That is a gross profit of a bit over 1000%.
Once one factors is belts, tools, electricity and propane, rent, taxes, etc., it gets down to hard to make even 100% profit. Your own salary is never in the equation. As you say, it is hard for most folks to make any real money making knives.
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Its finally depending on how much time involved to making the knife and how many blade you can sell I think.

Im not even a knifemaker, I just imported some quality material from your country, designing a knife and having a fulltime knifemaker making it for me. What I do is just do the heat treating part and I still made reasonable profit from selling them. The knife makers that work for me seems happy too.
 
right now i have been contracted out to finish 140 balisong knives including anodizing the Ti handles its really goiong to offset the slack in my kitchen knife sales. also going to be geetting back into the building razors again
 
daizee said:
I think you guys are basically making the same points from opposite directions.
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You Got it!. ;)

My Video business was a work of love too. But it wasn't intended that way. Was not able to produce the number of videos I needed to in time. Produced 10 videos but needed 2-3 times that many when the market was hot. Now that whole business is dead for the most part, killed off by Youtube. Only companies producing any more are selling DVD copies of their TV show episodes. But little of that had anything to do with my comments - although the experience is quite similar. Was more interested and commenting via my business consulting. Wish I had my business degrees before I started the Video Business. lol
 
I think maybe some of the math is being over simplified. If a knife maker is a sole proprietor then keeping the lights on in his house and shop are kinda tied together and are the biggest part of overhead. I know for myself shop space will probably be the most expensive thing I have. It will be a lot more than belts even. The next thing is that simple steels have a high market appeal. I'm going to go out on a limb and say they don't. Correct me if I'm wrong but how many people have stock removal carbon steel blades other than kitchen knives as a big earner. Before I get run out of here I want to say that the simple steel is most often forged and that forged blades have a separate appeal and pricing is not the same. It's my observation that there are two camps for high end knives. One is a traditional camp and the others are performance junkies. There is a lot of overlap, just like a guy who loves 1911s has a glock or a hk and a guy who loves XDs still buys a 1911. So using super steel gives access to a much larger market and can bring new customers. The other thing is that sure the material is more expensive and maybe uses more belts but it is also more often machine finishes so construction time might be less. Often knives built around performance with super steel are simpler than a classy forged blade. Thing big blade no guard and Micarta scales. A simple steel blade often is very traditional and comes with high end fittings if using nice wood the wood will probably be the most expensive item. I really think there are a few reasons that simple carbon steels are used, they can be forged, they have a historic feel, they look cool, people like pretty fiddly things, they tend to be very easy to sharpen. If not looking for these kinda things when people are wanting to buy a high end knife they are looking for specialized performance and that's where super steel comes in. I bet if you run the real numbers they may be some of the higher earning knives.
 
skillgannon said:
I bet if you run the real numbers ...
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Hit my point straight in the heart!
You would be amazed at the number of people wanting to start businesses or even who have businesses who don't run the numbers. I was just scratching the surface and trying to show where things aren't always what they seem. One of my business professors taught - "It is far better to go bankrupt 50 times on paper working the numbers, than to go bankrupt once in reality"
 
Dan of Bazz Clazz said:
Hit my point straight in the heart!
You would be amazed at the number of people wanting to start businesses or even who have businesses who don't run the numbers. I was just scratching the surface and trying to show where things aren't always what they seem. One of my business professors taught - "It is far better to go bankrupt 50 times on paper working the numbers, than to go bankrupt once in reality"
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Excuse me, the vast majority of “Professors” & MBAs have little to no real business experience and hide in the halls of Academia collecting their checks, Bennies etc..———————————————-///———- If they really knew what they proclaim to teach, they would be out kicking butt in the real world !
 
Rhinoknives1 said:
Excuse me, the vast majority of “Professors” & MBAs have little to no real business experience and hide in the halls of Academia collecting their checks, Bennies etc..———————————————-///———- If they really knew what they proclaim to teach, they would be out kicking butt in the real world !
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I did not know you knew the vast majority of Professors and MBA's. Is it an organized meeting? Put me on the mailing list. I'd love to attend the next one!
 
Dan, I have been learning the ins and outs of small home business slowly and brutally myself, I have zero business training and infact the only two things im technically trained in are wood work and bench chemistry. So far it has gone well enough for me selling wood to knife makers, though I may at some point hope to speak to you about how to better run a small business.

As for Stacy's point, I think the point he is making is that you are thinking of knife makers as a business. A guy who produces a knife to sell for profit, and that if his pay and investment is not correct he may lack adequate cash reserves for downturns. I think that forgets that the vast majority of knifemakes are not just knifemakers. In some ways it seems like counseling every fisherman to invoice his ice or his bait. It would seem to me that the cash reserves people have are in the form of their professional lives, their ability to invest in their hobby.

While yes, I think it could be beneficial to run a hobby as a profitable business, I think a lot of knife makers dont want to. Once you start running numbers and looking at the real cost of abrasives and epoxy and wow anvils are expensive and so on, knifemaking loses some of the enjoyable escapism. Every no and then someone will come to forum and lay out their grand plan to be the next benchmade, producing top quality knives for cheap and selling them to the eager hordes at vast markups.

These forum members dont tend to last long. The ones who stick around tend to be makers with established professional lives who get into knife making for the craft itself, the steady improvement, they way it intersects machining and blacksmithing and wood work and chemistry and art and design.
 
Greenberg Woods said:
The ones who stick around tend to be makers with established professional lives
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Or retired like I am. Besides having a lifelong interest in knives and tools I wanted a self sustaining hobby to get me off the couch and out from under the wife's watchful eye. It's just amazing how many things she can think of for me to do if I'm just sitting there.
 
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Greenberg Woods said:
Dan, I have been learning the ins and outs of small home business slowly and brutally myself, I have zero business training and infact the only two things im technically trained in are wood work and bench chemistry. So far it has gone well enough for me selling wood to knife makers, though I may at some point hope to speak to you about how to better run a small business.

As for Stacy's point, I think the point he is making is that you are thinking of knife makers as a business. A guy who produces a knife to sell for profit, and that if his pay and investment is not correct he may lack adequate cash reserves for downturns. I think that forgets that the vast majority of knifemakes are not just knifemakers. In some ways it seems like counseling every fisherman to invoice his ice or his bait. It would seem to me that the cash reserves people have are in the form of their professional lives, their ability to invest in their hobby.

While yes, I think it could be beneficial to run a hobby as a profitable business, I think a lot of knife makers dont want to. Once you start running numbers and looking at the real cost of abrasives and epoxy and wow anvils are expensive and so on, knifemaking loses some of the enjoyable escapism. Every no and then someone will come to forum and lay out their grand plan to be the next benchmade, producing top quality knives for cheap and selling them to the eager hordes at vast markups.

These forum members dont tend to last long. The ones who stick around tend to be makers with established professional lives who get into knife making for the craft itself, the steady improvement, they way it intersects machining and blacksmithing and wood work and chemistry and art and design.
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Your points are well taken, and nothing I have written has contradicted, or was intended to refute that. People get into knife making for all sorts of reasons. Ask 100 knife makers why they started it and you will probably get 150 reasons.

All of my comments, all of the points I was trying to make were targeted to those who are in the business of making knives, or those who want to be. I initially started the thread because I was curious about the production cost differences between standard and super steels. Part of my general curiosity about business, and also part of my curiosity about knives and their manufacture.

The simple "tinkering" I have done with some cost variables in knife making in this thread was intended to show a different way of looking at a common problem in business. For any of the knife makers here who are in business and want or need to do better - I hoped this got them thinking in different ways about their specific situation. Small business people have to be constantly thinking about ways to improve or adapt. The biggest advantage small business has over the big guys is how fast they can move, change and adapt. But they have to be willing to do so when needed.

For the guys who are just in it for the hobby, or the love of it, but would like to at least keep it at break even level, I hope I helped them as well. For everyone else, no worries. I'm sure most of them stopped reading the thread many entries ago. We all have different motivations for what we do. Making knives does not have to mean making money by making knives. For those that are trying to do that, I hope I helped in some small way.

In closing - you, or anyone else here on BF is welcome to contact me anytime about business questions. I will do my best to help out where ever I can. A couple here have tried to insinuate that I because I don't make knives, I don't know the knife business. In one respect that is a fact I will willingly confess. I am definitely not the man to ask about what steel, what edge geometry, what heat treat, or (as I asked at the start) what are the cost differences between standard and super steels. There are plenty on the forum who can answer those questions and I gladly and willingly bow before their vast experience and knowledge. But as to the business, the viability and the profitability, of knife making, I'll be more than happy to go head to head with anyone on that side of things. Business is business, and no matter what type it is, they all have to follow the same rules to exist, solve the same problems. Those problems may not always have the same answers, but it sure helps to have seen the problems before, and understanding that there are different answers for different situations.
 
I have read this thread with interest and I appreciate bringing that level of thought here. I use google spread sheets to track every detail about every one of my knives. From the cost of each component of the knife down to the time spent on each part of the process. This allows me to keep a pretty consistent pricing formula and gives me an idea of what makes me the most money. I am then able to focus on those things which I enjoy doing the most as well as are the most profitable. I have found the biggest challenge and factor in all this is TIME. Time management, but also they way interest comes and goes...so much more of my energy has been spent trying to identify markets and capitalize on interest. One week there will be 5 guys wanting to buy a knife but only maybe one of them is willing to wait for the typical months long custom process. It is important to have stuff readily available. The logistics of it all plays a big part in the business aspect. Now a days the knife making part is pretty much a pure joy, but those knives dont sell themselves exactly. I guess thats the challenge for any one man show...you dont just make the stuff you have to do the accounting and marketing as well. Dan, Ive got a crazy totally unhinged business plan Iv'e been thinking of lately, maybe you could help brainstorm with me if you enjoy that sort of thing.
 
It is funny how even the very basic market's laws don't apply to knifemaking.... as well as physics's ;)
 
Rhinoknives1 said:
Excuse me, the vast majority of “Professors” & MBAs have little to no real business experience and hide in the halls of Academia collecting their checks, Bennies etc..———————————————-///———- If they really knew what they proclaim to teach, they would be out kicking butt in the real world !
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Simply not true. I know a lot of people in academia (as well as being one of those people myself) and the vast majority of MBAs simply could not be walking the halls of academia if you think about it for just one minute. How many graduated from these programs each year, compared to how many profs, who teach year after year? Think about it. I do know some academics who are not very good at what they do, but the majority are quite competent. You do have to meet licensing requirements each year to keep your licence.
 
too many details... I just try to make about 12 knives per month and get as much as I can for them.
I buy good tools, batch process when appropriate and constantly look for ways to be more efficient in the process.. that's it.

There's enough work to do in knife making as it is :)
and I gave up a very good career in manufacturing and a very good salary and I have 2 Master's degrees including an MBA R Rhinoknives1 :)

I make a 1/3 of what I used to but interestingly enough my life hasn't dramatically changed (financially). Helps to be debt free and it took me a long time to learn that lesson and get to this point.
but I get to sit on my porch and drink coffee and enjoy my view when I want and play golf when I want

P.S. the steel I use is $35-50 per lb. But I HT myself with minimal equipment and it's fast and efficient to HT.
It's also easy to grind and easy to sharpen.

Ct8giq6.jpg
 
Lots of good points guys.

Some makers build knives and some build art pieces. There are custom knives where the customer decides the materials and style of knife, there are hand made knives where the maker chooses, there are high end semi production knives where the same models are produced over and over. All of these have a place in the market.

Those that find success narrow what they make and develope a customer base for their knives. Decide whether or not you want customers or clients, and whether or not you want to work with dealers or sell direct. With enough time most of these things work themselves out.

The few that I know that do make it in this business, make knives for the love of knives, not the love of money.

Find your nitch.

Hoss
 
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