Experienced Bladesmiths who have an established reputation and a good customer base have learned how to price their knives. But what about the Bladesmiths who are just getting into the market or those who what to sell more knives. What price is the right price? What is fair to the customer and how can you can make a living making custom knives? We realize that many Bladesmiths struggle to price their knives. Therefore, we did some research to find out the best way to price custom knives.
First, we started with a Google search and found many articles and videos on this subject. Second, we tried ChatGPT to see what information the latest technology would provide. Third, we drew on what we have learned talking to Bladesmiths over the past couple of years. Pulling all of this material together here is what we have found out.
The short answer is: that there is no straightforward or standard way to price custom knives. Several articles recommended checking out prices other Bladsmiths charge and pricing your knife accordingly. Some articles suggested using a value formula. Others recommended using both methods.
Value formula pricing is a combination of overhead, material and equipment costs, time to make the knife, your reputation, rent, marketing costs, and what customers will pay. Let’s delve deeper into these subjects about the pricing formula some bladesmiths recommend.
Several articles recommend using this type of value formula.
Shop time & overhead rate + material costs + Bladesmith’s pay (labour) + profit margin (how much you want to make) = price of the knife[i]
Shop Time and Overhead Rate: include machinery (grinders, kilns, etc), sanding belts, drill bits, saw blades, hammers, tongs, rent, marketing, utilities, propane, equipment maintenance, and anything else you use to create the finished product.
An overhead allocation rate is the overhead expenses incurred per labor hour. You can calculate your overhead allocation rate by dividing your total overhead costs by your total labor hours. This will give you the cost of your overhead per working hour. When you multiply your labor hours for a knife by your overhead allocation rate, you get the total overhead cost associated with one knife. [ii]
Material Costs: These costs can vary affecting the price. High-end steels like Damascus or MagnaCut are more expensive and will result in a higher quality blade and a higher price. The same goes for handle material. Exotic or stabilized woods, mammoth, and carbon fiber will all increase the cost to make and the price. For each knife consider steel, handle material, pins, and bolster material.
Bladesmith's Pay (Labour): Custom knives are very labor-intensive so your time and expertise need to be reflected in the price. Complex or intricate designs or engravings require more time and skill to create, which will increase the price. For example, the more time and effort required to forge and shape the blade, handle, and other components, the more expensive the knife will be.
One Bladesmith broke his time down this way:
- Making the billet: 1 hr
- Forging to shape: 0.5 hr
- Profiling and rough grind: 1 hr
- Heat treating: 5.5 hrs
- Initial sanding: 2 hrs
- Final polish and etching: 2 hrs
- Buffing and sharpening: 0.5 hr
- Assembly: 2 hrs
- Leather work: 1 hr
Total hours = 15.5[iii]
Profit Margin: This is how much you want to make on the knife. There’s no right or wrong way to calculate your profit margin. However, you’ll want to make sure that the final price is competitive with similar knives on the market while still reflecting the value and quality of your work. It’s common for Bladesmiths to build a 30%-50% profit margin into their knife prices.
There are several items to take into account when determining a profit margin amount. Several articles stated skill and reputation have a significant impact on price. A Bladesmith with a well-established reputation for producing high-quality knives is likely to charge a higher price than a less established Bladesmith. Your reputation can be influenced by factors such as:
- The quality and caliber of your work;
- Your level of experience and expertise; and
- Your track record for delivering knives on time and to the satisfaction of your clients.
A Bladesmith with a strong reputation may also have a waiting list for their blades, which can further increase the perceived value of their work and justify a higher price. [iv]
Some Bladesmiths determine their price per inch by calculating their overhead and labor costs, and profit margin. They then add the material costs for each knife.
To conclude, here is some advice from a 2018 Blade Magazine Article by Les Robertson.
“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.” [v]
Photo credit: https://frontiersmengear.ca
https://www.youtube.com/watch?v=aPHPrNNMNgA Walter Sorrells - video