Custom makers, deposits and the fallout from the PR (!!) fiasco

[BloodrootLS]

However no deposit puts all the risk on their shoulder. So the happy medium should be where it is.

As for what a happy medium is, that is the question... partial payment up front... or full payment at the end but you are paying a premium for their risk... Heaps of ways to do it but we really should be looking for that middle ground so the risk is shared.

So I realize I'm late to this party, but I would love to add to the makers' perspectives in the thread and perhaps shed some light on the complexities of waiting lists. David and I have changed in our policies over time. We do extremely custom work- often using customer's heirlooms or hot-stamping their intials into the blade or doing very particular designs that we would not do ourselves and would not feel comfortable selling elsewhere. If the customer doesn't come through on these kinds of orders we simply have to eat it. There is no resale. This is relatively infrequent, but it has happened several times over the last few years.

Our warranty/policy since the begining is that you get pictures of your knife before payment so that you can approve. Then, if you're unhappy with the knife for any reason during the first few months of use we'll remake it or provide a full refund.

We have a long wait list- over 3.5 years currently and continuing to grow. We space orders a customer every 2-3 days (we are two makers and are therefore pretty productive, despite every piece being one-off). Until the list reached 2 years+ we held all the risk and did not require a deposit of any form. We had between 1-4 hours of conversation time via email, in person, and/or phone with each customer. After 2 years our atrition rate began to grow significantly from about 5% to over 20%. The only thing the customers had in it was a conversation, so this was to be expected I suppose. We began taking a $100 deposit and interestingly the number of people contacting us and then following through with an order and getting on the list went UP. Very surprising to us. Apparently by us holding all the risk people didn't feel like we were as committed to them or them to us and they wanted to do/exchange something to get on the list. Statistically speaking people prefer having some skin in the game and are also then higher quality customers who will more likely complete the transaction once the knife is built.

Deposits are a pain. We have to pay taxes on them but can't technically use the money until the piece is complete because we are legally responsible to provide refunds immediately if anything happens and we are unable to meet our obligations. That means we have thousands of dollars in an escrow account that we can't use but have already been taxed on. This is the way that deposits are supposed to be handled from everything I have heard from similar industries and real businesses.

All orders are quoted when we have the conversations with the customer, so changes in pricing do NOT affect custom orders that are in line. Even if they change their designs or add a knife the pricing goes along with what it was at the time they made their order. This also means that a price hike does not come into effect on custom knives for over 3.5 years for us currently. This hits us pretty hard.

We no longer charge a deposit and instead charge a customization fee of $100. Instead of raising our prices on all our knives to deal with some of the problems with the custom order process (massive amounts of conversation time that is often wasted when a customer doesn't follow through, increased risk, fixed pricing over time), we simply add $100 to the custom order process (per order, not per knife) and this "helps" (still doesn't cover it) pay our conversation time and offset the price discount that custom orders get by avoiding price increases over time. That money is not a deposit and is for services rendered (conversation/design time) and therefore does not have to be saved in escrow. We also volunteer to refund the fee if after the design conversation the customer decides not to go ahead with getting a knife.

The only reason we feel comfortable with a long wait list is that we are two makers in a stable situation. If one of us gets injured the other will continue making knives and that spreads the risk. We are also fully commited to continuing knifemaking for a very long time and have oriented our lives and families around that goal. If we were in a more transient state, like many makers are, we would not feel as comfortable and would have closed our books before now.

Making available knives (non custom), is more lucrative once you have a good market for them. The custom process is a pain, but it also pushes you as a maker to try things you wouldn't ordinarily do and opens the door to some cool collaborations.

I hope that this gives you all a little insight into the issues that makers' like us have to think about and deal with. The main takeaway is that in general people seem to like having skin in the game if it's not too much and that the custom order process is complicated and risky for the maker, so try to be understanding, but also make sure that the maker's you're supporting do good business and are thinking about you and what could go wrong on their end. Most of us are not business people and have to figure out how to do business. We're just craftsman after all and don't have staff or extensive resources to help us typically. You have to choose what you're willing to risk to work with people who don't know how to do business well and are figuring it all out. What's nice is that it's one on one communication with small makers and you can get a feel for who they are and if they're trustworthy. Also, ask questions and let them know what you're comfortable with. You may get an agreement with a maker that is not their typical policy if they want to work with you and can trust you.

Best of luck and thank you all for making it possible for makers like us to build knives for a living.

~Luke

 

[chefcomesback]

Awesome post Luke , thanks .
Mert

 

[gic]

Yes awesome post Luke

 

[skewed]

Luke- I had a long conversation with a friend who is a high-end custom luthier that was spot on to your post. Thanks for the insight.

 

[alterwisser]

Incredible insight Luke, thanks a lot! Just confirms every positive impression I had from my conversation with you guys. Happy to be on your list....!

 

[Matus]

Thank you Luke for sharing some of the 'behind the scene' with us. I am patiently waiting for my turn

 

[DanHumphrey]

Let me add to the chorus...

I'm on your list and can't wait! And it'll be like three more years; at least by then I should know exactly what I want!

 

[Gustavo1977]

My 2 cents...
I think every maker should provide these informations on his subforum:
a) How long does he use to take do make a knife;
b) how many knives can he work simultaneously;
Also, he should provide a sheet where I could know:
a) His waiting list (with the date when each order was included);
b) What is the estimate date for him to start each project on that list;
c) That list should be updated with the delivered dates of knives he ended (then I can know how consistence he is with the timeline)
With this, I can really know if I want to be on that waiting list and how much I'm willing to pay in advance.
Sorry about my english...

 

[chinacats]

My 2 cents...
I think every maker should provide these informations on his subforum:
a) How long does he use to take do make a knife;
b) how many knives can he work simultaneously;
Also, he should provide a sheet where I could know:
a) His waiting list (with the date when each order was included);
b) What is the estimate date for him to start each project on that list;
c) That list should be updated with the delivered dates of knives he ended (then I can know how consistence he is with the timeline)
With this, I can really know if I want to be on that waiting list and how much I'm willing to pay in advance.
Sorry about my english...

Well said. Don't know how realistic it is but it would make me feel better about giving a deposit up front.

And please don't apologize, your English is at least as good as mine. Somewhat sad considering English is my primary language.

Cheers

 

[alterwisser]

And please don't apologize, your English is at least as good as mine. Somewhat sad considering English is my primary language.

Cheers

And here I always thought you were Chinese...

 

[BloodrootLS]

My 2 cents...
I think every maker should provide these informations on his subforum:
a) How long does he use to take do make a knife;
b) how many knives can he work simultaneously;
Also, he should provide a sheet where I could know:
a) His waiting list (with the date when each order was included);
b) What is the estimate date for him to start each project on that list;
c) That list should be updated with the delivered dates of knives he ended (then I can know how consistence he is with the timeline)
With this, I can really know if I want to be on that waiting list and how much I'm willing to pay in advance.
Sorry about my english...

Great point. And perhaps what would work better for everybody is better transparency. Custom makers have not had to do this (communication is work, and effectively unpaid work at that) and the norms in this "industry" do not require good communication or really even good business. Sometimes I think people are more excited about makers who are harder to deal with since it makes them feel like they're on the "inside" of the curve. Maybe that's true but you as customers have not required good communication, just good product. It would be great if as an industry communication could be better to avoid some of the issues that this thread has talked about. I bet makers would have a lot more business if they would be transparent and publish information like you suggested to make people feel more comfortable and able to trust the maker.

We have exact dates on our list, but many makers don't. We have gotten behind (we moved shops and had to retrofit the shop and renovate a house. We took 3.5 weeks to do so before we got back in production and it took us a YEAR to recover those 3.5 weeks and get back on time) before and it is easy to do and very difficult to get out of once it's happened. It's also very stressful. Now we try to be ahead to give ourselves a buffer in case something comes up like a sickness or injury that puts us behind. We also stack our custom orders slightly less densely than we have in the past so we have less risk of getting behind. The organization that it takes to keep up with a list like this is pretty intense and we've had to invent ways to do it. The reason we have knives for sale that are not custom each month is that it allows us to still make what we need financially with also keeping the buffer on customs so that we don't get behind or if we do we can catch up faster. If we only did customs we would stop doing customs altogether. It's too stressful and risky to betray customer trust and be able to meet our obligations.

Actually posting dates and that specific of information like you listed in your post would be too time comsuming and difficult, but some indication of how late or early the customs have been in the recent past (i.e. trackrecord) would probably be very possible. Also, makers who don't have specific times promised or associated with their lists puts much of the risk on you. You have to decide if you are still willing to work with makers who can't give straight answers to the questions you asked, since many won't be able to given the structure or lack thereof of their list. Not everyone keeps a well organized list and it is a lot of work to do so.

We contact you a month or so before we start work on your piece. That way we check to make sure you're still interested, let you know it's coming, and can tell you whether your order will be ready a little early or late. Communication is the key here since even if we are late we can at least let you know why and what we are doing about it and that we acknowledge that we require some grace from you and if you're unwilling to give it then you get your deposit or fee back.

All this communication is a lot of time not making knives though, which is why this communication is often lacking from many makers, especially those doing the work by themselves without the help of a partner or assistant or other resources.

~Luke

 

[chinacats]

And here I always thought you were Chinese...

No, the name is from a Dead tune

All this communication is a lot of time not making knives though, which is why this communication is often lacking from many makers, especially those doing the work by themselves without the help of a partner or assistant or other resources.

~Luke

I agree with everything you said up until the last bit...and don't necessarily disagree but want to point out that I've heard this many times from makers. The problem is that your business is not unique in this regard. Most business owners don't enjoy the time they spend scheduling, bookkeeping, etc but it certainly is part of the 'job' of running your own business and for this part I cannot have any sympathy.

Cheers

 

[alterwisser]

.


All this communication is a lot of time not making knives though, which is why this communication is often lacking from many makers, especially those doing the work by themselves without the help of a partner or assistant or other resources.

~Luke

If your knives are as top notch as your communication .... holy sh**!

 

[Anton]

If your knives are as top notch as your communication .... holy sh**!

They are. And I've gotten mine within a day or two of the promised date months back. Seriously impressed

 

[DanHumphrey]

If your knives are as top notch as your communication .... holy sh**!

If I weren't already on the list for a heritage set from them, I'd have bought (or tried to) one from their monthly orders. Has anyone ever had a complaint about a Bloodroot knife?

I just really want realistic timelines, so I know when I'll be spending money and when I'll have a new toy. If it's late, it's late, but I don't wan to buy one expensive knife and then the next week have a custom maker tell me he's finished mine and have to buy another right away.

 

[malexthekid]

No, the name is from a Dead tune



I agree with everything you said up until the last bit...and don't necessarily disagree but want to point out that I've heard this many times from makers. The problem is that your business is not unique in this regard. Most business owners don't enjoy the time they spend scheduling, bookkeeping, etc but it certainly is part of the 'job' of running your own business and for this part I cannot have any sympathy.

Cheers

It is a lot easier said than done. And while I don't necessarily disagree, I would say that you have to pay for good communication.

In this business I would argue a lot of makers aren't paying themselves a fair wage for their work let alone enough to cover admin. And while you say "its part of the job", working for free isn't part of the job.

So the question is would you be happy to pay 30-50% extra on your knives for that?

To put it in perspective, as an engineer my company charged me out at $180/hr.... at that charge out rate that afforded me 8 hrs per week of non-billable (or non-shop time in equivalent) hours, any more and profit started to drop...

 

[malexthekid]

I should add that my comments are generalisations based on observations from the forums.

It seems the guys from Bloodroots and a couple of others have spent the time to work out a business model that works.

I would be interested to know if you guys pay yourself a wage or just work for profits? (No need to divulge as its business info, just a curious musing).

 

[Dan P.]

Many thanks to Bloodroot, it made most edifying reading.

I agree with everything you said up until the last bit...and don't necessarily disagree but want to point out that I've heard this many times from makers. The problem is that your business is not unique in this regard. Most business owners don't enjoy the time they spend scheduling, bookkeeping, etc but it certainly is part of the 'job' of running your own business and for this part I cannot have any sympathy.

Cheers

The business is not unique in this respect, no, but the degree to which customer desire vs. maker's vision vs. reality vs. cost vs. materials etc. etc. needs to be pounded out in communications and put on paper for even the most basic customization is surely unusual.
On the other hand, being a knifemaker, or blacksmith, candlestick maker or whatever is also a lifestyle as much as a job, and that has its upsides but it also needs to be paid for on some level.

 

[rick_english]

.......We took 3.5 weeks to do so before we got back in production and it took us a YEAR to recover those 3.5 weeks and get back on time) before and it is easy to do and very difficult to get out of once it's happened.............
~Luke

The point is you worked until you got back down to zero lag. I know a couple of medical groups where the docs worked evenings and weekends for a year to get their appointment wait time down from 3 months to one day. It stayed that way too----people stopped making appointments months in advance just to hold a slot open, since they knew they could get in the next day.

I'll get flamed to oblivion for this, but I think many knifemakers are just too lazy to do the really hard work that's required to get to the point where they can keep their promises and finish their work on time. It's just easier to make excuses than to make knives.

 

[toddnmd]

It's very helpful to have comments from some makers (thanks Luke and Dan!), to getter a more complete picture of this process. I was hoping there would be some more input to get a glimpse of how it looks from the other side of the transaction.
Some time for communication and design needs to be built in, and should be considered part of the process. Though I would guess there is a pretty big range in how much communication time is required for each knife. Probably some buyers just go with basic dimensions, handle materials, etc., while I'd guess others have some very specific requests, which sometimes may approach or exceed a maker's experience, or what the steel can do.
While I think Gustavo's list of ways to keep people informed would become a time-sinking burden on makers, the basics of giving a reasonable estimate, and updates if necessary, particularly if the delivery date needs to slip.
It would be very interesting to compile some data about how successful different makers are in meeting expected delivery dates. Luke made an excellent point about buyers not necessarily requiring the type of communication that we seek. I am hoping this thread can contribute toward setting some more widely accepted standards in custom knife making.
Thanks to Bloodroot for really thinking things through, coming up with a way to manage the process, and sharing their experiences here.

 

[chefcomesback]

The point is you worked until you got back down to zero lag. I know a couple of medical groups where the docs worked evenings and weekends for a year to get their appointment wait time down from 3 months to one day. It stayed that way too----people stopped making appointments months in advance just to hold a slot open, since they knew they could get in the next day.

I'll get flamed to oblivion for this, but I think many knifemakers are just too lazy to do the really hard work that's required to get to the point where they can keep their promises and finish their work on time. It's just easier to make excuses than to make knives.

You will not get flamed to oblivion since no custom maker will openly criticise or ridicule this statement , mostly due to the fact they may loose a potential customer or being seen as rude , bad customer service etc .
On a side note have you ever made a knife ?

 

[brainsausage]

The point is you worked until you got back down to zero lag. I know a couple of medical groups where the docs worked evenings and weekends for a year to get their appointment wait time down from 3 months to one day. It stayed that way too----people stopped making appointments months in advance just to hold a slot open, since they knew they could get in the next day.

I'll get flamed to oblivion for this, but I think many knifemakers are just too lazy to do the really hard work that's required to get to the point where they can keep their promises and finish their work on time. It's just easier to make excuses than to make knives.

That's a pretty ridiculous blanket statement to make.

 

[alterwisser]

You will not get flamed to oblivion since no custom maker will openly criticise or ridicule this statement , mostly due to the fact they may loose a potential customer or being seen as rude , bad customer service etc .
On a side note have you ever made a knife ?

I made a crappy petty, stock removal... And it took me a very long time, especially getting to 800 grit finish on the blade.

You guys have my utmost respect

 

[BloodrootLS]

It is a lot easier said than done. And while I don't necessarily disagree, I would say that you have to pay for good communication.

In this business I would argue a lot of makers aren't paying themselves a fair wage for their work let alone enough to cover admin. And while you say "its part of the job", working for free isn't part of the job.

So the question is would you be happy to pay 30-50% extra on your knives for that?

To put it in perspective, as an engineer my company charged me out at $180/hr.... at that charge out rate that afforded me 8 hrs per week of non-billable (or non-shop time in equivalent) hours, any more and profit started to drop...

I have heard that it is hard to push past 30 hours of billable time per week for consultant jobs and many other kinds of jobs that have strong demarkation between billable hours and non billable hours and it seems to hold true. We changed our process from doing some administration every day to having one day a week essentially entirely dedicated to "unbillable" work (and still do emails most every day for an hour or so). Making this change, and moving to 5 days/wk of work instead of 6 days like we had been doing for years increased our productivity by 20%. It's easy as a small business owner to be working always and yet be very inefficient. Structuring work hours can drastically increase efficiency, as can lots of other things.

Granted we are able to develop and conduct our business like we do because we are a partnership and can share the load. We also this past year hired Katy (David's wife) to do a lot of the administration for us which increased our productivity and organization to a huge degree. The more time we as makers get in the shop- the more billable hours, the more knives get made and more revenue we make. We still do all of the designing with the customers however.

We do pay ourselves a salary.

I think you are right Chinacats that knifemakers should not necessarily be "let off the hook" for neglecting their business to maximize profit. They are not likely to change unless they have a reason to however and like I said these issues are here in part because they have not been required to by purchasers. You vote with your dollars.

I don't think 30-50% extra for additional service is likely. Knives do not have to take weeks to make and prices do not have to be what they are. If a knifemaker gets their pricing up high enough they can be as inefficient as they want. In an industry where overheads are very low (think of the margins a restaurant has to deal with!) and prices are very high and everything you're paying for essentially is time (and desireability), differences in efficiency could make almost any knifemaker able to pay their bills and there's a lot of leeway in how you can increase time in the shop or efficiency while you're there. And I'm saying this from a perspective of every piece being hand forged and very customized- all one-off and we collect and curate a huge array of materials. We are not mid-tech or equipment rich by any stretch of the imagination. Dan I love what you said about how we need to pay for our lucky-dog part of the job by also taking care of the nonbillable stuff and I think you're right on and I have to preach this to myself. We as makers have it really good in that we often get to do what we love and get to do it how and when we want for the most part and can choose how we want to balance time vs. money. It's a great life in many ways if you can handle that much freedom but it's a huge learning curve for most of us to figure out how to deal with freedom in time, the craft, and business to that degree.

David wanted me to mention that the function of the forum should be to report the business practices of the maker in addition to the quality of the knives. Obviously you already do this, but his point was specifically toward maker punctuality. The maker should not be the one reporting if they've been on time or not since we can make up whatever we want, but that it should be your job as the customers to report wait list issues or deposit issues in the forum or as a part of knife reviews. You can really help prospective buyers know what to expect and the level of risk they are taking on by enlisting the services of different makers.

Best of luck and since I'm beginning to degenerate into rants instead of provide helpful insight I think I'll sign off ;-)

~Luke

 

[malexthekid]

That's a pretty ridiculous blanket statement to make.

Would love to see a proper indepth analysis. Did they increase staff, were there other doctors in their area that ended up picking up some of that overlap as people weren't prepared to wait etc.

That is an effective incresse of 25% in working hours.

 

[brainsausage]

Would love to see a proper indepth analysis. Did they increase staff, were there other doctors in their area that ended up picking up some of that overlap as people weren't prepared to wait etc.

That is an effective incresse of 25% in working hours.

I was more referring to the work ethic of these mysterious smiths mentioned in the original post. Your point is also of interest.

 

[malexthekid]

I was sort of getting at the same thing... the inference that the drs were great for doing it but knife makers were lazy... when the actual equation us much more complex....

Plus doesn't address the fundamental issue that to decrease wait time a knife make has to increase production... which there is only 3 options...

Take on staff;

Move to an more automated mass produced process; or

Increase working time.

The last is not efficient and sustainable as any properly run business will tell you.

The first two tend go against what we desire as customers

 

[brainsausage]

I was sort of getting at the same thing... the inference that the drs were great for doing it but knife makers were lazy... when the actual equation us much more complex....

Plus doesn't address the fundamental issue that to decrease wait time a knife make has to increase production... which there is only 3 options...

Take on staff;

Move to an more automated mass produced process; or

Increase working time.

The last is not efficient and sustainable as any properly run business will tell you.

The first two tend go against what we desire as customers

Agreed. As stated above, I think you really need to understand your limitations, and not let hype or buzz mislead you into taking on more work than you can reliably produce in an acceptable time frame. Which seems to happen all too often. And- well- I'm not privy to the inside of certain people's brains, but I wouldn't be surprised if that was the case with the issue that birthed forth this here thread.

 

[malexthekid]

Agreed. As stated above, I think you really need to understand your limitations, and not let hype or buzz mislead you into taking on more work than you can reliably produce in an acceptable time frame. Which seems to happen all too often. And- well- I'm not privy to the inside of certain people's brains, but I wouldn't be surprised if that was the case with the issue that birthed forth this here thread.

I would take it you are right or close to it.

Its also why, as much as the Bloodroots guys have their sh!t in order, 3 years is a long time and a lot can happen in that time frame... and i struggle to commit to anything beyond a "your name is on my list" style of thing for that length or wait list.

 

[toddnmd]

I was sort of getting at the same thing... the inference that the drs were great for doing it but knife makers were lazy... when the actual equation us much more complex....

Plus doesn't address the fundamental issue that to decrease wait time a knife make has to increase production... which there is only 3 options...

Take on staff;

Move to an more automated mass produced process; or

Increase working time.

The last is not efficient and sustainable as any properly run business will tell you.

The first two tend go against what we desire as customers

I would guess there is some increase in efficiency as makers gain experience making certain types of knives. In a way, limiting the degree of customization would make things more efficient. One maker (Watanabe) discourages custom requests, saying that customers should use the standard design of a particular knife before requesting a custom version (though he will make more custom versions for an upcharge).

On the other hand, I think some makers probably enjoy the creative aspect of being pushed to do something new, and that ultimately expands their knowledge, and range of knives they can make, although it may often take longer.