Investing in Custom Knives: Part 2 of 5
2. Position in the Custom Knife Market
A maker’s position in a market is not always so obvious. Early on, when I was primarily a collector, I noticed (after spending several-thousand dollars) that just about every knife I bought and later sold lost money. I was confused as to why this was happening, since I did a lot of homework. What I thought was “homework” was; in fact, doing a lot of research to pick out what was really my favorite knife, not which knife would hold its value or even go up a little.
Years later, while in graduate school, I developed a theory regarding the pricing of custom knives. I called this “index” the Robertson’s Maker Market Matrix. Basically, what it did was compare every maker who was in KNIVES 1992 to every other maker who built a knife in a similar category. Then price comparison started between the makers, followed by materials, time making custom knives, reputation, a few other variables and patterns started to form. By creating this matrix, I found I quickly started to separate the makers into strata within a particular market. Almost without exception, the top three to five makers in each stratum rose to that position because they offered value pricing for their knives.
Know the market; know the maker’s position in the market; determine if the knife is appropriately priced. If yes, purchase the knife, and then be sensitive to the factors driving a particular maker and/or his work in that market. The purpose of investing in a custom knife is to sell it for a profit. This sensitivity will indicate to you when the time is right to sell to achieve your goal.
A couple years ago a collector came to me at the Blade Show. He had heard that a collector had spent more than $100,000 on custom knives at the show. He asked which knives I would spend $100,000 on at the show? My reply was $50,000 cash and $50,000 in custom knives. Surprised, he asked why so few knives. My job is to buy knives that will resell for a profit. I replied that I probably could not get every knife offered in a drawing, so I would have to buy knives that are offered for sale to anyone. The number of knives (even at the Blade Show) that could be resold for a profit is limited. He asked why that was. I replied that it’s because the majority of custom knives are overpriced. Not with malice aforethought, but nonetheless, overpriced.
Pricing is difficult. Often, new makers will rely on established makers to give them pricing guidance, or merely look at a knife similar to the one they have built and estimate what their knives should sell for. This is why it is incumbent upon the investor to look for value pricing in their investment knives. Most collectors don’t know the makers position in the market, and apparently most don’t care, which is good for the makers. Consequently, they don’t know they have over paid until it is time to sell the knife. Then, the aftermarket lets them know how they did. Remember, your fellow collectors are the aftermarket.
This is a 5-part blog that will continue on Sat. 7/7 so come by to keep learning about collecting custom knives for investments.
Robertson’s Custom Cutlery is your source for custom knives from today’s leading custom knife makers. We only feature the highest quality knives at value prices. Our custom fixed and folding knife selection includes tactical fixed and folding knives, presentation fixed and folding knives, bowies, hunters and skinners, and a large selection of forged blades. Les Robertson, author and owner of Robertson’s Custom Cutlery, is also a Field Editor for Blade Magazine and an instructor at Blade University. If you have questions about the content in this article or about any knife or maker on our website, you can contact Les directly at firstname.lastname@example.org or (706) 650-0252.