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Balisong Economics

May 19, 2010

Other person's comment: "To try and put it in perspective, last year you could get Limited Edition 4x series for $280 or less (usually less depending on the model). So, how is the most popular/produced/owned Balisong some how worth more than the before mentioned LE Bali's?"

My response:
The LEs have gone up in value along with the 42, so now they are all worth more now. Values tend to rise with increased demand and decreased supply, it's not a matter of right or wrong or what "something is worth intrinsically." The market dictates what something is worth based on how much people want to pay for a knife that is hard to obtain.

If you ask me, the 42 was always an outstanding value at $150-$180, one reason I stocked up on them. I think the knife was easily worth $300 when there were plenty around, and I have no problem with people paying more now for a classic knife that is widely considered one of the best in history. In fact it wouldn't surprise me if they cross the $500 barrier at some point if they are not re-introduced.

The 42 is a great high-quality knife that will likely last a lifetime, and BM warranties it for life should anything wear down too far. It's one of the best flippers, and a classic design. I see people spend $500 of knife money on far less in terms of materials and durability.

Consider that the 42 flips better than most customs and will likely outlast many customs if both are used to the same extent.

My bottom line: A knife is always worth what someone wants to pay for it. These buyers and collectors buying them aren't stupid, they just want one, and that's what it takes in this market. Like I said, I think they are still well-priced for what they are. We just had it so good for so many years it's hard to switch gears.

Putting my own money where my mouth is. Despite having bought many at the lower price point before this year, I am still buying them at more recent higher price points because I still think there is value there.

May 20, 2010

Other person's comment: "My problem isn't with the buyer's, it's with the sellers.

I couldn't bring myself to sell something for that much more than what I originally paid for it. I was always under the impression you sold your knife to get your cash back, not to make a profit, I guess I was mistaken. Apparently some people play a little faster and looser with their ethics and it is pretty pathetic IMHO.

This hobby is supposed to be fun, remember?

Anyway, I am done with the Benchmade pricing debates, to each his own.

BTW, (seller with high market for sale posts), considering the sales you've had up recently, there is no surprise you share his thoughts."

My response:

I like your ethics, (previous poster), but the hobby wouldn't be fun for me if I had to watch every knife I want sell to someone else who doesn't want it as bad. The ethics sound good, but I wouldn't want them applied to the bali market and here's why:

Based on my understanding of economics, you can't have a problem with sellers and no problem with buyers. The only reason a discontinued knife is available for you to buy is because it is priced to give you that opportunity. In other words, if it was priced way below market value, it would be bought in one second by the first person that comes along. You (or substitute any collector), actually wants knives priced appropriately because it gives you a chance to buy one at a fair price. "Fair" being determined by the market. When sellers price their product appropriately, it gives those who have the funds (i.e. ready and willing buyers) a chance to buy one, rather than see every single knife they want sold to someone else in 2 minutes because it is underpriced. So think of appropriate pricing as a favor to buyers who want to own a hard-to-find knife but don't live glued to the computer.

I like to get a good deal on a knife as much as the next collector, but when it comes to a knife that's hard to obtain, I would rather sellers put high market price on them so I have a chance, if I'm willing to spend the dough. Take the Ikoma Guardian Angel, for example. It appreciated so hard and fast after it was released, that every one that has been sold in the last few years I've missed out on because it was sold in the first few minutes. I would rather pay a premium for one than not have one, and that's what drives prices up, mainly buyers, not sellers. Sellers just respond to buyer demand.

Right now, the foreign market is helping drive prices up. Think of it from their perspective. These knives are hard to get in their countries, stock is very low. Prices are generally much higher to begin with. Often, when they buy from here, they have to pay an import tax on them. And finally, many currencies have been inflated relative to the dollar, making our products more expensive. When we list a knife for sale in what is generally a domestic sale, what seems expensive to us in the U.S. may seem like a good deal to someone in another country. Finally, there are many wealthy people in the U.S. and abroad and they don't care if they pay over average market value to get the knife they want.

All of that to say that there is more going on than U.S.-based collectors selling to other U.S.-based collectors. There is an entire global market out there with variations in currency, and great variation in the wealth and purchase power of interested buyers. If you're not against buyers, then don't be against the sellers that make it possible for those buyers to own a discontinued knife. If every seller sold their old collectible bali for what they paid for it, us collectors wouldn't have a chance to collect very much at all, and some collectors really LOVE collecting. Prices they can deal with, not having access kills the game entirely.

In addition to my thoughts above, I also believe in free markets, letting individuals determine value (rather than imposing a cap as you suggested), and the creation of wealth (return based on risk of ownership and investment). To me, that's the way to do things. I often give a good deal to a friend or collector here or there looking for a knife. But if I list a knife on the open market, I want the most motivated seller to have a shot at it, just like I would want that same chance if a knife I wanted was listed for sale.