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50%-80% Price Increase past 10 years is it justified?

us Offline Blackbeard

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Full size MT's from Leatherman and Victorinox have gone up steadily over past decade while many Gerber and Sogs remain about the same. Search on Camelcamelcamel.com and you can see the enormous price increases for items that haven't changed in design much over the years. Some LM's like the wingman inexplicably are 100% more expensive these days.

Just wondering what has changed in the economy that has driven these increases, it can't just be steady inflation or steel prices as they mostly use lower end steels to begin with. I'm no economist, but I find these price jumps to be very high and disheartening.

Personally I did my largest share of MT buying about 7-9 years ago, and now I only get a new one if I find a heavy discount or clearance sale, since I am pretty happy with what I own, so I rarely find anything to purchase aside from saks


ch Offline Etherealicer

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #1 on: May 28, 2019, 02:23:57 PM
I presume that you were looking at US data.
If you look at the data for Germany you will see that Victorinox more or less stayed the same. LM too suffers far less increase (see attached Rebar chart).
For the US you have to consider that 2009 to 2019 there is 20% inflation alone. Larger companies might be able to cut corners or compensate with high production numbers, but LM is a relatively small company. Then there are import taxes and other political decisions to be considered (steel price has almost doubled in the US in the recent years).

Other factors:
- Legal cost (Lawsuits, copyright battles, copyright applications etc.) seem to go up every year
- After 9/11 knife sales went down a lot... so prices followed, the market is now recovering
- LM has brought a wide variety of new products in recent years (thread, leap and free are probably the biggest in terms of R&D)
rebar.JPG
* rebar.JPG (Filesize: 45.17 KB)
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ch Offline Etherealicer

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #2 on: May 28, 2019, 02:34:08 PM
Another reason for the tremendous increase, especially around the year 2010 might be the gold price, which more than doubled from 2009 to 2011 and since has steadily increased (with the exception of 2013, but that is almost negligible).
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us Offline Alan K.

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #3 on: May 28, 2019, 05:02:01 PM
It is probably a reasonable increase, but reasonable or not, it is also the reason I buy all of my tools used or at clearance prices.


us Offline Blackbeard

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #4 on: May 29, 2019, 01:13:01 AM
I presume that you were looking at US data.
If you look at the data for Germany you will see that Victorinox more or less stayed the same. LM too suffers far less increase (see attached Rebar chart).
For the US you have to consider that 2009 to 2019 there is 20% inflation alone. Larger companies might be able to cut corners or compensate with high production numbers, but LM is a relatively small company. Then there are import taxes and other political decisions to be considered (steel price has almost doubled in the US in the recent years).

Other factors:
- Legal cost (Lawsuits, copyright battles, copyright applications etc.) seem to go up every year
- After 9/11 knife sales went down a lot... so prices followed, the market is now recovering
- LM has brought a wide variety of new products in recent years (thread, leap and free are probably the biggest in terms of R&D)

Yes, USA prices. Interesting points. It's too bad models that have nothing to do with their R&D are still affected. Still Gerber's have not changed much, but I assume they are the bigger company.


us Offline cody6268

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #5 on: May 29, 2019, 01:42:41 AM
 :ahhhA Wingman is like $60 at my local Lowe's now and that's discounted. Seemed they were a lot cheaper (like $40) than that not too long ago.  They also discontinued what few folders they had (all Cases) that were made in the USA 4-5 years ago. They also carried a lot more LMs and Gerbers; even a few SOGs.

Inflation considered, SAKs are much cheaper than they were 50 years ago. A Huntsman would cost you the equivalent of $100 in the 1960s, when they're $30-35 through most places today.

I've also noticed that some secondhand tools are getting pricier, and pricier (as well as harder to find) in the 5 years I've been active in this hobby. LM PSTs were under $20 all the time, now it's hard finding one at  that price. The Vise Grip (Schrade/Petersen) MTs are a lot more expensive than they were when I was first looking for them. They were $50-60 all the time, now $100 seems normal.
« Last Edit: May 29, 2019, 01:50:10 AM by cody6268 »


us Offline Blackbeard

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #6 on: May 29, 2019, 06:27:14 AM
I remember getting wingman around when it first came out for $25ish at home depot black friday sale, I think I resold it for at or near what I paid, but I can't justify the $60 price tag nowadays, I don't think I'm being a cheapskate, I just think their pricing structure is out of whack with reality  :think:


au Offline munecito

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #7 on: May 29, 2019, 07:48:28 AM
Well. I think Gerber for example has managed to keep prices by cutting corners.

I have a really old folding knife that is lovely and sturdy. The newer one I have seems to be made of butter. Doesn't keep the edge and it is very rattly. The washers were nylon and they broke and came off.

I have an old Gerber vice and it is much better built than my recently bought dime. The dime package opener spring bent opening a box and now the cutter over extends.

So there is that as well.


us Offline Blackbeard

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #8 on: May 29, 2019, 08:06:17 AM
Some Gerber knives are junk, that's for sure, I have had a few that I got for low cost and it shows, but they also have a lot of quality blades, they are very inconsistent and hard to figure out as well...they are probably a bigger entity then Leatherman, but LM certainly has them beat in the quality department.


us Offline gerleatherberman

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #9 on: May 29, 2019, 08:08:07 AM
Actually, and if you do some research, the prices of LMs are not crazy. Original PST was $35-$45 when new in the 1980s. That is like $83-$106 in today's money. A SuperTool 300 is the same price as the original PST was in the 80s, adjusted for inflation. :)
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us Offline Blackbeard

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #10 on: May 29, 2019, 08:30:23 AM
Some products do not reflect this steady increase though, a Kershaw Leek as an example is roughly the same price it was 10 years ago, and many things like single purpose hand tools & food staples dont increase much, a loaf of Arnold bread never was 25 cents 10 years ago, $2-$4 which is same today. I'm sure some of these comparisons are not quite fair and I am not well educated on inflation  :rofl:, but as a buyer of these niche items like MT's the gravy train is off the tracks and in the river for me


ch Offline Etherealicer

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #11 on: May 29, 2019, 10:14:53 AM
[...] Seemed they were a lot cheaper (like $40) than that not too long ago.[...]
Don't want to go into too much politics, but I read that Trumps battle with China had quite some impact on the knife industry (higher steel prices).
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ch Offline Etherealicer

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #12 on: May 29, 2019, 10:25:36 AM
One more thing to consider is warranty claims.
Someone has to pay for it, if people buy broken tools of the flea-market, then send them in for warranty.
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no Offline Vidar

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #13 on: May 31, 2019, 03:02:07 PM
Pricing and price strategies are quite interesting, and are like most business topics influenced by the current trends and fashions in the field. One of the more straightforward ones is to focus on the value for the buyer rather than the production cost. In other words, when setting a price the focus is on what customers are willing to pay rather than what it cost to manufacture. If something is worth USD 100 for you, you'll likely buy it for USD 80 even if the production cost was just USD 8. If they simply did retail = production cost x 6 they would leave a lot of money on the table.

While the concept logic is simple enough it gets more complex as the same product have different value for different customers. Sometimes even different value at different times. Hotel and air tickets pricing are examples of that. Thus there is still very much an art to pricing and segmenting markets. The price differences between US and Europe might be viewed partially in that light I believe.

Companies will also be vary to not make the gap between production cost and sales price so large as to encourage many new competitors to enter a profitable field. In that respect branding is essential, as only Leatherman can make Leatherman - and thus the gap can be higher than a less attractive brand could get away with.

I seem to be rambling on here.  :ahhh My main point is that I think the price increases have less to do with increases in costs, and more to do with adjustments over brand value, perceived customer value and adjusting for various models and market segments.

(The last 5-15 years or so there has also been a trend towards designing to price - in other words they first decide what the price point the product will be at, and then try to make a design that is profitable at that price. I think it is likely that some cut corners on some models might be due to that).
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Offline Radrler

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #14 on: June 01, 2019, 04:07:52 PM
One more thing to consider is warranty claims.
Someone has to pay for it, if people buy broken tools of the flea-market, then send them in for warranty.

This. At this point, buying a Leatherman tool is as much buying the warranty as anything. I’m paying about 50% more, because Israeli Leatherman demands a receipt from a local shop. Now I don’t mind, but it’s something to acknowledge. Nothing comes for free. Ever.


us Offline Blackbeard

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #15 on: June 02, 2019, 06:47:18 AM
Pricing and price strategies are quite interesting, and are like most business topics influenced by the current trends and fashions in the field. One of the more straightforward ones is to focus on the value for the buyer rather than the production cost. In other words, when setting a price the focus is on what customers are willing to pay rather than what it cost to manufacture. If something is worth USD 100 for you, you'll likely buy it for USD 80 even if the production cost was just USD 8. If they simply did retail = production cost x 6 they would leave a lot of money on the table.

While the concept logic is simple enough it gets more complex as the same product have different value for different customers. Sometimes even different value at different times. Hotel and air tickets pricing are examples of that. Thus there is still very much an art to pricing and segmenting markets. The price differences between US and Europe might be viewed partially in that light I believe.

Companies will also be vary to not make the gap between production cost and sales price so large as to encourage many new competitors to enter a profitable field. In that respect branding is essential, as only Leatherman can make Leatherman - and thus the gap can be higher than a less attractive brand could get away with.

I seem to be rambling on here.  :ahhh My main point is that I think the price increases have less to do with increases in costs, and more to do with adjustments over brand value, perceived customer value and adjusting for various models and market segments.

(The last 5-15 years or so there has also been a trend towards designing to price - in other words they first decide what the price point the product will be at, and then try to make a design that is profitable at that price. I think it is likely that some cut corners on some models might be due to that).

Interesting points. I also think that there may be some truth behind the idea of creating a mindset that your product is the top of the line for that category based on the price charged. They may be trying to appear as the Mercedes or BMW of the MT industry by having higher priced items vs The Toyota/Honda level MT's. I'm not knocking LM, I love mine, and have about 10 of them and have owned more but sold them over the years...but I don't think the public should have to bear the cost for warranty policies, R&D on new items that force older items up in value


no Offline Vidar

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #16 on: June 02, 2019, 10:35:44 AM
I also think that there may be some truth behind the idea of creating a mindset that your product is the top of the line for that category based on the price charged. They may be trying to appear as the Mercedes or BMW of the MT industry by having higher priced items vs The Toyota/Honda level MT's.

That is a good point. Another example of that policy is lawyers and dentists - people usually look for a good one, not the cheapest one. Thus high price follows as a way of signaling quality work whether it is actually there or not.

For products a common variation of that theme is having a product range where the top one is artificially high priced - in part to achieve that high end effect, and in part to make the less pricey models seems like great offers in comparison. Usually also complemented with a low range where the product and or packaging is made to look a bit cheap on purpose.

Luxury design shops certainly do this - they place some crazy priced item literally on a pedestal in the middle of the room with lots of space around. The concept isn't really about selling that item, but all about anchoring a very high price point in the customers mind when they enter. That way the other stuff seem like bargains even if they are still pricey. As for the top to low price positioning range there are plenty of examples in any grocery store - lots of categories have several almost identical products from the same manufacturer. That being washing detergent, toilet paper or whatever. Often under different brands, with the low end often being no-name or some store brand.

Manufacturers still have to back up claims of a great brand with actual great products or the brand name will suffer. (Which I guess they do on purpose when they aim to milk dying brands for any residual value by selling cheap stuff at high prices).
« Last Edit: June 02, 2019, 11:08:02 AM by Vidar »
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gb Offline AimlessWanderer

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #17 on: June 02, 2019, 07:50:59 PM
I think for many years, multitool makers have been cutting costs and absorbing increases wherever possible, rather than allowing prices to rise with inflation, in order to try and keep sales prices below certain psychological thresholds (something I have commented on in previous years). There's only so long that continue, before the wheels start to drop off. My perspective is that the recent price rises, have been a kind of reset. While unpalatable, it's probably for the best in terms of the long term health of the industry. Hopefully, in time, this will give them more confidence and better cashflow for further innovation.

But yeah, it sucks for the present day buyer. I'm just glad I've already got all I'll ever need :D However, I think the reset is still below long term inflation. When the original Wave came out a few of us chipped together to get one for a friend's birthday, and it cost over £100 back then.


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no Offline Vidar

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #18 on: June 02, 2019, 09:06:54 PM
I think for many years, multitool makers have been cutting costs and absorbing increases wherever possible, rather than allowing prices to rise with inflation, in order to try and keep sales prices below certain psychological thresholds (something I have commented on in previous years). There's only so long that continue, before the wheels start to drop off. My perspective is that the recent price rises, have been a kind of reset. While unpalatable, it's probably for the best in terms of the long term health of the industry. Hopefully, in time, this will give them more confidence and better cashflow for further innovation.

But yeah, it sucks for the present day buyer. I'm just glad I've already got all I'll ever need :D However, I think the reset is still below long term inflation. When the original Wave came out a few of us chipped together to get one for a friend's birthday, and it cost over £100 back then.

I do think the prices tends to stick around certain psychological thresholds. And it is understandable that they have to keep up with the times in the long run. I can also see how second and third tier brands might struggle to keep profitability at the larger players chosen price points. I do however think that the major players and the industry is quite healthy.

There are ways to get indications of whether price increases are due to necessity over increasing costs or just good old want for more. Gerber for instance is owned by the Fiskars Group and they are stock listed. As a stock listed company they have to keep the public informed via quarterly and annual reports. From there one can see that they do quite fine financially in the division Gerber belongs to. They sold a bit less in 2018 yet interestingly enough still had about 50% higher operating profits from that sector in 2018 than they had in 2017. And 2017 seemed like a normal enough year. I haven't followed Gerber prices, but if the prices have increased lately it seems a fair bit of the difference ends up in increased profits. (Also interesting was that the group as a whole spent about 1.6% of turnover on research and development - that is about USD 20 million).   

As for Leatherman and Victorinox they are privately owned, but one can get some idea of the development from likely cost per unit sold and how the business or their owners invest or place money. I assume both do better financially than Gerber.
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us Offline Blackbeard

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #19 on: June 08, 2019, 02:38:31 AM
I don't know if this is specific to the store near me, but I went to a local Ace hardware that was listed on Victorinox website as a Vic dealer, they had LM Wingman for $39.95, so if you are in the market for one that may be the best deal these days.


us Offline cody6268

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #20 on: June 08, 2019, 02:45:30 AM
I don't know if this is specific to the store near me, but I went to a local Ace hardware that was listed on Victorinox website as a Vic dealer, they had LM Wingman for $39.95, so if you are in the market for one that may be the best deal these days.

You're lucky. Our Ace I don't think even carries any knives other than Case; and our local knife store orders their SAKs from a distributor-they are not an official Vic dealer. They're only official dealers for Case and Spyderco.


us Offline Blackbeard

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Re: 50%-80% Price Increase past 10 years is it justified?
Reply #21 on: June 08, 2019, 03:06:01 AM
You're lucky. Our Ace I don't think even carries any knives other than Case; and our local knife store orders their SAKs from a distributor-they are not an official Vic dealer. They're only official dealers for Case and Spyderco.

This was a surprising store, I had never been there before, I spent like an hour just walking around, could not believe the amount of stuff they had compared to a nearby true value store...they had a little of everything, great store. In terms of knives they had some Bucks, Gerbers, Case and some Coast. They had about 7 LM models, a Micra for $25 and the $40 wingman were the only ones I saw not at MSRP, THere was also a Swisscard for $25 and one of those older maglite SAK combos...I need to go back and scope it out some more to see what the model was, but glad I found the place.


 

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