First, I'll start with that I want to see Spyderco succeed, they are unique in the market due to the the variety of steels that they use and some great in house designs, that being said, price increases are concerning. I feel that these continued price raises are not taking into account the competition, and will result in pricing themselves out of the market. It's not a question of "Perhaps you just can't afford them" rather its a fact that the market now has equally compelling options at lower price points. You can't expect to raise the dealer sale price of the Chevy Malibu from 30k to 33k and still sell cars if Honda is selling the Accord for 25k down the road.
Without having deep information on Spydercos sales and margins here are some assumptions:
- Good products at lower prices will take over a market, regardless of country of origin. I.E. Japanese cars. Your personal choice to buy American isn't going to change the market.
The majority of Spyderco sales are from the commodity models that can be bought at big box stores I.E. Tenacious and PM2
R&D and spin up costs make up a significant portion of a knifes price
These commodity models have generally paid back their R/D and spin up costs
The majority of Spydercos manufacturing is outsourced to other companies in China, Taiwan or Japan
Sprint runs are generally high profit
Looking at the market I see a few different categories
1. The "Design" house: just produces design and has them produced I.E. Boos Blades
2. The "Manufacturer": just produces knives based to a specification
3. The "Middle Man": Takes a design, refines it, and then has it produced by a manufacturer I.E. Massdrop
3. The "All in one":A company that does almost everything (Design, Manufacturing, et cetera) in house I.E. Benchmade
Spyderco currently is a hybrid it produces some of its own knives in house. However, it also acts like a "Middle Man" taking a Slysz design, tweaking it and having it produced in Taiwan.
So how would I keep prices down and quality up?
Approach 1: Benchmade model
Inhouse everything, don't be reliant on external manufacturers or heavily reliant on external designers. This will shrink the number of models Spyderco offers, but allow better cost control. In addition, this allows Benchmade to offer ridiculous warranty further justifying their higher costs.
Approach 2: Exit Manufacturing
Become a design house and a middle man I.E. Apple. Outsource all production to external companies so you can have dedicated manufacturers compete to produce the designs. Focus on the design side where Spyderco excels.
My current concerns for Spyderco
Generally, I think the knife market is going though a rapid change. Competition is ramping up. Look at the rise of Japanese auto manufacturing in the 70s.
Concern #1: Manufacturers are entering the market
Some of the companies that have probably been behind the scenes are now visible in the market. These companies are now producing their own designs or seeking out designers to produce designs for them. This manufacturer initiated expansion should be of real concern. Spyderco may not be able to compete since it doesn't own most of its manufacturing capacity on the low and high ends.
Concern #2: Designers have a gateway to manufacturers
It seems that Designers have better ways to directly interface with these new manufacturers, I.E. Boos having his knives made by WE. This door is opening more and more. What stops Slysz from having his swayback produced directly by WE bypassing Spyderco?
Concern #3: Cheaper Middle Men
Places like Massdrop are connecting designers to manufactures at much lower costs than Spyderco. I.E. the Laconico Keen is a compelling knife with TI and S35VN for < $150, what does Spyderco have that competes?
Concern #4: Competition at the commodity level
There are a lot of new entrants into the knife market with similar quality and materials Tangram, Civvi, Ruike, and Kershaw being sold at lower price points providing better "value". If a strong competitor such as Civvi got shelf space at big box stores it could really hurt Spyderco's business. I believe Kershaw is responding well to this pressure and producing high quality, USA made knives at approachable under $70 price points
Concern #5: Competition at the high end
Just like the low end, the high end market has become increasingly congested with knives of similar or better quality and materials at lower price points. Kizer, WE, Rike, ZT et cetera. These companies do in house manufacturing which may assist with hitting lower price points. In addition these companies are now working directly with designers to provide innovative designs. They aren't producing ugly ergonomic disasters made out of titanium and S35VN for $150, but rather things like the Kizer T1 or Laconico Keen.