Two questions to Sal about aluminium scales

[archangel]

Dear Sal,

I'm referring to the BHQ exclusives.

Q1: comparing them to G10 and FRN, where are costs for material & production of aluminium scales? I know costs are business internal, I don't expect that you share figures. Just an orientation would be totally ok, if you can.
You do not need moulds like for FRN, you do not need liners, and BHQ is selling the product for $140. Seems like aluminium is a relatively cheap alternative? If that is true, do you have plans to add aluminium as a permanent alternative? (bonus question).

Q2: According to user feedback, the texture is quite aggressive. The term used by others is 'pocket shredders'. My gut feeling is that this can be fixed though - you just need to find the "right" pattern. I'm sure you are aware of this "issue". Are there countermeasures / CQI in preparation? I flew through the dedicated thread viewtopic.php?f=2&t=91313 but did not see you had chimed in.

[BornIn1500]

Kershaw had the Link in both aluminum (with milled chamfers) and in FRN. Before they were discontinued, the Aluminum was $49 and the FRN was $39. I think it's safe to say aluminum scales are more expensive to make.

[The Deacon]

Spyderco gravitated away from aluminum handles years ago. That leads me to suspect the negatives, like ease of cosmetic damage, outweigh the positives. Which makes me wonder if both the choice of material and choice of texture may have been BHQ's.

[archangel]

It would be, if both FRN and aluminium were produced in the same quantities. Which I doubt.

I hope Sal can take the blur away a little.

[archangel]

Spyderco gravitated away from aluminum handles years ago. That leads me to suspect the negatives, like ease of cosmetic damage, outweigh the positives. Which makes me wonder if both the choice of material and choice of texture may have been BHQ's.

Could be. Both materials and techniques might however have developed during those years. Maybe they see a future now?

[Evil D]

Cost is going to depend on the current cost of aluminum, which does fluctuate and there are many different grades of aluminum so it'll also depends on what they're using.

Pocket shredding is definitely controllable, just tweak the texture design. I'm sure these are done by CNC. You can "fix" this yourself but it'll also mean damaging the colored coating.

[Xformer]

Cost is going to depend on the current cost of aluminum, which does fluctuate and there are many different grades of aluminum so it'll also depends on what they're using.

Pocket shredding is definitely controllable, just tweak the texture design. I'm sure these are done by CNC. You can "fix" this yourself but it'll also mean damaging the colored coating.

Speaking of current costs, aluminium price will skyrocket in the next few weeks because of the current state of the world.

[standy99]

Three years old FRN beats One year old aluminium in a used knife…..

[Danke]

Blade HQ exclusives are a bad yardstick for figuring out what stuff "costs". I've got a bunch and the pricing has been near or even under the production version. For a small batch, better steel, exclusive handle that doesn't add up.

My opinion is they use their exclusives as loss leaders to lock in customer habits so they'll pick them before another store for all their purchases; not just the unique versions.

[archangel]

Blade HQ exclusives are a bad yardstick for figuring out what stuff "costs". I've got a bunch and the pricing has been near or even under the production version. For a small batch, better steel, exclusive handle that doesn't add up.

My opinion is they use their exclusives as loss leaders to lock in customer habits so they'll pick them before another store for all their purchases; not just the unique versions.

I thought about this too, but I find it hard to believe that they sell a line of exclusives at a negative profit. Especially if they let produce in a variety of colors. One or two colors not selling out, what to do with the stock? Dropping price to make an even bigger loss? Sounds irrational to me. I could be wrong though.

[Danke]

Welcome to selling stuff to human beings. It's not always best to engage your customers on a rational level.

If you get engaged on a rational level do you really need that many pocket knives?

[archangel]

I stand by my previous personal opinion. But thanks Danke.

[Danke]

Blade HQ exclusives are a bad yardstick for figuring out what stuff "costs". I've got a bunch and the pricing has been near or even under the production version. For a small batch, better steel, exclusive handle that doesn't add up.

My opinion is they use their exclusives as loss leaders to lock in customer habits so they'll pick them before another store for all their purchases; not just the unique versions.

I thought about this too, but I find it hard to believe that they sell something at a negative profit. Especially if they let produce in a variety of colors. One or two colors not selling out, what to do with the stock? Dropping price to make an even bigger loss? Sounds irrational to me. I could be wrong though.

They're not loosing money they're just not making the same profit on their exclusive as on a production version.

So their knife costs them $125 and they sell for $150. The production knife costs them $90 and the sell is $145. They sell ten to one production versions quietly while the exclusive gets all the attention.

The only time that kind of plan bites you is if your exclusive offering isn't desirable. So far that hasn't looked like a problem for anyone. The exclusive sell out in minutes to hours or at worst days. If a dealer's whole business hinged on exclusive offerings they'd have to raise the price or risk going broke but using them to create a halo is more than just a knife store tactic.

[Accutron]

This is definitely an example of BHQ taking a reduced profit to increase customer attachment. It's called a loss leader...a basic strategy they teach to first-year business students. Strictly speaking, loss leaders are actually sold at a negative profit, but setting an atypically low profit margin serves the same function.

[Danke]

BHQ does a lot of exclusives and not just from Spyderco. I wouldn't expect them all to be at be at a negative profit but no one ever lets me audit their books.

[JRinFL]

Aluminum may increase based on World events, but we already know how petroleum products have skyrocketed in price over the last months. FRN may not be so inexpensive going forward. I'm comfortable believing Spyderco is watching all of this and making plans accordingly.

[cjk]

No one above seems to be taking into account that CTS-BD1N is probably less costly than the default PM2 steel, CPM-S45VN. That's probably a cost savings. My impression is that most of the cost and price savings is here.

There are less parts to the aluminum handled PM2. Probably just one less though if you count them. It doesn't need steel liners, but it does need a lock bar which would have been part of one of the liners on a G-10 one. The lock bar being smaller than one liner is a cost savings due to using less materials. Deleting the second liner is also a cost savings.

G-10 is machined. Aluminum is machined. Presumably both via CNC. Let's assume it costs more to machine the aluminum and the design is more complicated, so there's some added cost due to more machine time for the aluminum. Probably less than you might think though.

The aluminum had to be anodized. G-10 doesn't. There's some added cost.

Given that there's one fewer part, assembly may go more quickly, so that's a potential cost savings.

I can easily see several cost savings and a couple cost increases. They may balance each other out. It's possible the savings are larger than the added costs and the $140 street price tag is the totally legit MAP.

Alternatively, if you compare the street prices of a green aluminum S30V BM 940 to a 940-1702 (green G-10, REI exclusive, also S30V), the aluminum one is only priced $7 more.

[cjk]

One person's pocket shredder is another person's impressive grip.

[Danke]

Aluminum may increase based on World events, but we already know how petroleum products have skyrocketed in price over the last months. FRN may not be so inexpensive going forward. I'm comfortable believing Spyderco is watching all of this and making plans accordingly.

Aluminum prices/demand shot up 3 years ago. Along with a bunch more metals.

People stealing stuff to sell to a scrappie are doing pretty good right now.

[Danke]

No one above seems to be taking into account that CTS-BD1N is probably less costly than the default PM2 steel, CPM-S45VN. That's probably a cost savings. My impression is that most of the cost and price savings is here.

There are less parts to the aluminum handled PM2. Probably just one less though if you count them. It doesn't need steel liners, but it does need a lock bar which would have been part of one of the liners on a G-10 one. The lock bar being smaller than one liner is a cost savings due to using less materials. Deleting the second liner is also a cost savings.

G-10 is machined. Aluminum is machined. Presumably both via CNC. Let's assume it costs more to machine the aluminum and the design is more complicated, so there's some added cost due to more machine time for the aluminum. Probably less than you might think though.

The aluminum had to be anodized. G-10 doesn't. There's some added cost.

Given that there's one fewer part, assembly may go more quickly, so that's a potential cost savings.

I can easily see several cost savings and a couple cost increases. They may balance each other out. It's possible the savings are larger than the added costs and the $140 street price tag is the totally legit MAP.

Alternatively, if you compare the street prices of a green aluminum S30V BM 940 to a 940-1702 (green G-10, REI exclusive, also S30V), the aluminum one is only priced $7 more.

Materiel machine costs aren't an assumption. The harder the material the more often your tooling wears out.

There are going to be other variables around this though; the material can also have other properties that affect tooling. But all that is pretty easy to find out.