Blue Spruce has learned the Woodcraft Rule

At around 3pm Pacific time on Thursday, August 15th, Blue Spruce toolworks sent out an email telling its customers of a special summer sale it was holding on remainders and products with minor blemishes. I suspect that very soon after that message went out, Dave Jeske, the very nice owner of Blue Spruce learned the Woodcraft Rule. What is the Woodcraft Rule, you ask?  It has to do with marketing anything to woodworkers.  And to be clear, I have no knowledge that Woodcraft ever stated this rule explicitly, or even hinted that it's their official stance . . . they just epitomize it in stark relief with everything they do. The rule deals with three traits of the woodworking community:

Woodworkers are willing to buy shiny, fancy, specialized products to support their hobby, but woodworkers are patient in a way that almost no other group has ever been, and they are as cheap as mizers in a penny-pinching contest

So what was the result of the Blue Spruce Special Summer Sale? They sold out in 15 minutes.  You can see from the wording of their original blog posting, that they expected the sale to take a bit longer than that . . . 

This is a section which may change daily so you will want to check back often. Periodically I plan to list items that are over-stock or slightly blemished. The tools will make wonderful users but for one reason or another they cannot be sold as perfect, current production tools. The descriptions will try to point out the type of discrepancy the tool has but may not capture every detail. Be assured that these tools are still high quality and will perform at a high level.

Me? I love Blue Spruce tools. I've got one of their fabulously beautiful and indestructable acrylic-impregnated mallets and also a marking knife that I use almost every day. The stuff has been made supremely well and with wonderful attention to detail, mostly by Dave Jeske himself. They've only recently announced that they were growing to three employees and moving into a new office, so I knew they were growing.  It's nice to see, especially given some of the troubles of other early tool rennaissance innovators such as Wezloff & Sons saw makers.  But as a business theory and operational guy, I knew that the Blue Spruce team must be going through some major growing pains right now. This one is probably a fairly pleasant pain to suffer. I read the email announcing the sale at about 10pm last night, Eastern time, and immediately clicked through to see if there was anything I might be able to con my wife into letting me buy.  I was exactly 3 hours and 45 minutes too late.

As the Blue Spruce landing page stated, they sold out in 15 minutes! Wow. Good job, Blue Spruce. But they clearly got surprised. I was a bit surprised, but upon thinking it through, I really shouldn't have been. As the Woodcraft rule has demonstrated, woodworkers often build up a desire for some of these fine products, but then they wait, and wait, and wait . . . and wait . . . for the slightest sale price or free shipping opportunity they can find.  The result is that they have a habit of starving companies that offer simple, clear, regular pricing.

It's like the way that airlines have learned to raise more revenue by charging us ever more for things that used to be free: the in-flight meals, the ability to checkin bags, the ability to sit in a seat (!?). The customers have trained the industry that they will not pay one cent over the competitors and that they watch the prices like hawks. The airlines have lived on razor thin margins for years, until they figured out the 'add-on fee' scam. Frankly, it's our own fault as consumers that it's come to this.

Something similar is happening in the woodworking market. What is the Woodcraft market strategy? Mark everything in the stores up by an additional 15% over the regular markup. Then, every two to four weeks, hold a 15% off sale.  And send out special 10% off coupons for a customer's birthday month and neglect to mention that they will actually be paying 5% more than their real markup price. And hold a special seasonal sale on product category X, where everything is marked, you guessed it, 15% off.  The only things they don't mark up are the really expensive, premium products, such as Festool and Powermatic power tools, and Lie-Nielsen hand tools (back when they carried them . . which is a separate rant, discussed elsewhere. . ) And you'll notice that in every flyer and special sale brochure, those premium items are excepted out of the 15% sale prices. I suppose the theory is that if someone is willing to pay the exhorbitant prices for those products, they don't really need to wait for a sale price. (Or perhaps those vendors have mandated the prices that retailers can list on their products, and they have the market position and power to enforce it, as Apple does on iPhones.) So mark everything up to an artificially high price, and give lots of fake 'sales' for people to find 'bargains'. 

It is, unfortunately, at least from my perspective, a simple truth about the woodworking community. We like good tools, but we'll wait forever to buy them, and we'll pounce on a sale price.  So Woodcraft builds their entire business around the practice. And Blue Spruce now has no stock remaining on sale items. That just shows that there was a huge backlog of demand for their products (for good reason.) But all of those buyers weren't willing to pay the list price. Personally, I love my Blue Spruce products, and would buy them again . . particularly the mallet.  Even though they've had to increase the price of the fancier version of that mallet to $95.  I'd probably buy the simpler maple and beech one now for the original price, at $80, but even that one is a thing of beauty that just sings when you work with it.  I have no problem with paying a custom toolmaker what his tools will bring. Too many of them are putting themselves into financial straights offering their products at a 'fair price'.  They need to understand that they are offering a premium product, and they'll probably get it if they ask for it.  But they may need to consider occasionally offering it for 10% less on rare occasions. 

I just hope they don't learn the lesson too well and take it to the cynical extreme, as Woodcraft has. An occasional sale will help the bottom line. Clearly woodworking tools is an incredible price inelastic product category. If you change the price even slightly, the demand for it will change dramatically.  But the corellary to that business rule is that people get used to a new price expectation very quickly. Almost no one pays full price at Woodcraft anymore. You know you will be able to buy it for 15% less if you wait as little as 2 weeks to buy. But if you make your sales just slightly rare, as Lee Valley does with their special shipping offers and other price breaks, you'll see the best of both worlds. People won't suspect that you're gaming them, and you'll still see steady sales at regular times, at your *real* set price.

And we, as customers, need to stop expecting the world for a cut-rate price (aka, the Wallmart Syndrome), since it only hurts those who are creating the products we love and who live in our own communities.  Personally, I buy very few tools, but when I buy, I pay the fair price being asked by the person who does it best.  And I don't feel foolish doing so.  I wish more Americans would shop that way, and especially more woodworking Americans.