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Monday, April 30, 2007

Why have Grading? Pt. 2 - The Cons

Biz Stuff - Big update today! The full story can be found on the News page, but in brief, there is one new Talbert Briar (pictured left), three new Talbert Mortas, and one new Ligne Bretagne Collector. Alas, as I write this, both the TB and the LB have already been sold. However, there is a surprise bit of news - There will be a selection of Talbert Briars and Ligne Bretagnes at the Chicago show after all! P&P friend Robert Lawing is apparently taking some of Pipe & Pint's stock to the show to display on his table, so stop by and say hello, if you can find him. For the home-bound in search of my pipes, there are also two currently posted on Ebay, a morta brandyglass and a morta pot.

So, to get back to my ongoing ruminations - Why have grading? I'm going to devote this post to the cons of grading, and use the next one to discuss the pros. We'll see which ends up on top...

Grading, at its heart, is simply an artificial method of loss-leader price fixing. If the pipes in a line were all the same price, buyers would simply cherry-pick the best examples and the rest would go unsold while buyers waited for new cherries to arrive, unwilling to pay the same prices for less desirable pieces. Obviously, makers can't afford this - We need to sell as large a percentage of what we make as possible, which brings the question of how to gently nudge buyers into buying the less desirable pieces. Here we have grading entering the picture - "Yes, that perfect straight grain billiard is a high grade and costs 550 €, instead of the 324 € of the less striking version." The idea is to start spreading the prices out to snag a larger proportion of buyers, but this doesn't always work the way it should.

A pipemaker (I can't recall who - Edwards?) in a past issue of P&T summed it up best when he stated, "We used to have a grading system but we stopped it because everyone just wanted to buy the high grades". This is a very real problem! Because, at its heart, the situation becomes ludicrous - If you know your high grades will all sell quickly while the lower grades sit, there's no incentive to make the lower grades. I get this to some extent - In many cases, it is actually cheaper for me to discard a pipe that would have been a grade 1 or 2, and go on to find a better block, than it is to actually invest the time and labor into finishing the pipe. Once you hit 300 € or more, nobody wants "average". The irony is that the high grades BECOME the average - Suppose for example that I produce nothing but grade 3+ pipes... Are they actually higher grades, or have they just become the new average?

Too, grading scales are insane. Really. I'm a one-man (and one-woman) shop and between my lines, I have five different kinds of grading in Talbert Briars (with five levels each), two different grading levels in mortas, and no less than eleven different grading steps in Ligne Bretagnes..... and by comparison to some, this is simple!! "Grading bloat", like waistline spread, seems to be an inevitable process that occurs gradually over a maker's career as various unusual projects come along that require some new way of thinking and pricing, until eventually you're looking at an entire drawer full of stamps of logos, dots, stars, moons, snails, birds, fish, numbers, and cartoon characters. It really does get ridiculous, and what does it all mean? Is a grade 3, two star fish better or worse than a grade four, one star owl, and how do both relate to the non-numbered five-starred pipes stamped with Speedy Gonzales?

Collectors like to believe that grading gives a measure for a pipe's relative value, especially at resell, but I haven't seen this to be the case - Resell prices tend much more to be influenced by the popularity of a maker's name, how "hot" a brand is at the moment, and just how much someone likes the pipe in question.

I don't think too many Ebay buyers are calculating, "Ahh, that 3 dot Kervorkian has the special WAKKA stamping, meaning it cost exactly $475 when it was made in 1994, which I can determine by deciphering the date coding 785BN427HEMI using Pi. Therefore, proper estate value should be exactly $240 in good condition."
I do think buyers are more often thinking, "OOO, a Kervorkian!! I like/hate it and I'll pay/not pay whatever the asking price is."

The bottom line for a maker is, unless your grading system is simple, which most are not (witness moi), NOBODY CARES. At the end of the day, buyers want a really nice example of your work. When it reaches the point where a maker is tossing out pieces that would have become low grades in favor of only creating higher grade pipes, is there really any point to having grades anymore? Why not simply say, "My pipes cost between 350 and 600 € based solely on how cool they are", and leave it at that? Or to paraphrase a friend of mine, when asked why a certain pipe was a certain grade, "That pipe is that grade because it took three days of work to make, and that's the salary I need to make for three days' work".

This is getting longer than anticipated - More to come in the next article, same Pipe-time, same Pipe-channel!