Is Cutco Cutlery a pyramid scheme or legit MLM?
If you are reading this, you’ve probably heard of the program they offer where you can earn money from selling knives and the other Cutco Products via Vector Marketing.
They (Vector Marketing) have garnered a reputation of urging their sales reps to sell to family and friends, a practice that is commonly frowned upon (especially by family members). They’ve even been labeled a pyramid scheme. Then there is the controversial hiring process that has led some to label them a Cutco Knives Scam.
But you are probably wondering: is Cutco a scam or a pyramid scheme, or does it offer you a genuine way to make money?
In this Cutco review, we will get to the bottom of this covering the company’s history, its products, its compensation plans, its benefits, its drawbacks, and whether it is a legit company that offers genuine opportunities for people to earn money.
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What Is Cutco Cutlery?
Cutco Cutlery, sometimes referred to as Cutco Knives, is a direct sales company that is based in Olean, New York.
Cutco Cutlery manufactures and distributes high-quality kitchen cutlery, cookware, garden tools, flatware, and other kitchen accessories as well as hunting, sporting, and pocket knives.
But it is safe to say that, they are best known for their high quality kitchen knives and knife sets more than anything.
Cutco Cutlery was formed in 1949, Cutco as a joint venture between Alcoa and Case Cutlery. It was originally called Alcas Corporation.
So here is how that unfolded: Alcoa acquired Case in 1972 and then ten years later, the entire company was bought by Alcas Management.
Three years later, Alcas acquired Vector Marketing Corporation as the sales arm of the company. We’ll get to the whole story about Vector Marketing later on in this review (or you can read the comprehensive review I just linked to).
Fast-forward to today, and it is estimated that Cutco Cutlery has sold its products to millions of households.
Cutco Cutlery is a privately-owned company, which means that investors cannot buy its shares in a public exchange.
As for its business model, it can best be described as a direct sales company (we will get to the question of whether it is a pyramid scheme or a multi-level marketing company later on too).
Besides being known for selling knives, Cutco Cutlery is known for offering no-experience sales job opportunities to stay-at-home parents, college students, and high-school graduates.
Its whole model is based on the fact that it hires people and trains them to sell knives in order to pay them a commission. It also sells on its website and during scheduled events in various locations.
In a nutshell, it’s model is a departure from the traditional business model where it would have to sell its products to its customers through the traditional supply chain (wholesalers and retailers).
All Cutco Knives are American Made and they come with a lifetime guarantee.
Now, let’s take a closer look at their marketing arm, Vector Marketing:
What Is Vector Marketing?
You can think of Vector Marketing as the sales department of Cutco Cutlery.
How does this work?
Throughout its existence, Cutco Cutlery has been a direct sales company.
In the early days, Cutco Cutlery didn’t have one main seller. Its products were sold by many small, independent, direct-sellers. It did not have a preferred direct sales company.
Then in 1981, Vector Marketing Corporation came along and was quickly outselling all other independent sellers.
In 1985, Cutco acquired Vector Marketing making it its main seller and it ended up taking its successful model and replicating it across its business. That’s how the two companies got linked up.
All said, Cutco is a single-level direct sales company. This means that when you work as a Vector Sales Rep, you cannot create a downline and earn commissions from new recruits like you see in MLMs.
Some people on the internet claim that Vector handles the “MLM operations” of Cutco, which is incorrect. The truth is that it is the sole at-home distributor of Cutco knives.
Therefore, nowadays if you receive a call from someone working as a receptionist for the company or seen an advertisement offering you an opportunity, it is likely from Vector Marketing and not Cutco.
Vector marketing has courted controversy over the years for what most people consider unscrupulous hiring practices. It has often been blamed for giving people misleading information.
It has been blamed for targeting college students, stay-at-home parents, and high school graduates by presenting a potential money-making opportunity that they can do to make money on the side without articulating the realities of the amounts you can realistically make.
It has had to deal with its fair share of lawsuits with the most prominent one being a Wisconsin suit where people accused Vector of allegedly including false or misleading information in its advertisements.
Many people who complain when they work for Vector Marketing say that they hardly make money. In fact, a significant number of them say that they lose money working for Vector Marketing.
This was confirmed by a survey done by The Washington Post in 1996 where half of 940 Vector recruits said that they had not managed to make money with some saying that they had, indeed, lost money.
Due to what many saw as predatory hiring practices of Vector Marketing, some students came together to create a group called SAVE (stands for “Students Against Vector Exploitation) to push back against the company.
I should clarify that these accusations have been levelled against Vector Marketing and not Cutco.
Vector Marketing has largely weathered the storm and survived the negativity and has been selling Cutco Cutlery throughout.
Which Products does Cutco Cutlery Sell?
Cutco Cutlery is not only about selling knives. They have an array of products that they sell to their customers.
Cutco knives are, of course, their most popular product and have even come to be synonymous with the brand.
Cutco sells well-designed blades that are widely recognized to be among the best quality in the market.
In addition to the knives, they also sell Cook’s Tools, Tableware, Cutlery, Cookware, Pots, pans, gadgets, baking tools, utensils and cutting boards.
In fact part of the appeal for Cutco knives is that they are made of durable, high-quality material.
A good example of this is the handles of knives that are made of a thermo-resin material that can withstand repeated dishwasher wear while also offering strength and durability.
The same applies to all their other products, which explains why they are said to be in over 16 million homes.
Here is a general list of the products sold by Cutco (Note that some products may have been discontinued by the time you read this):
Knives and Knife sets
Cutco Knives are the best-selling product sold by the company.
Under this category, they include kitchen knives, table knives, outdoor knives, and storage accessories.
Some of the knives they sell include Bread Knives, Carving Knives, Cheese Knives, Chef Knives, Fruit & Vegetable Knives, and Specialty Knives, Table Knife Sets, and french knife.
Speaking of storage accessories, they sell Wood Blocks, Knife Trays, Drawer Organizers, Countertop Organizers, Wall Organizers, and Sheaths.
Some of Cutco’s best-selling products are the Cutco Knife Sets. These knife sets feature a patented recessed “Double D,” 440A stainless steel bladed-recessed edge that is said to make precise cuts.
Specialty scissors or Specialty shears are a customer favorite.
They are versatile enough to be used in the kitchen or outdoors because they cut everything from vegetables to metallic objects. They’ve been shown to cut pennies, dimes, and quarters.
Some of the outdoor equipment and tools they sell include hunting knives, pocket knives, sporting knives, and garden tools.
Cutco Lifetime Guarantee
Another reason people keep buying Cutco knives is because of the lifetime guarantee that they offer.
Cutco promises that if you are not satisfied with the performance of any Cutco product, they will rectify it for you thanks to this guarantee as long as you are using it as intended.
The Lifetime Guarantee applies to all Cutco products whether you made the initial purchase or you received the product as a gift.
All you have to do is send the product for sharpening or repair and it will be taken through a detailed multi-step process before it is returned to you good as new. They do not demand a receipt or registration.
If you damage Cutco products through unconventional use, they replace it for half the price (including the applicable sales tax).
How to Make Money With Cutco Cutlery
You can make money selling Cutco Products although I have to say, it is not easy. Selling something face to face doesn’t work for everyone, which also explains why not many people cannot start their own business.
But that does not mean that it is impossible to make money selling knives if you are prepared to work hard enough. People have been making real money selling these products, often starting with no experience.
The process of becoming a sales rep is relatively easy:
- You go in for an interview
- They offer you a three-day training course after you have been hired.
- You provide a list of referrals
- They provide you with a sales script and presentation that will guide you as you meet prospective clients (Sales reps are encouraged to take prospective buyers and members’ phone numbers and email addresses to be stored in the client database).
In the early days, Vector Marketing required sales reps to buy a kit for their presentations.
These days, Cutco Cutlery provides the kit for free if you are an active representative.
Who is an active representative?
An active representative is a sales rep that is required to sell $100 worth of cutlery or cookware each month.
If the sales representatives fail to meet this target, they are required to return the kit or buy it for half the cost to keep selling it.
Cutco Cutlery’s Compensation Plan
The way the compensation plan is designed is pretty straightforward because the sales rep is a single-level direct seller.
Cutco Cutlery (Vector Marketing) offers sales representatives a guaranteed wage for every appointment and this is not common because most direct sales companies do not offer this (they pay purely with commissions).
The amount Cutco pay you varies depending on the location.
People often confuse the “per appointment” rate with “per hour” because the typical appointment is said to take approximately one hour.
In fact, there was controversy about people being promised to be paid $15 per hour.
But as it turned out, there was a misunderstanding. What that meant was that you can earn $15 for every successful in-person appointment with prospective buyers and members.
And since each appointment lasts about an hour, the pay was interpreted to mean hourly.
In addition to your guaranteed wage for every appointment, Cutco Cutlery also pays you commissions on your sales.
Cutco Cutlery has uses two kinds of compensation plans: Basic Cutco Compensation Plan and Cutco At Home Compensation Plan
The Cutco At Home Compensation Plan, has two ways you can earn: Sales Commissions and Bonus generated from your downline sales.
The typical commission structure looks like this:
- $0 – $1,000 (sales) = 10% (commission)
- $1,001 – $4,000 = 15% (commission)
- $4,001 – $7,500 = 20% (commission)
- $7,501 – $12,000 = 25% (commission)
- $12,000 – $24,000 = 30% (commission)
- $24,000 plus = 30% + (the “+” is unspecified)
If you want to get paid, you have to submit a qualified presentation report every week to your office manager.
In addition to that, I should also mention that you are required to sign a standard Sales Representative Agreement, and put down a security deposit ($200) for your demonstration knives (in some instances).
Pros of Cutco Cutlery
They pay you $15 when you make a successful appointment. There has been some confusion in the past about this being an hourly payment but they have clarified multiple times that you get paid when you make a client presentation. You stand to make even more if your prospect buys something from you.
If you enjoy sales, the guaranteed wage is more than you can hope to get from most direct sales companies.
Cutco product quality
Customers always give positive feedback about the quality of Cutco’s products. People even recommend them.
You’ll see chefs, butchers, and ordinary people say that they are using them and they would recommend them thus cementing the opinion that they make good products.
When you are selling something that is of great quality, half of the work is done for you. The rest has to do with how persuasive you are or whether the prospect wants to buy.
Vector marketing offers training
Vector Marketing, the de-facto sales department of Cutco, provides new recruits with sales training, which isn’t surprising because they mostly employ high school students and college students without sales experience.
Vector Marketing also provides sales reps with written starter sales pitch scripts they can use to introduce the product. They even have pre-written responses to handle rejections.
The training is beneficial for your career
The training you get from Vector Marketing applies to other roles you take in your career especially if it has to do with sales.
The experience you get when you are on the field also helps develop your communication skills because you learn how to present yourself as well as how to handle rejections.
The training benefits your life
Whether you are into sales or not and whether or not you are interested in making money selling Cutco knives, the sales training benefits other aspects of your life.
If you think about it, we spend our lives selling ourselves. Whether you are in a job interview or dating, having people skills makes your life easier. The training Vector Marketing gives you helps with this.
Cutco has a large social media presence
Cutco Cutlery has a massive social media following, which means that many people are aware of the product.
This can be of great help when you are out on the field and meet someone who knows the brand and was even considering buying due to that publicity.
Cutco bends over backwards to ensure that they offer their customers a great after-sales experience.
They’ll repair knives at no extra charge due to this guarantee. People can also have their knives sharpened any time they want for free.
Cons of Cutco Cutlery
Cutco uses deceptive recruiting tactics
Although this allegation is made against Cutco/Vector Marketing by many people online, it is more nuanced than some bad reviews will lead on.
For example, since there are many branches, some managers are bound to be more honest than others.
There are some good ones that tell you like it is. However, some of them will mislead you thus giving Vector Marketing the bad reputation it gets. This is an important distinction that is not often conveyed.
This job is not for everyone
Working for Vector Marketing is not suited to many people. This explains why they have a large employee turnover because many people go in with unrealistic expectations and end up frustrated.
The way the recruitment process is designed does not help candidates come in with realistic expectations and this is done intentionally.
Cutco is aware that their business model has certain demands and they wouldn’t attract many people if they didn’t mislead.
They don’t reimburse you for overhead costs
Since this is not a regular sales job, they do not refund the money you spend moving around selling their products.
Therefore, you have to take care of the car insurance, fuel costs, meals, and phone charges from your pocket. They don’t consider these even when you spend your money while selling their products.
This is particularly damning when you consider that there are ways you can earn passive income by joining some programs online.
Cutco Knives are expensive
Cutco Cutlery makes impressively high quality products all round; they make knives that cut through leather and shears that cut through coins. The problem is that they charge a premium for these products compared to what a typical family will buy at the store.
Therefore, although they sell great products, most people cannot afford them and this affects your sales numbers.
You may alienate yourself from friends and family
Since Vector Marketing encourages you to sell to your family and friends, the people you are closest to in your life may find you a nuisance if they think that all you do is push expensive products on them.
Many people, you may be one of them, have in the past been approached by family members or friends they no longer talk to selling them some product or a “business opportunity” and it usually is an uncomfortable experience for most people.
Cutco uses ineffective sales tactics
Since you will have to go selling door-to-door and they give you scripts, it may not be the most effective sales method there is especially in a post-covid society.
This is especially true in an age where people are more likely to buy household items online via Amazon or other retailers (I should mention that Cutco Cutlery has an online store too making sales people all the more at a disadvantage).
That being said, it is an effective sales technique in some instances (like when selling to people who are not aware of the online store) and this is probably why it still exists.
Can You Make Money Selling Cutco Knives?
I think you can make money with Cutco Cutlery, but it’s not going to be as easy as the company makes it sound.
There’s a lot of work you have to do upfront without any real guarantee of success.
This can be a tough experience particularly for people who don’t like sales; this is a common occurrence because those who often find themselves selling for the company are not recruited based on experience or credentials.
It is not a shock that Cutco Cutlery has a high employee turnover rate because they often bring in people who don’t have it in them to do a sales job.
To most of these people, the opportunity sounds great on paper and they get excited. Then they set unrealistic expectations not realizing how tough the job is in practice especially when it comes to in-home sales.
That being said, people who have the right personality and can handle rejection constantly, tend to thrive and make money. They are the success stories.
Is Cutco Cutlery A Multi-Level Marketing Scheme?
Cutco Cutlery is not a Multi-Level Marketing scheme.
Here’s why: A Multi-Level Marketing scheme by definition is a network marketing program where the sales structure encourages the members to recruit new members to form a network.
Once members recruit new people, they get a portion of the sales from member sales and commissions for the products they sell directly. The emphasis, if you want to make money, is to create a downline or “a sales team.”
You don’t see that with Cutco Cutlery, or even Vector Marketing because people don’t get paid more to “recruit” new members in their downline (that doesn’t even exist). They are paid for making appointments and sales.
In fact, in my comprehensive review of Vector Marketing, I answered the question of Vector Marketing being an MLM like this:
“Vector Marketing is not a Multi-level marketing company. It is merely a direct sales marketing company.
In a typical multi-level marketing company, the sales representatives are likely to make more money if they build their downline and recruit more sales representatives rather than focus on the product.
This is not the case at Vector Marketing where they recruit people in a conventional manner; they advertise jobs and they interview candidates. However, the don’t impose educational requirements and experience which means the bar is so low, anyone who is willing to join can become a distributor.
As a salesperson, you will be paid base pay and you will be paid when you “make appointments.”
This approach is lauded by some people as a smart recruiting strategy, but detractors consider it predatory and mistakenly liken it to a multi-level marketing scheme.”
Since Cutco is to an extent synonymous with Vector Marketing, I share the same view of it.
This may change over time and when that happens, I will change my stance on this.
A good example of an MLM is Monat Global, a company that sells hair and skin care products through network marketing.
Is Cutco A Pyramid Scheme?
If Cutco Knives is not a multi-level marketing scheme yet we hear all the complaints levelled against it, is it a pyramid scheme.
By definition, no.
A pyramid scheme, which is illegal by the way, is a business model where a few top-level members recruit new members and make all the money while the rest of the members barely make money or even lose it.
In a typical pyramid scheme, new members pay a fee to join and that money gets distributed through the ranks. An important thing to note here is that the emphasis is more on the recruitment effort than selling goods of any real value.
In fact, this is the main thing you should be looking for when trying to determine whether a company is a pyramid scheme.
Cutco Knives clearly isn’t a pyramid scheme because they take pride in selling their products.
And if you think about it, Cutco Cutlery is far less likely to be a pyramid scheme than an MLM, which we have found it not to be.
Is Cutco A Scam?
I don’t think Cutco is a Scam.
In fact, I think Cutco Cutlery is a genuine company that’s just trying to sell its products but due to its hiring practices, has had its public image tarnished.
This is one of those cases where I think the public portrayal of the company is not a reflection of the underlying truth.
Final Word on Cutco Cutlery
Cutco Cutlery is a genuine company that makes great products and offers opportunities for people, particularly inexperienced ones, to make money as sales representatives.
Cutco has gotten a lot of flack over the years for the recruitment practices of their marketing arm, Vector Marketing. The main reason for this is that the recruitment process has often targeted people who are not experienced salespeople promising them an opportunity to make money.
While some people are suited to the job, and they usually make money selling Cutco Cutlery, the majority are not.
There is no doubt that if you look at Cutco purely as a manufacturer of kitchen knives and other products, it is an outstanding company. Few companies make products as good as it does or even offer their customers a lifetime guarantee.
Their products receive overwhelmingly positive reviews that you can read online.
Furthermore, many experts recommend cutco knives and the company has a sizeable social media following (although you can’t read too much into that).
It is when you look at HOW Cutco sells its products that you find people calling it “Cutco pyramid scheme” among other pejorative names.
But even then, if you approach it as an unconventional sales job (because it does not demand that you be experienced) and not a get-rich-quick scheme, it becomes obvious that it is a genuine direct sales company.
If you are not suited to the job Cutco offers, there are other ways to make money. For example, there are avenues for making money online you can consider that don’t require you to have sales skills to start.
Unfortunately, in the current online climate, many people fall victim to bad actors and I have been reviewing investment opportunities and online avenues for earning passive income. I have found some opportunities that are worth trying out:
Before you leave
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David Fortune has been the editor NoBSIMReviews.com since 2019. He is an expert at writing content on stock advisory services, side hustles, reviewing online business opportunities and many more topics. You can learn more about David on our about us page.