(2022) Is Cutco a Pyramid Scheme?

If you’ve ever tried to find a side hustle, odds are you’ve heard of Cutco– you may even have interviewed with them. But just because a company has been around for a long time doesn’t mean they have your best interests at heart.

For years, rumors have swirled about this company and their business model. You’re probably wondering, “Is Cutco a pyramid scheme?” and a million other questions about this knife-seller.

Today, I’m doing a deep dive into Cutco. We’ll talk about their history, their knives, what it’s like to be a rep, and my personal opinion of their business. By the end, you’ll have a very clear understanding of Cutco… and whether or not they make the cut.

Who Owns Cutco?

Cutco is a multi-level marketing company that sells kitchen knives, shears, and other cutlery. The company was founded in 1949 by Alcoa, an aluminum company– which should give you an idea of the quality of their knives (hint: they’re not great).

In 1966, Vector Marketing Corporation took over Cutco. Vector is the direct sales arm of Alcas Corporation, which still owns Cutco today. If that sounds confusing, don’t worry– I’ll explain everything in more detail later on.

For now, just know that Cutco is owned by a larger corporation, which isn’t uncommon for MLMs. What is uncommon is the amount of lawsuits this company has faced over the years… which we’ll talk about later.

About Cutco Knives

Cutco knives are made of a high-carbon stainless steel that supposedly never needs sharpening. The company also claims their knives are heat-treated and frozen for extra strength (more on that later).

Each knife is handmade in the United States– although some of the parts are outsourced, which I’ll get into shortly.

Are Cutco Knives Made In China?

No, Cutco knives are not made in China. According to the Cutco website, all of their products are made in their factory located in Olean, New York. However, I found quite a few rumors and claims that materials for their handles and accessories are shipped in from overseas.

Like many things with Cutco, they try very hard to sell you only on the story they want you to hear. This is just my personal opinion, but I’m extremely doubtful that every single Cutco product component is produced and manufactured here in the USA.

Heat Treatment

Cutco knives are heat treated in a process that strengthens the steel and makes the knives less likely to chip or break. The company claims their blades go through a 17-step process that starts with heating the metal to over 1,700 degrees Fahrenheit.

The metal is then cooled rapidly in order to make it harder and more durable. This is a common process used in knife making, so I have no reason to doubt Cutco’s claims.

Deep Frozen

After the heat treatment process, the knives are frozen at -320 degrees Fahrenheit. This supposedly makes the knives even stronger and less likely to break.

Oven Tempered

Finally, the knives are tempered in an oven set to 350 degrees Fahrenheit. This supposedly makes the knives more flexible and less likely to chip.

I have no reason to doubt any of these claims, as they’re common knife-making processes. That being said, I have yet to find any scientific evidence that supports Cutco’s claims of making unbreakable knives.

How Does Cutco Work?

Now that we know a little bit about Cutco’s knives, let’s talk about how the company works.

Cutco is a direct sales company, which means they rely on independent contractors (called “reps”) to sell their products. These reps are not employees of Cutco, but rather independent contractors who work on commission.

Cutco reps typically sell their knives through in-home demonstrations. The customer invites the rep into their home for a “party” where the rep will show off the knives and give a demonstration.

The idea is that the customer will be so impressed by the quality of the knives (and maybe even a little bit pressured by the high-pressure sales tactics) that they’ll make a purchase on the spot.

In my opinion, this is a terrible business model for two reasons:

1) It’s extremely inconvenient for the customer. Who wants to have a stranger in their home, especially when they’re not expecting it?

2) It’s nearly impossible to make a sale when the customer can’t try out the product first.

Fortunately, Cutco has started to move away from this in-home demonstration model in recent years. The company now offers several different ways for customers to buy their knives, including:

– Online: Customers can now purchase Cutco knives online through the company’s website. This is a much more convenient option for customers, and it also allows them to compare prices and read reviews before making a purchase.

– Catalog: Cutco also offers a catalog, which is basically a glorified price list. Customers can browse the catalog and then place an order over the phone or through the mail.

– Retail stores: Cutco knives are also available at a handful of retail stores, including Bed Bath & Beyond and Ace Hardware. This is by far the most convenient option for customers, as they can try out the knives before they buy them.

Cutco Compensation Plan

Now let’s talk about how much money you can make as a Cutco rep.

The company claims their reps make an average of $20 per hour, but I’m skeptical of this claim. In my experience, most direct sales companies inflate their earnings claims in order to recruit more reps.

The Cutco compensation plan is pretty standard for a direct sales company. Reps earn a commission on every sale they make, and they also have the opportunity to earn bonuses and commissions on the sales of other reps they’ve recruited. There is also a team override component, which allows reps to earn a percentage of the sales generated by their team members.

The company also offers a few different ways for reps to earn additional income, including:

– Selling knives at events: Reps can set up tables at community events and sell knives to attendees.

– Holding in-home parties: As I mentioned earlier, Cutco reps can hold in-home parties where they give demonstrations and try to sell knives to guests.

– Recruiting new reps: Reps can earn a commission on every new rep they recruit, as well as a percentage of the sales made by that rep.

Overall, the Cutco compensation plan is pretty standard for a direct sales company. There’s nothing particularly unique or exciting about it.