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#1 Wicked Mike

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Posted 24 May 2016 - 03:51 PM

Heya folks.

 

I had someone tell me the other day that $18 seemed like a lot of money for a SFRB of fresh pods. I was chatting the other day with another vendor (who shall remain nameless, unless (s)he chooses otherwise), and when I told her/him that they were too cheap, they said "but people complain if you charge anything more than that." In the interest of transparency, I thought I'd start a discussion on the costs involved in producing the hot pepper products we all know and love. Vendors and buyers alike, please feel free to add your two cents.

 

In breaking down the costs, let's start at the end: shipping costs. There's been some discussion on other threads concerning USPS having hiked their rates at the beginning of the year. As it stands, a small flat-rate priority box (SFRB) costs $6.10 to ship. While there are cheaper shipping options for less perishable items (sauces, powders, seeds, etc), perishable items like fresh pods or live plants really can't handle more than the 1-3 business days that Priority Mail takes. For those products, a vendor is really left no choice.

 

After shipping, $18 has become $11.90.

 

There's also the matter of PayPal to consider. When you send money via PayPal, you have two options: "Send money to friends and family," or "Pay for goods and services." If the person initiating the transaction chooses "friends and family," the transaction doesn't cost either party anything, but neither party is covered by "PayPal Protection" in the event of a dispute. If "pay for goods and services" is selected, $0.82 is deducted from that $18 (which, remember, is actually $11.90; in essence, the vendor is being taxed by PayPal for $6.10 that USPS is getting). Now, $0.82 may not seem like a lot, but it adds up fast. Some people choose "friends and family," which is hugely appreciated. Most people don't. And personally, I don't blame them. Although the THP community does a very thorough job getting the word around about the quality of different vendors' products, most people want to know that they have some sort of recourse in the event that they get ripped off. 

 

$11.90, now, is $11.18.

 

But wait, what happens when USPS delivers the box to the wrong house? Or leaves it somewhere without air conditioning for a long period of time? Or steps on it? Or it gets mangled by one of their sorting machines? Or is sacrificed to appease mighty Cthulhu (well, who knows what else it is they're doing to these poor boxes?)

 

In theory, part of the aforementioned $6.10 goes toward insuring the contents of the box for up to $50. I say "in theory" because, despite the fact that I've lost a sadly large number of boxes to USPS' gentle ministrations, I've never once successfully collected a penny from them for any of it. What is a vendor to do?

 

Well, you do the right thing. You apologize, thank the person for their patience, and you make it right. You ship a replacement or give a refund. You don't charge them the shipping costs for the replacement. You don't charge them anything, and if they offer to split the difference, you politely thank them for offering but decline. You eat the cost, because it's the right thing to do.

 

From $11.18 a box, down to...wait, how many boxes have I lost to USPS?

 

On to the costs of materials to produce the peppers themselves. High petroleum prices means plastic pots aren't cheap. Miracle-gro Potting Mix is roughly $14 for the 64-quart bag. You're going to go through a lot of these. Black Kow is four or five bucks a bag. You'll need a lot of these, too. A decent fertilizer is fifty or sixty bucks for a forty-pound bag (and that's the wholesale price). Pesticides...ahh, pesticides...people want peppers that are bug free, but they also don't want their food to be contaminated with all manner of nasty toxins. And hey, who can blame them? So you spray, but you do it conscientiously. You don't set up a rigorous preventative pest control regime, spraying every week whether it's needed or not; when something pops up, you nip it in the bud. This means countless hours spent scouting for problems. You will probably own more jeweler's loupes than pairs of shoes. And when pests do pop up, you need allied products that are highly effective, but minimally damaging to the environment and the end consumer. That costs money. A lot of money. You're talking products like Actara or Conserve SC. You're talking $100-150 a quart.

 

There are hidden costs, as well. Maintaining irrigation. The cost of land itself. And what about time and labor? One way or another, you'll be working seven days a week, and at the end, you're probably going to do it for less than minimum wage. And you'll do it, because you love doing it. You'll hustle odd jobs installing vegetable gardens for bored trophy wives who drive a Maserati but nickle and dime you on the bill, just so you can keep your head above water and keep doing the plant thing. You'll try to ignore that little voice in your head that says, "I'm college-educated, what the hell am I doing?" And you'll try not to laugh out loud when the corporate lawyer or software engineer says, "I wish I could do what you do...it must be so relaxing."

 

I don't mean to whine, and I'm certainly not trying to imply that other peoples' dollars are any less hard-earned than my own. Other people get up every day and say, "I have to go to work." I get to go to work. If I inherited an obscene amount of money tomorrow, I'd still do it. I'd do it for free. In the meanwhile, I'm doing my best.

 

What I'm getting at is that it's easy to look at the dollar sign attached to a product and say, "why does it cost so much" until you're the one producing it or someone lays it out for you. Maybe, as vendors, we need to speak up a little more so that people will have a concrete answer to that question.

 

TLDR: "Well, almost half of it goes to USPS and PayPal, and there are a lot of other costs...trust me, I'm not getting rich here."


"Virtute enim ipsa non tam multi praediti esse quam videri volunt."

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#2 grantmichaels

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Posted 24 May 2016 - 04:04 PM

I fully agree that the only reason to grow peppers is because you can't not.

 

:cheers:


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#3 calchilihead

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Posted 24 May 2016 - 04:10 PM

I think 18 bucks was cheap...i think even 22-25 is reasonable.


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#4 Grass Snake

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Posted 24 May 2016 - 04:14 PM

Thanks for breaking it down for us Mike. This is my first year in business and I can relate when people try to beat me up on my price. I wish I had time to break it down for each one of them and explain overhead cost but I simply don't, I just stick to my price and move to the next potential customer. You offer a product that's not easily obtained without shipping, so naturally the cost are going to be higher. If people don't get that they can go to the grocery store and buy some jalapenos.


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#5 hogleg

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Posted 24 May 2016 - 04:20 PM

I think $18 is a great price. Shoot I think $20 is more than a fair price. Taking into account cost of shipping,  labor, materials, rarity, and intermediate+ level of growing skill to successfully farm them. Shit.

 

I say well put WM, and good on ya.   :cheers:


Edited by hogleg, 24 May 2016 - 04:24 PM.


#6 grantmichaels

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Posted 24 May 2016 - 04:27 PM

I think 18 bucks was cheap...i think even 22-25 is reasonable.

 

$20 seems like an easy solution. I wouldn't even notice the $2, since I consider $18 to be $20, anyways ...

 

Then, furthermore, you could add a tier - specimen-grade, or "Premium/Gold" boxes - for $25 ...

 

A lot of the time when I buy things from members I just arbitrarily send more money regardless, and also, I tend to use the gift option for anything less than $50-75, or from anyone I've already done business with ...


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#7 Wicked Mike

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Posted 24 May 2016 - 04:34 PM

I fully agree that the only reason to grow peppers is because you can't not.

 

Boy, is that the truth. I remember when I first decided to do this, I was talking to Sicman about it. He kind of incredulously said, "well, you don't think this is all I do, do you?" At the time, I probably thought something like, "why not?" Now, I get it.

 

I think 18 bucks was cheap...i think even 22-25 is reasonable.

 

I think $18 is a great price. Shoot I think $20 is more than a fair price. Taking into account cost of shipping,  labor, materials, rarity, and intermediate+ level of growing skill to successfully farm them. Shit.

 

I don't know how these guys managed ten dollar boxes last summer. I have to figure they were breaking even or worse, or else they know something I don't.

 

As growing skill goes, I have to admit I was pretty proud of myself yesterday. Ndeme has been a regular customer for a while now, and a really pleasant guy to deal with. He's never had a pubescens before, so I slipped a Costan RIcan Yellow Rocoto into his order. Pubescens in Miami? Going into July?  :crazy:

 

Thanks for breaking it down for us Mike. This is my first year in business and I can relate when people try to beat me up on my price. I wish I had time to break it down for each one of them and explain overhead cost but I simply don't, I just stick to my price and move to the next potential customer. You offer a product that's not easily obtained without shipping, so naturally the cost are going to be higher. If people don't get that they can go to the grocery store and buy some jalapenos.

 

Yeah...you definitely learn as you go.


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#8 Pariah

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Posted 24 May 2016 - 04:37 PM

Great post, Mike! I agree, $18 is very fair!
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#9 Wicked Mike

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Posted 24 May 2016 - 04:43 PM

Then, furthermore, you could add a tier - specimen-grade, or "Premium/Gold" boxes - for $25 ...

 

"Photography Material"

 

 

A lot of the time when I buy things from members I just arbitrarily send more money regardless, and also, I tend to use the gift option for anything less than $50-75, or from anyone I've already done business with ...

 

Not something that goes unnoticed or unappreciated, I can assure you. That, and getting behind worthwhile causes when it comes to the charity auctions.


"Virtute enim ipsa non tam multi praediti esse quam videri volunt."

     - Cicero, De Amicitia


#10 AaronTT

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Posted 24 May 2016 - 04:46 PM

I think its funny when people complain about the price of specialty peppers. I seen some folks charging 30 dollar a box and their peppers are nothing to holler about, so $18 is fair. If people don't want to pay those prices, either grow your own, or buy jalepenos as already said. Plus, most of the selection you offer Mike CANNOT be found in any store, and so its only fair to pay for that. I admit I do try to save money by purchasing peppers off of vendors by buying a lot at one time, but I also understand if they cannot do so. Good you showed how expensive it can get to do what you do. You might want to look into buying soil by the yard/truck full, as this helped to cut my cost down quite a bit. Either way though it adds up.

I need to make sure when I buy from you I pay friends and family, which I don't mind. It does add a bit more, but not much. 


Edited by AaronTT, 24 May 2016 - 04:47 PM.


#11 AaronTT

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Posted 24 May 2016 - 04:54 PM

These special peppers are a luxury and not a necessity, and thus the price needs to reflect that. I kind of chuckle when people complain that their luxuries are costing them too much. Well, then dont buy them, its simple. You don't NEED peppers, except the rare few who need them for pain management and so on. Its like complaining that you cannot afford a S500 Mercedes...  



#12 Justaguy

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Posted 24 May 2016 - 04:59 PM

+1
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#13 moruga welder

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Posted 24 May 2016 - 05:14 PM

Definitely Agree with you Mike !  Even as a hobby it can be expensive , my lights , new bulbs , electric, timers , water ,  greenhouse , etc. .   $ 18 is a great price , not only all the before mentioned , go find these fine strains in a grocery store , or from  Burpess !       :onfire:


Edited by moruga welder, 24 May 2016 - 06:14 PM.


#14 JDFan

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Posted 24 May 2016 - 05:16 PM

The way I see it - you have to charge what you have to charge - and people are going to complain about the cost whether it is $50 or $5 (that's just part of selling things !) - figure those that do not want to spend the $18 either have other things they prefer to spend the $ on or don't want what you have to offer that much. ( If they value the product they'll pay what it costs.) Or can't afford to spend that much due to other things and probably should be using the $ elsewhere anyway.

 

As for those selling for $10 last year you also have to remember it's a supply and demand thing -- Once you get to the middle and late summer months your customer base is falling ( most that will pay for superhots are also growing a few plants that will be putting out lots of pods at that time) and at the same time there are a lot more people trying to sell off a few boxes rather than have them go bad when the plants are in full production mode, so fewer people buying and massively more pods available tends to make profit  margins drop - figure a $2 profit on a box is still more than you get if the pods rot !

 

You just have to figure those sales into the pricing just like all of the other costs - so early season and late season prices are even a bit higher than average since the supply is scarce and the customer base is larger since they don't have pods ripe yet or their all gone but the craving is not so a bit higher price is tolerated ( figure cost of production is higher then also since it requires heat and light to get the early start or to keep them going later) and mid summer prices leave less profit as more people are selling and fewer people need to buy.



#15 KingChile

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Posted 24 May 2016 - 05:26 PM

Judy spoiled everyone thats y $18 seems too much........i dunno where she went but buying from her was the BEST, all her pods were mostly VERY nicely sized. Not to mention she ALWAYS sents extras too. I dunno where she went but I hope she does come back soon!!



#16 dlsolo

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Posted 24 May 2016 - 05:47 PM

$18 is more than fair.  If someone was to post a SFRB of fresh pods for $18, more than likely just do an even $20, because I'm appreciative of the hard work that went into producing such exquisite pods of flaming hot yumminess!  Plus, for $18, where else are you gonna find these unique beauties?  Uhhhhmmmm, Wal-Mart?  I think not.

 

Put me down for "fair" all day long....


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#17 Justaguy

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Posted 24 May 2016 - 06:00 PM

...go find these fine strains in a grocery store....

:evil grin: I like to take a handful extra supers during harvest with me to the grocery store. While doing my shopping I do my best to mix them in with whatever they have that looks even somewhat close. Very hard at times and the produce guy knows me so I have a feeling he has thwarted my fun a few times, but at least I know he will buy them to enjoy them :rofl:


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#18 SmokenFire

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Posted 24 May 2016 - 06:03 PM

Great to see so many understanding and conscious replies in this thread.  Amazon has made Free Shipping almost mandatory - it's like people expect it.  Sure you can get stuff for cheaper - one can always use the interwebz to find cheaper things.  Quality, service, integrity - those are the kind of people and businesses I want to support.  It's worth paying extra for that type of experience.  :)


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#19 Hotrod64

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Posted 24 May 2016 - 06:23 PM

IMO ..some people just have no idea of all the "behind the scene"work,cost ,time etc that has been done to get a pod from a seed to that marketable product,they just see the pod sitting in front of them and must think it has grown itself?



#20 cmpman1974

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Posted 24 May 2016 - 07:02 PM

I agree fully.  The work that goes into growing can be tremendous.   It certainly isn't a get rich situation.  it's a labor of love. 

 

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