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."
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."
love it ! 
