Why does it cost so much?

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 sent out a few boxes recently to people and it literally took me 2 hrs to cut, sort through, label, go to the post office and send out the boxes. I only sent out 3 boxes that morning, and maybe made 10$ a box just like you're figuring. That's 15/hr, excluding the cost to actually produce the  buggers. I whole heartedly agree with ya mike. For it to be profitable, Id even say boxes of things you CAN"T get in the store should go for 25-30$ You deserve at least double. You da man, only reason I'm thriving with all these plants and peppers now between buying plants from you and the seed train which has provided the genetics. 
 
Justaguy said:
: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:
 
I gotta do this!
 
Justaguy said:
: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:
 
:twisted:   love it !      :onfire:
 
Justaguy said:
: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:
 
 
LOL that's definitely going to ruin....or make someone's day/meal/tomorrow's sphincter? 
 
I don't see the problem. I know how much time and money I spend in my own garden.

If I like what is being sold, I buy it. I like to try different pod's, if I like it, I'll save the seeds. Anyone I've purchased pod's from can tell you, I even ask before I save seed's. That's just me and that's worth whatever price I pay. I'm just glad that there are vendor's to buy pod's from. Sometimes, one's season doesn't end well. We're fortunate to have such good vendor's. Not so long ago, that wasn't the case.

Thanks for offering your service.

Keep up the good work.
 
I have received pods from Mike many times before and they have always been superb quality that I would gladly pay much more for, especially considering the fact you can get all of one type or up to five different types. His communication has always been very fast, and lets not forget the freebees he tosses in from seeds to powders. I look at 18 dollars as cheap and a hell of a bargain. What he sells you cant just go to the store a buy so it would have to be ordered so I already expect a shipping charge and that 18 already includes that. So If i am paying 11 dollars for one sfrb of peppers, hell i couldn't go to walmart and buy that much in regular low quality orange habaneros for that cost. So worth every penny as a consumer!!
 
Some people are so damn cheep they wouldn't know a great deal if hit em. They are happy with mass produced jalapeño and bell pepper they get at Walmart and will complain about anything. Some people have watched so much American Pickers that their willing to beat down a honest deal just cause they can. I've always been money spent on good food is well spent.
 

salsalady

Business Member
I paid $6.50 for a large bunch of organic asparagus at the FM.
I paid $3.99/lb for a large bunch of asparagus at the store.
 
 
I didn't pay attention to the actual weights, but they were pretty much the same size, prolly 1.5 pounds each.
 
 
Doing The Math...
 
the organic bunch might help the farmer cover costs, and what profit there is is supporting a local family of 5.  Picked that morning and bought by noon, eaten by 6pm.
 
The store asparagus came from (who knows where) harvested (who knows when) and profits are going to-
the store
the produce delivery company
the packing house
the farm
---the pickers---
 
 
 
If you value your product, others will also.  Some will appreciate what goes into making or growing whatever-it-is.  Some will never appreciate the effort and will only go for the cheapest or best deal.  Sometimes the hardest thing to do is to say "No, I can't cut my prices.  I'm in business to make money just like the gas station, the grocery store and Amazon." 
 
Would they even consider asking the corner market to reduce the price of that gallon of milk?  No? Why not?  Because they would get laughed out of the store.  So why would they think it's OK to beat up some other business person on the price of goods? 
 
If customers are bitching about the price, raise the price and see who bites.  Seriously!  At least then you know those who are purchasing are appreciative of your efforts and when you throw in the extras, that will also be appreciated.  Or you can be "out of stock" for those special customers....
 
 
https://www.youtube.com/watch?v=M2lfZg-apSA
 
 
"NO PODS FOR YOU!!!"
 
:lol:
 
I don't want a box of lovingly picked, thoughtful smurf script described tag on stem peppers for $18.

I'd rather pay 29.99-34.99 + shipping for a box of rotten peppers from someone who won't return my emails.

;)


Nah. Just kiddin. Fcku that though. Some people are just cheap bastards and want something for nothing.
 
Great discussion Mike. It is indeed a labor of love as Chris says. I don't sell any pepper products but it is not hard to imagine for large retail producers and wholesale suppliers it can be very frustrating. SFRB @ $18 is good for me but I probably wouldn't quibble with $20-25, if early in the season and pods are what I want and/or premium as mentioned.
 
I just ordered 2 boxes from Mike. I like the idea of trying out different peppers to see which ones I will end up liking. I even went so far as to describe a few kinds I liked and a few that I didn't care for and then gave him the liberty to "surprise me" with some. It's a service that I GREATLY appreciate and I can say that I was truly happy with the whole process!

Yes I have 42 plants growing presently, but I live in Michigan and pods aren't here yet...in comes a vendor like Mike to fill the gap and expose me to new varieties. I thought $30 for 2 boxes was a super deal ;)

Unfortunately there will always be the cheapskates and to them I say: get your fix somewhere else...if you can find them :P
 
TNKS said:
Where Im from a man is his word
Your world is how you direct it with in your means
Pay to play is the bottom line,stand your worth
It will come around . .  . . .
Pay to play isn't the bottom line with everyone. If a man is his word, literally and figuratively, and one doesn't like that word-you could have all the moneybin the world and still not get shit .
 
While we are doing really well at farmers markets and events, with our first online order the other day; my fiance and I would have to sell A LOT of product to be able to leave our other full time jobs. We work 80+ hours a week because we love making our sauces, with the thought of one day replacing our jobs with it full time. But the reality as the OP stated is that making sauce is expensive. Insurance, $500+. Taxes, $400-600+. Paying Event fees, shipping costs, replacements, food and equipment for your events. Hoping that you sell enough to cover just the cost to be there.
 
And those who are growing their own peppers, making and selling their own hot sauce. That's even more time, and costs involved. One thing I've found is that I am constantly looking for better deals, everywhere! I don't think looking for better prices on peppers, ingredients, etc. will ever stop either.
 
At the end of the day, you gotta do it because you love it. The rest hopefully will fall into place. 
 
Thanknyou Furious fornyour perspective.

I do believe there is a difference between looking for a better deal and complaining that "so and so has if for better price - you should too."

As a business man you always want the best product for the best price. And you can go to a vendor and say " I need 15 LBS of Morugas. What's the best you can do me for?" Which is a world of difference between " Well this vendor has them for 11 a box you should match them." Whuch , believe me ,does happen.


Another direction.

Also as everyone else already said- this is specialty product.

When I was in the game and I'd go to my dealer , if I said " Yo dawg- johnny got me for this price. " or " I can get better cheaper down the road". They'd look at me and tell me to get steppin, you can get it better go and do it.

These vendors put their heart, their soul into what they do not only because they love it, but because they believe that someone else out there might, just might, like the fruits of their effort, their laborious love enough to try it themselves.

The chilihead spirit is about sharing the love which is why you see vendors charging anywhere between 10-20 dollars a box. When they know full well they could charge 30$+ for something that'd be really rare to find in a most spots of the world- much less fresh to boot?!?!?!

If you think its just about the money you're wrong. You're dead wrong. Its about doing something you love and sharing it with people who might appreciate it as much as you do.
 
SmokenFire said:
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.   :)
 
This a million times over.  I will gladly pay a high quality company more for top notch quality and integrity.  Its part of the reason I support SOME local businesses (and online retailers).  My wife being a small business owner herself, I know the amount of dedication it takes to make something worthwhile.
 
Justaguy said:
: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:
damn, i gotta try that . that's funny right there. to bad you cant see them when the eat it.
 
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