Cigar Pricing

[ratpak-cl]

Just how does a manufacturer come up with pricing. My point is, I'm a big DPG fan, most of his gars are reasonably priced as far as I'm concerned. Then you have some companies, newer ones for the most part, who's prices seem to be a little outrageous. To me, quite a few of the Premium or Super Premium gars do not merit the price tag on them. Case in point (personal case and opinion!) I love the Camacho Corojo Line, however having a few Diploma and 10th anni, the price difference does not, to me, Justify buying them when they almost taste the same. Am I off bas here, you could say this about almost every manufacturer in my opinion. Is buying the "ultra" and "super" premiums really a flavor thing or a "look what I have" thing.

your thoughts.

[baboruger]

I think that a majority of the pricing comes from the cost of the raw materials. The more expensive the tobacco, the more expensive the cigar...

[jitzy]

Originally Posted by baboruger

I think that a majority of the pricing comes from the cost of the raw materials. The more expensive the tobacco, the more expensive the cigar...

I agree

[iloveclmore]

Originally Posted by baboruger

I think that a majority of the pricing comes from the cost of the raw materials. The more expensive the tobacco, the more expensive the cigar...

This is what I always thought it was. But hell, they can charge as much as they want to as long as people are willing to pay it. Ah capitalism..

[Tom Ramsey]

Originally Posted by baboruger

I think that a majority of the pricing comes from the cost of the raw materials. The more expensive the tobacco, the more expensive the cigar...

It's a little more complicated than that, but you are right for the most part. Labor is also a big factor. Miami rolled cigars are very expensive because of labor costs associated with US prevailing wages. You also have to factor in marketing, transportation, inventory carrying costs and everything else.

Pepin can charge less for a couple of reasons. First, he spends very little on marketing. Since there is so much buzz about other things he is making (Tatuaje etc.) he has little need to spend money promoting himself. Secondly, he controls the manufacturing and does not have to pay someone else (another layer of profit) to make his sticks. This limits his production capability but helps keep his prices under the competition. As he starts hitting the wall in his capacity, you should expect to see his prices increase.

As a rule, super-premium cigars are constructed from more expensive tobacco and rolled by the most experienced rollers in a given factory. Although you may not think they are justified in the pricing realm, they are genuinely more expensive to manufacture.

I've told numerous people, the world is filled with good cigars under $5.00 and mediocre cigars over $10.00. But I have never had a cigar under $5.00 that I would consider to be GREAT. You have to pay for quality.

[suckapuff]

Well, what about a certain manufacturer that will remain un-named that is always having a MSRP of 15 and above on sticks, but will be on sale every day at the 3-6 range?

[Rah55]

Originally Posted by Tom Ramsey

It's a little more complicated than that, but you are right for the most part. Labor is also a big factor. Miami rolled cigars are very expensive because of labor costs associated with US prevailing wages. You also have to factor in marketing, transportation, inventory carrying costs and everything else.

Pepin can charge less for a couple of reasons. First, he spends very little on marketing. Since there is so much buzz about other things he is making (Tatuaje etc.) he has little need to spend money promoting himself. Secondly, he controls the manufacturing and does not have to pay someone else (another layer of profit) to make his sticks. This limits his production capability but helps keep his prices under the competition. As he starts hitting the wall in his capacity, you should expect to see his prices increase.

As a rule, super-premium cigars are constructed from more expensive tobacco and rolled by the most experienced rollers in a given factory. Although you may not think they are justified in the pricing realm, they are genuinely more expensive to manufacture.

I've told numerous people, the world is filled with good cigars under $5.00 and mediocre cigars over $10.00. But I have never had a cigar under $5.00 that I would consider to be GREAT. You have to pay for quality.

Pretty good summary I'd say but, you cannot ignore market conditions. Look at some of the smokes in the last cigar boom that were going for top dollar and just can't compete today because they never really warranted the price. In essence ANYTHING is worth what the market will pay for it.

[Oxman]

...and that's what it all boils down to: what people are willing to pay.

[ratpak-cl]

Originally Posted by Oxman

...and that's what it all boils down to: what people are willing to pay.

Which is why I buy 2 Comacho Corojo's instead of 1 10th anni. Both great cigars but I get 2 instead of 1 thats double...double the pleasure

[CHBIV]

Although I agree for the most part that quality of raw materials and all the other cost's that are associated with making, marketing, shipping, selling, etc a cigar determine price, there are still some companies I think that do jack the price up far above what that cost is. Whether they do that to create a "super premium" stigma or just because people will pay it, and I am sure the reasons vary, but I think that there are many expensive cigars that could be sold at a lower price and still be above there cost and provide the maker a profit. Just my $0.02 though.

[Lok17]

Originally Posted by CHBIV

Although I agree for the most part that quality of raw materials and all the other cost's that are associated with making, marketing, shipping, selling, etc a cigar determine price, there are still some companies I think that do jack the price up far above what that cost is. Whether they do that to create a "super premium" stigma or just because people will pay it, and I am sure the reasons vary, but I think that there are many expensive cigars that could be sold at a lower price and still be above there cost and provide the maker a profit. Just my $0.02 though.

He is dead nuts on here....

[mdj65]

Originally Posted by CHBIV

Although I agree for the most part that quality of raw materials and all the other cost's that are associated with making, marketing, shipping, selling, etc a cigar determine price, there are still some companies I think that do jack the price up far above what that cost is. Whether they do that to create a "super premium" stigma or just because people will pay it, and I am sure the reasons vary, but I think that there are many expensive cigars that could be sold at a lower price and still be above there cost and provide the maker a profit. Just my $0.02 though.

I would also agree with this. Its just like any product. As soon as you put the stigma of premium or specialty on it the price automatically goes up. You take Stanley Power tool from Lowes and write "Rescue" on the side of it some Fire Dept will pay $400 above what it cost at Lowes for it.

[jam]

I would say the majority is taxes i know thats for ny

[BlueHavanaII-cl]

Originally Posted by vankleekkw

Well, what about a certain manufacturer that will remain un-named that is always having a MSRP of 15 and above on sticks, but will be on sale every day at the 3-6 range?

I would say that that manufacturer has diminished their brand by giving the big boys such great deals... which is why I don't carry any cigars from that unnamed manufacturer!

[Cowboyjeans]

The markets will pay what the market desires. There is a portion of the market who want "super-premiums" that may be priced way above smokes of similar characteristics priced at a more moderate affordable level. God Bless the Free Market System! We as customers all have a choice of what to smoke, if a customer wants to spend more they have that option.