The Incredible $3 Cigar

Alex Svenson

Krieg

Joeyjoe21_8

excellent point.....it sure does suck about the dumb tax which is so high......but there is nothing we can do about it.....and i cant wait to go on the trip!

YankeeMan

New York State tax has not helped the situation. They increased the already ridiculous tobacco tax over 51%. It has driven one B & M to Florida and other ones are feeling the crunch.

thehoff

Ok. So I understand where $0.41 of the markup comes from but what about the other $1.09-$1.59? Based on the information given above, the maximum price increase I should have seen on my favorite cigar should be $0.41 with potentially less if the cigar manufacturer/distributor cut into their profit margin to absorb some of the increase. That extra buck seems unaccounted for. As the post was written, the only tax mentioned in relation to the increase was SCHIP tax (which is capped). See how this doesn't add up? Did the manufactures take the opportunity to raise prices while knowing the consumer will automatically blame whatever increases on unpopular (within the smoking community) legislation? Did the distributor? I thought these businesses cut profit margin. Who is getting the extra money? I don't understand the point of this thread at all. Not all the factors are present and consumer response to prices is all part of being in free market economy where an elastic good's ability to sell is directly related to its cost. Can it be poor form from time to time? Of course. But mentioning the effort required for the finished product still probably will not take priority over price for many consumers.

fla-gypsy

If I understand Alex's point, the maximum increase is .41 per stick unless the state has tacked on something as well?

Lasabar

thehoff:

Ok. So I understand where $0.41 of the markup comes from but what about the other $1.09-$1.59? Based on the information given above, the maximum price increase I should have seen on my favorite cigar should be $0.41 with potentially less if the cigar manufacturer/distributor cut into their profit margin to absorb some of the increase. That extra buck seems unaccounted for. As the post was written, the only tax mentioned in relation to the increase was SCHIP tax (which is capped). See how this doesn't add up? Did the manufactures take the opportunity to raise prices while knowing the consumer will automatically blame whatever increases on unpopular (within the smoking community) legislation? Did the distributor? I thought these businesses cut profit margin. Who is getting the extra money? I don't understand the point of this thread at all. Not all the factors are present and consumer response to prices is all part of being in free market economy where an elastic good's ability to sell is directly related to its cost. Can it be poor form from time to time? Of course. But mentioning the effort required for the finished product still probably will not take priority over price for many consumers.

Thats just the import tax, most states have even higher taxes on tobacco as well, and those went up as well... I'm no expert, but online you can find what your state charges on tobacco tax as well

Hays

docedwards

I don't understand some of the comments on today's '92 beli. The usual price is $135-$140 per box plus shipping and this is only $100 w/ free shipping. As for $3 cigars, one of my favs is only $2. It is the Indian Tabac Limited Reserve on the sister site. I don't think the price has increased in the 5 years that I've been buying them. Still $50 for a box of 25. Have a great trip, Alex.

thehoff

Redtailhawkoz

doromath

ljl

It is good to have some inside perspective on this. An interesting post. Sometimes people fail to realize the value of an item at it's regular price and they get upset when they see a sale price that they feel should give a greater discount. I still see cigars as an affordable luxury.

ctremblay187

great point Alex....i am fairly new to the cigar world but a couple weeks ago at my local B&M they had nick perdomo there. He also had emphasized everything that goes into the cigar process in whcih i found amazing. It really opened my eyes and now have more of an appreciation every time i light up. He also talked about all of the bullshit taxing that they do here in the states and everything that he has done to make it more affordable for the consumers. All in all it was a very informing visit. Cant wait to read the next post. Have a safe and smokey trip!!

Nick2021

I think Alex makes some great points. Part of the problem nowadays (in my opinion) is that it's easier to criticize a company/person over such issues as pricing, rather than taking the time to understand all of the factors affecting the situation. Companies are in the business to make a profit, so any discounts provided to the consumers are a plus in my opinion. As a contract negotiator for the Government, I can tell you the Government considers 8-13% a fair profit margin of the overall price of the contract. What cigar companies consider to be a fair profit I don't know, but I'm sure there's a reason behind why they price their products the way they do. I don't think most of the cigar companies would charge some random outrageous price for their products without putting some thought behind it...if they didn't understand the basics of pricing I can't see how they'd survive in the industry.

Unthought_Known

NYHCx516x

so very glad i got in on that list for the Nicaragua trip. I really do want to see the whole seed to finished product.

Schrooz

CCOm should incorporate, put out some stocks, and pay dividend in premium cigars.

boydmcgowan

Nick2021:

I think Alex makes some great points. Part of the problem nowadays (in my opinion) is that it's easier to criticize a company/person over such issues as pricing, rather than taking the time to understand all of the factors affecting the situation. Companies are in the business to make a profit, so any discounts provided to the consumers are a plus in my opinion. As a contract negotiator for the Government, I can tell you the Government considers 8-13% a fair profit margin of the overall price of the contract. What cigar companies consider to be a fair profit I don't know, but I'm sure there's a reason behind why they price their products the way they do. I don't think most of the cigar companies would charge some random outrageous price for their products without putting some thought behind it...if they didn't understand the basics of pricing I can't see how they'd survive in the industry.

I completely agree man. Also, the thing a lot of people forget is that the profit margin being made by CCom on each cigar isn’t really profit. That profit margin per stick goes to pay their facilities rent, the utilities to keep the lights on the forum up and running and those cigars in the warehouse humidified, their travel expenses, and the salaries of the account reps we all rave about. I’m a fairly long time cigar smoker, and I switched exclusively to CCom about 2-3 years back entirely as a result of their customer service and the condition of the cigars shipped to me. A Good buying experience and a great product make their normal prices completely worth it for me. Anything below that for their sales or daily deals is just icing on the cake if it’s a cigar that I want to try. Great Read Alex, it’s cool to hear about what goes on behind the scenes in the industry. Thanks for the information and keep doing what you guys do.

KCW

Alex Svenson

thehoff:

Ok. So I understand where $0.41 of the markup comes from but what about the other $1.09-$1.59? Based on the information given above, the maximum price increase I should have seen on my favorite cigar should be $0.41 with potentially less if the cigar manufacturer/distributor cut into their profit margin to absorb some of the increase. That extra buck seems unaccounted for. As the post was written, the only tax mentioned in relation to the increase was SCHIP tax (which is capped). See how this doesn't add up? Did the manufactures take the opportunity to raise prices while knowing the consumer will automatically blame whatever increases on unpopular (within the smoking community) legislation? Did the distributor? I thought these businesses cut profit margin. Who is getting the extra money? I don't understand the point of this thread at all. Not all the factors are present and consumer response to prices is all part of being in free market economy where an elastic good's ability to sell is directly related to its cost. Can it be poor form from time to time? Of course. But mentioning the effort required for the finished product still probably will not take priority over price for many consumers.

Wow some great pints and I am happy to see people found this interesting. Some guys hit the nail on the head with the later reponsies. The cigars are imported by manufacturers then sold to distributors or to retailers. That tax got balled into the wholesale cost so basically the suppliers costs go up. Most retail in any industry works on profit margin as a %. So if the wholesale price increases as it did, it gets compounded along the way in the sales chain so to speak. When I say many companies took a hit in profit, they basically choose to pass along the tax rather than mark up the cigars more. Some suppliers ate the tax all together and some actually tried to build profit on it. One stand up company in particular that is worth mentioning in regard to all of this is Perdomo. Those guys actually ate the whole tax and even took the opportunity to get aggressive and lowered their prices in the wake of everyone else raising. Nick is a stand up guy and I think it is worth mentioning. I'll also add that the intention of my post was not to try to defend pricing or stand on a soap box, merely to remind everyone what goes into a cigar. It really is an art and an amazing product.

Alex Svenson

KCW

undulac

This is why AJ Fernandez sticks are such a good price. The are bought directly from ccom and do not hit a middle man. One of my favorites is the Le Herencia Habano and (LHCOF) and SCCC and if ccom didn't buy them direct they'd be a $6-$7 stick.

quix24

I am loving this thread. I'm very new to cigars and the cigar world as a whole and this is all very informative and I can't wait to learn more.