Quote Originally Posted by craig View Post
Of course it is a simplification - development /storage/carrying costs are not included, for example, nor is the price of the packaging/band/marketing. However, if one looks at what farmers are paid for tobacco and what workers get paid to process - then Lew's point that the cost doesn't vary that much is pretty close to the truth.

The main point is that the price you pay for a high-end luxury good has little to do with the actual cost of production. A Cohiba costs more to make than a Quintero, but the difference is closer to pennies than to 10's of dollars. I grew up in the garment industry and the same is true there. If one likes reading more on the web, then I found the cost comparisons of an iPad vs. Kindle quite entertaining, as were (to me) the comparisons between a pickup vs. an SUV based on that pickup.
...the price you pay for a high-end luxury good has little to do with the actual cost of production
That, my friend, is the textbook example of a "sweeping generalization". I wholeheartedly disagree with that statement. And - I think you'd find it very difficult to defend.

A Cohiba costs more to make than a Quintero, but the difference is closer to pennies than to 10's of dollars.
You're suggesting it is within a few "pennies" to make a short filler (left over scraps) machine made cigar, versus a long filler hand made cigar? And (more importantly) a low-end machine made cigar versus a handmade cigar that is made by the best cigar rollers Cuba has to offer? Seriously?!?

Rather than quoting Lew Rothman, I'd suggest you quote someone within the Cuban tobacco industry that is in "the know" about actual cost of production. The manufacturer really can give a better cost gauge than someone who is known for buying truck loads of "leftovers" from production runs the manufacturers are trying to close out. It's rather like inferring Trader Joe's is the expert on the cost of producing wine because they can give a good price point for "two-buck Chuck".