eli5: Why aren’t bamboo products like Toilet Paper/Paper towels considerably cheaper than their tree counterparts?
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A LOT of consumer goods, and this will be especially true for something like toilet paper, have material costs that are a tiny fraction of the retail price of the good.
Understand first that the price of something may be constrained by its cost to produce, but rarely has any relationship to it. A product that costs $1 to make and deliver to the consumer may have a price of $100 if consumers value it at $100. This is how market pricing works.
My guess for toilet paper is that no more than 10% of the price of toilet paper reflects the material cost. Further, the packaging of the toilet paper probably costs as much as the toilet paper itself. The shipping of it is also pretty high – it’s light but bulky. A semi of toilet paper isn’t worth much money, so the cost of that shipping is distributed over a relatively small number of units. You have high retail costs because it takes up a lot of shelf space. You have advertising costs in there as well. Gotta pay for that NASCAR sponsorship.
So if you cut your material costs by 50%, you’re probably cutting maybe 5% of the retail price. That’s generally not even enough to bother discounting a product because it’s not enough to get consumers to switch. Not many people are choosing the $0.94 can of beans over the $0.99 one based on price.
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