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Hobby Costs; Can they be lower?

Blaise006

Blaise006

Supporting Member
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The problem with the costs of Reefkeeping.

Specially in California, we see the impacts to our wallets on all fronts. Utilities, shipping, inflation, etc. I am writing this because I feel I have seen a large increase in posts about it, probably just recency bias honestly. So I wanted to pose the question, what are most of the things we commonly buy worth and is a business viable at lower prices?

A bit of background on me: I have been working in the financial field for 9 years, but only as an analyst for three of them. I am a member of the Chartered Financial Analyst Institute, an education program for financial professionals. I spent the majority of my career working in structured products like interest rate swaps, credit default swaps, and various other financial instruments.

Do people view the industry as having excessive margins? Are costs assumed to be lower by the public then they actually are, or vice versa?

I am on the paying end of this as are most individuals here and would love to have my money go a bit further with stuff in the hobby, but I know there are very few flourishing establishments at current prices, and the successful ones tend to have monopolistic traits. I believe the answer is a mixed bag, but I am curious to see who might have an opinion on this. High margins should attract competition, but that’s easier said than done, specially in small niches.

If I could I would love to go over the balance sheet and income statement on some of the firms in our hobby, but I doubt I’ll be seeing them listed on the major exchanges anytime soon.
 
I had the idea where I wanted to maintain many small tanks so I could create 'micro-environments' unique to specific coral. Today, automation in tank operation is 'high-end-expensive' and targeted a single largish tank. So, I built my own....component cost under $75 for all of the automation management electronics and DOS. Probes, lights, and high-flow pumps are independent since they have to scale with tanks mostly. After doing all of that I thought....hey maybe there are others...and even a market....for something like this. As it turns out, there are just not that many Reefers out there. So to go after a sub-section around Nano-tanks was an even smaller market....

In the end, my feeling is that the market is small. So, in order to truly change the price curve for gear, the market has to become significantly larger....think 10x to change a price curve based on volume. OK, how do we get 10x more reefers? Well, reefing needs to be way way easier and the science just isn't there yet IMHO. For some reason, there are people here in BAR that are just successful and they can share their recipe...and many of those recipes are similar...but almost never the same enough to package up. I think there are far more unsuccessful reefers than successful ones. This is partly because we have to build an ENTIRE ecosystem in my opinion.

We are getting there. Nano-AIO, LEDs, and general recipe components (patience, bio-diversity, seeding, QT/Dipping) have brought people like me in...where I think I would have never gone after a 100G starter tank. I do think the next problem is in the electronics/automation/probes/maintenance part of the successful recipe problem. Those just don't scale down to 10-20g starter tanks for cost or functionality.

Look, I would LOVE for us all to be in a state where we got to enjoy our tanks inhabitants with high reliability. Today, recipe discussions are about how to get stability with the combination of gallonage, components, and inhabitants we each have. Wouldn't it be AWESOME if the base level of balance and reliable was taken care of by a dynamic mostly-automated management system so that we could spend time talking about propagation and how to trigger spawning? Uplevel the entire conversation to some really neat eco-system problems.

So, that is my $.02: Small market....grow through Nano....which needs better recipes and dynamic automation that changes with the tank inhabitants.
 
I think there’s a large dynamic with government regulation and inflation that’s carrying the costs beyond the average person as our incomes just aren’t keeping up. A large part of this is energy inflation. These factors are something we can’t control and will most likely make fish keeping a top 10% only hobby in the next 10-20 yrs or less. At least for anything over a certain size range. At 42 cents kWh and climbing the average 100g reef tank is now hitting a couple hundred a month.

Unless energy becomes cheap again the hobby for most will be toast. Especially since energy costs are pushed through to us at every level.
 
Da_Neefer said:
I think there’s a large dynamic with government regulation and inflation that’s carrying the costs beyond the average person as our incomes just aren’t keeping up. A large part of this is energy inflation. These factors are something we can’t control and will most likely make fish keeping a top 10% only hobby in the next 10-20 yrs or less. At least for anything over a certain size range. At 42 cents kWh and climbing the average 100g reef tank is now hitting a couple hundred a month.

Unless energy becomes cheap again the hobby for most will be toast. Especially since energy costs are pushed through to us at every level.
Click to expand...
I can relate. My energy bill last month was 850 for 900sqft home not running heat.
 
Blaise006 said:
The problem with the costs of Reefkeeping.

Specially in California, we see the impacts to our wallets on all fronts. Utilities, shipping, inflation, etc. I am writing this because I feel I have seen a large increase in posts about it, probably just recency bias honestly. So I wanted to pose the question, what are most of the things we commonly buy worth and is a business viable at lower prices?

A bit of background on me: I have been working in the financial field for 9 years, but only as an analyst for three of them. I am a member of the Chartered Financial Analyst Institute, an education program for financial professionals. I spent the majority of my career working in structured products like interest rate swaps, credit default swaps, and various other financial instruments.

Do people view the industry as having excessive margins? Are costs assumed to be lower by the public then they actually are, or vice versa?

I am on the paying end of this as are most individuals here and would love to have my money go a bit further with stuff in the hobby, but I know there are very few flourishing establishments at current prices, and the successful ones tend to have monopolistic traits. I believe the answer is a mixed bag, but I am curious to see who might have an opinion on this. High margins should attract competition, but that’s easier said than done, specially in small niches.

If I could I would love to go over the balance sheet and income statement on some of the firms in our hobby, but I doubt I’ll be seeing them listed on the major exchanges anytime soon.
Click to expand...

Most aquaria biz aren't operating with excessive margins. Some of the supplement companies are, but for the most part, you're lucky if you hit 30%
 
Part of the fun (for me) is making some of my own equipment and doo-dads for a reef tank. Some stuff is beyond me, so I buy it, but there are some simple things to make.
I mean, even the famous 2-part calc/alk formula is an attempt at reducing costs (or rather, avoiding expenses!). And using pickling lime instead of rebranded "Kalkwasser" help.
I think "making reefing a bit cheaper" is basically how Bulk Reef Supply got started as a company, though they certainly will sell you expensive stuff now.

Changes in knowledge and technology help us too. For instance, instead of running 3 175W metal halide lights, you can now run 3 LED lights (of whatever lower wattage).
The club helps too. Get frags by trading, swap old equipment, etc, etc.

Seriously, step one to save money is ... join BAR.
 
to continue operating my reef tank is not bad at all. My monthly power bill right now is about $150 a month. My roof is littered with solar. Throw in some fish food and water changes and supplies its still very doable. What hurts is the up front purchase of tank , lights etc. Also depends on your taste in corals and fish. That part can also costly
 
I didn't know that about BRS....but I have to say I've bought a few things from them but mostly in return for the awesome research/video content. Their bio diversity tank seeding comparison video really cemented some concepts and a direction for me. That was probably all known before by experienced reefers but hadn't been cemented in the community...or a majority even...so it was super valuable.

BAR is the most valuable for me as well...but when it comes to recipes....BAR still has a lot of variations and maybe even some disagreements. A, "1-2-3 tank start guide for the first time reefer according to BAR" with maybe a big tank and small tank variant would be AWESOME! I read that 1-pager from Neptune Aquatics like 20 times as I got started....and it had nothing about feeding, copepods, etc that was actionable. I guess I should just write one for Nano tanks and have the group comment to see if we can reach a conclusion on at least one recipe, not the only one, but at least one, that has reasonably high support from BAR and has been proven out.
 
On line stores / brick and mortar. IE:BRS, aquacave, LFS , etc. Will their prices come down ? Probably not ? Why ? Because if they sold it to you at 8 dollars last year and this year they raised it to 10. Why would they go back to 8 or less. Doesn’t make business sense. Plus everything is going up rent, man power, utilities, etc.

So, what to do ? I believe every person needs to do a power audit on their aquarium. Most people believe lights are the largest power draw. In reality, I believe that the pumps, heaters are the largest with lights coming in third. Last year I set up an off grid solar system to run my aquarium. Doing so I had to honestly do a detailed power audit of what each component was using. I can tell you that they use way more power than listed. Example an awesome skimmer. It’s sized for a 75 gallon. Pump said 18watts. I thought awesome. That little pump pulls 50 watts. Hummmmm. Crazy right.

so bottom line is….. think out of the box. Know what you’re plugging in and how much energy it really uses. Most of the time. We don’t really need all that additives , extra pump for this and that. and what not. We don’t even really need a sump if you want to get down and dirty.
 
My guess is the livestock doesn't have unexpected margins when you look at it in totality across the entire supply chain. The excessive stuff is luxury items that saltwater nerds (such as this group incl myself) buy. You can get nice clownfish for $20 if you aren't looking for SnowflakeUberJustReleasedFooBarz. Similarly the high quality frags you can get at places like Neptune for $10 were shocking to me when I rejoined the hobby. There's stuff in there for $10 that years ago would've been $50 and bought online; everyone just went crazy and started wanting UberLuxury$500Torches.

Equipment is a totally different beast though. Apex and other controllers are extraordinarily expensive. The hardware shouldn't exist, and should just be standard smart home devices. A EB832 is nearly $300; a Kasa smart outlet is $55 (and goes on sale below that). A Apex JR is $300, and if you individually bought similar pieces at consumer prices (a probe, 2 sensors, a raspberry pi) it'd be $100-$150. A $200 Versa peristaltic pump is a Jamoer pump head ($50 for consumer) and $10 worth of electronics. The markups when components are bought in bulk must be insanely high.

I don't disparage these folks, because the market they're selling is small and people that are throwing money at them, but the margins are certainly very high. The R&D also doesn't seem like it'd be high. There's seemingly minimal research getting done, and the innovations are taking research from other domains (eg LED lighting) and engineering/packaging them.

Ways to make it cheaper?
  • focus on looks, not luxury -- is that $500 coral really 10x nicer than the $50 one?
  • use good, not high end, equipment -- you don't need AP9x to light your tank
  • place corals and equipment in combination -- you can get away with a lot less light and a lot less flow if you put a SPS under your light and next to your powerhead, versus on the sand bed at the far end of a tank
  • buy used -- reallllly good deals on tanks and equipment out there.
    • do not build your own -- as a counter to some other points, I think building your own is almost always more expensive than buying comparable used stuff. I DIY a lot of stuff because it's fun to engineer things and look at my tank and say "I designed, printed, and put the electronics to build that". I enjoy that more than the tank sometimes. However the cost of materials and tools is never really cheaper than buying used. I think in woodworking the saying is something like "I can buy that table from Ikea for $30 OR better I can buy $250 worth of tools and wood and build it myself!" Definitely applies here too.

Do I personally do these things? Not necessarily, because this is the main hobby I now spend my disposable income on.
 
Is it possible to save money by buying right the first time? Feels like many of us have multiple versions/vendors/etc of the same thing? Maybe we call it an upgrade or a bad first sizing. I'm just wondering how much gear is currently running VS how much is in a box in the garage, under the tank, etc and not in use any longer? A quick way to spend money is to spend it twice or, to @richiev 's point, DIY it once and then buy it once?
 
Prestondeeply said:
Is it possible to save money by buying right the first time? Feels like many of us have multiple versions/vendors/etc of the same thing? Maybe we call it an upgrade or a bad first sizing. I'm just wondering how much gear is currently running VS how much is in a box in the garage, under the tank, etc and not in use any longer? A quick way to spend money is to spend it twice or, to @richiev 's point, DIY it once and then buy it once?
Click to expand...

> DIY it once and then buy it once

attacked-attack.gif


That one cuts to the core :).

I think "buying right the first time" can be helpful, but in my experience it's also kinda overrated. I think a lot of joy comes from the research, learning, improve, cycle. In my experience "buy right the first time" is code for "instead of spending $50 first, then later another $200; spend $200 first, then later another $400".

Tastes, budgets, and interest change over time. Tech also advances constantly. Even if you're buying used, the type of used stuff you would buy today is going to be a year more dated than the type of used thing you can buy a year from now.
 
richiev said:
> DIY it once and then buy it once

attacked-attack.gif


That one cuts to the core :).

I think "buying right the first time" can be helpful, but in my experience it's also kinda overrated. I think a lot of joy comes from the research, learning, improve, cycle. In my experience "buy right the first time" is code for "instead of spending $50 first, then later another $200; spend $200 first, then later another $400".

Tastes, budgets, and interest change over time. Tech also advances constantly. Even if you're buying used, the type of used stuff you would buy today is going to be a year more dated than the type of used thing you can buy a year from now.
Click to expand...
I wasn't attacking...you've seen my reefpi setup....I spent a hundred hours maybe on that....and I enjoyed it most of that time. ;-)
 
First I would I would like to say that I truly appreciate this club. I am not sure if I would still be in the hobby without it between the knowledge, DBTC, trading, and other club activities. I wonder how many other local clubs there are and do they have the same extensive interactions?

I look at reef central and I can see answers float in from all parts of the country.

But to @Prestondeeply and @Blaise006 inputs I will add another component -the time sink! After you have perhaps established a big enough tank (~50 gal) plus an apex perhaps -next comes the time trying to solve all the issues that come with a tank-chemistry , algae, mechanical, programming apex.

Plus maintenance of these items. It is def a love of labor for sure. But I cannot tell you how much time I have had to research various topics to keep this tank going.

I love the problem solving of algae, other issues in the tanks. Do I tackle it by biological, chemical, or mechanical means?

I don’t enjoy when the mechanical/electrical issues surface (protein skimmer or apex issues)

Yet I think a lot of people either don’t have the time or patience to keep it going and then suddenly a hair/bubble algae/cyano issue crops up and/or a tank crash (over vacation ) destroys the tank and they give up.

Also my 2 cents is when they have their first major water spill (as in gallons of water on the floor) -they or their spouse has some 2nd opinions on this.

I’ll leave at this -someone once asked me what relaxes me-my fish tank. What stresses you out-my fish tank.

I do love having a reef tank in the house. But also I feel fortunate that not only do we have a great forum but also some great local LFS for SW namely now high tide & @under_water_ninja but also AC, Neptune and others. If I lived in an area without these resources would I be in the hobby if I had to rely on delivery of fish?

I do think barriers to entry are coming down-but it’s inching along for sure.
 
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