Pete is eating SCHIP on all his cigars still, so any retailer telling you that SCHIP factors in on these is full of it. Also, I'd never buy by phone/internet who charges for "operational costs." The MSRP on cigars is always a HUGE markup over what the retailers pay ... if they want to charge in-house customers more, of course that's their business.
I'd like to point out that a retailer has a lot of expenses (and state taxes are one of those expenses) that the large online and catalogue businesses do not. Also, the online/catalogue businesses do a volume that is miles beyond what a small local business does. A cigar store in a town of 100,000 has to manage a lot of expenses that aren't a factor when you're moving millions of cigars a day.
Pete has long been one of the few who eat SCHIP. It doesn't apply across the board (meaning other manufacturers) and my point on that was that there are a lot of costs people seem to be unaware of.
To the MSRP issue: in my experience, MSRP (by the way, I'd like to point out that the 'S' is for suggested and the 'M' doesn't mean mandatory) is often (STRESSING THE POINT: NOT THE CASE WITH PETE, BUT VERY, VERY OFTEN) well below the price a retailer would have to sell for in order to keep his head above water. It'd be a great world if everything was sold at cost, but it would be very difficult to keep stores open in that reality. I won't mention names, but there are a lot of manufacturers that set an MSRP that is ridiculously out of line with what a store has to charge in order to stay in business. (Luckily for me, to say nothing of the national economy if this line of thinking were taken to its logical end, cigar stores don't have self checkout yet.) Many of them don't account for SCHIP, or state tax, or apparently the cost of the cigar. In my experience, that markup is far from 'huge.' Also, our customers (and I'm sure many other retailers do the same) often receive considerations that make the markup anything but huge. I can say in full confidence that we are not screwing anyone. I've heard of retailers gouging, but I've never been a part of it and haven't met a retailer who has.