On occasion, I’ll have before me a tea unlike any teas I have tasted in a while. It will have a unique mouthfeel, complex flavor notes… and, much less appetizing, a high price point. This leaves me having to figure out if this tea is actually worth the steep fee.

To make the distinction between tea — or anything, really — that’s reasonably priced versus significantly marked up, you first need to understand what goes into that price. Luckily there are a few objective variables that you can take into account when determining whether the tea you’re drinking is fairly priced.

LOCATION

The first factor is probably the most obvious. Location is without a doubt extremely important for tea, since the soil and climate of an area stand to make the plants more strong and healthy, and therefore produce better tea. The farmers know this, and the market does as well. There’s a reason why many famous teas are known by their locations — teas like Shi Feng Long Jing, Huang Shan Mao Feng, Liu An Gua Pian and Meng Ding Huang Ya are prime examples.

Even lower grades of tea from a famous location can be priced on the higher side, because there is an understanding that even when the tea isn’t produced as skillfully, the conditions ensure it will likely still have good qualities.

EFFORT

Making good tea is a laborious process, and time is money. That’s why another factor to be considered is the effort farmers put into making this tea.

Did he or she watch it carefully all night looking for the best time to turn it, or just put on a timer and go to bed? A lot of the price that farmers give is based on the amount of effort they put into making the tea.

Truly handmade tea will never be sold at 200RMB per jin (29USD per 0.5kg), because it takes way too much time and effort to justify that price point. (I’m looking at you, shady Tie Guan Yin makers.)

Understanding the correlation between effort and price will not only help you understand the high price for a well made tea, but also clue you into when the farmer maybe didn’t put as much skill into the tea as he claims he did.

DEMAND

The variable of demand is probably the most important, and gauging it can be a little more difficult.

You can have the best location for a single tea, and put all the time and care in the world into making it, but if nobody wants to buy it, it won’t sell for much — plain and simple.

Demand is probably the biggest influence on the tea market as a whole. If we woke up tomorrow to a sudden high demand for tea grown in abandoned outhouses, you’d have farmers all over the country selling their outhouse oolong instantly for sky-high prices.

The fame of terroir can only really come to fruition after its tea garners a high demand. So, ultimately, demand works in a kind of ephemeral triangle with the other two factors, each affecting the other.

There is a fourth variable, of course — quality — but that is much harder to judge. Even if a farmer puts in very little effort, he might still get lucky and produce a good tea, which he will sell for a higher price.

But to factor quality into price, one must understand what it means to be a quality tea, which is a whole other ball game. The three variables I mentioned above are things you can directly apply to your purchase when you are considering the price of a tea that you have already found to be good quality.

Determining an appropriate price for the tea you’re drinking is never a hard science. There are a lot of factors that come into play, some of which you can’t always foresee. But thinking about these things will not only help you understand in some cases why tea is so expensive, but also allow you to question in others why a tea is so cheap.