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what is a fair price for liquid gold?

edited January 1970 in Have your say
I work in a relatively upmarket cafe in an affluent Melbourne Suburb. We use a premium bean ($30 a kg) and high quality milk. I was recently attacked by a customer who thought paying $3 for a flat white was both "obscene and disgusting". I realise that the mark up on coffee is higher than most forms of food and beverage but am convinced that $3 is not excessive. My questions are:

- What factors should be taken into consideration when pricing a cup of coffee?

- How much should the price of the bean effect the sale price of a cup?

- Can having a top barista or well trained espresso coffee maker behind the machine add considerable worth to a cup?

- should the price of "take away" and "have in" vary considerably? If so then by how much

- Is it common practise to charge less for a short black and how much less?

I am very interested to hear how the price of coffee has evolved and what factors have lead to the average cup being around the $3 mark give or take a little at both ends.

What is the cheapest and most expensive price one has paid for a standard cup in the last 12 months?

" If it is offensive to your pallet, send it back! If funds are not returned, then never come back!"

bonya

Comments

  • Hey, I bet she drives a new BMW (on the tax payers funded finance) 3 bucks for a cup of life is not far of the mark. 3 bucks for a spot of the elixir is even closer to the mark. 3 bucks for the new late nite afrodesiac (spelling??) is cheap! Mate, next time this unsophisicated CHEAPSCATE Blimp comes in, offer her one on the house and politely tell them to POQ and DCBS I know that in a hotel in Sydney they charge 12 bucks for a cappuccino 'swill'! Keep up the good work. Where is your cafe???? PS the DCBS means Dont Come Back Soon
  • We charge $3.80 for a cap, fw, sb, smac, $4.20 for a long mac $4.50 for a hot choc....in an average area of Perth. These prices are quite up there with the most expensive in Perth and the end product isn't really that fantastic. I try to do my best with the equipment and supplies I am given, but there is only so much an EMO can do before their talent is runs out :) Compare this to somewhere like Core, where the coffee is unbelievable and only costs a fraction of the price :) You say the area is up-market and affluent...what does she expect to pay? I wouldn't worry as that price is MORE than reasonable. Mimmo
  • It really depends on the quality of service & coffee. ;DWe charge $3 for coffee's except mac, ristreto & affogato's.  :( LE
  • Hi guys - have just had an enquiry from a reporter from one of the big papers about coffee prices (to the consumer). Is there any evidence they're going up because of the increasing popularity of coffee? As far as I can tell, most prices (at least at the cafes i frequent) tend to gravitate around the $3.00 mark.
  • Hi I think that $3 is a good price. Here in WA it seems that as you get closer to the city the dearer the coffee. Quality is not often a factor as i have seen places selling top quality beans made well for less than $3 a cup and inner city places selling budget beans made poorly at a premium, have seen one charging $4.50 for a flat white. :( LE
  • Having travelled extensively up the East Coast of recent I can definitely say that Melbourne coffee prices are by far on the lower end of the scale.  And I can tell you that my coffee supplier has one recommended retail price list for Melbourne, and another for his Sydney clients. I also use a premium product, but charge below recommended retail for my introductory priced items (sm: $2.8), but get a better margin on my med and lg coffees ($3.4 & $4.4 respectively) What the consumer needs to bear in mind when it comes to coffee prices, is that in a rapidly escalating cafe culture, it is in many places, mine included, completely acceptable for a customer to rock up for a coffee, and a coffee only, and to occupy that table space for as long as they like. The way I look at it is, among other things, that the customer actually 'rents' that space for as long as they are there, and this needs to be taken into consideration in the overall pricing structure. Now, I don't mind paying top dollar for a quality coffee, and have often been charged $4.50 for a double shot soy latte (although not in Melbourne, in Sydney, Sunshine Coast and Byron Bay - and yes, even this seemingly exorbitant amount is, I believe, justifiable, when quality ingredients are combined by a skilful barista and talented floor staff to provide a rewarding and in all ways satisfying coffee experience. What really gets my goat, however, is when you fork out the top cashola for an inferior product, and poor service. As a general rule, if on unfamiliar territory, I will observe the coffee maker in operation, time the extraction on the coffee, make sure that they wipe the steam wand after use, flush out the group head on the coffee machine before pulling a shot, and wipe out the portafilter with a clean dry cloth before using. If even ONE of these requirements for making fine coffee is missing, my advice is to walk away to avoid disappointment. One of the benefits of owning your own establishment is being able to respond to cheapskates in kind. I have been known to, on the odd, rare, occasion, respond to the accusation that our coffee is too expensive, by replying, 'actually, Madam, I think that the problem is that you are too cheap.' Or; 'if you wish to pay less for the dishwater that they serve elsewhere, then by all means, be my guest.' I think at the end of the day, though, quality control, as well as quality ingredients should be the main determining factor when it comes to pricing coffee. If you can ABSOLUTELY GUARANTEE that each and every coffee you serve is going to be bloody good, in the very least, and completely amazing, as the preferred starting point, then this should be remunerated in kind. Not many places can offer that kind of guarantee, however.  I can think of probably six places in Melbourne that would rate as among the coffee icon establishments of our times, with
  • In Brookvale (Sydney), the common price is about $2.50 for a small cappuccino. However, I believe they charge on a time basis as their shots seem to rarely last more than about 15 seconds. In Crows Nest, the average seems to be around $3.00 - $3.50. One place in Crowie that serves the big V charge something like $5 for a 'dine in' coffee (I could be wrong). I will admit that they probably get the best out of that rubbish, but still, it seems pricey. P
  • On the assumption of a good barista, good bean and good gear: $3 for in-house coffee $2.50 for espresso, mac etc no extra charge for strong, yes to extra for soy! ice choc and ice coffee $3.50 - $4 depending on your ice cream quality As for all these crazy new light soy half water chai's - charge as much as you can!!!! i think that these should be (and generally are) the pricing standard. $3 is a nice even two coins :)
  • I don't think $3 to $3.50 is anything more than reasonable, even for an average coffee. Unfortunatley you will always get someone complaining even if it's only $2. It's just in some peoples nature to be a pain in the arse. As hard as it is, don't let it get under your skin. When I had my cafe, a young female solicitor always came in, dressed right up and looking serious. She was having a go at me because she thought raisin toast should cost no more than 50 cents, she'd worked it out she said. I refused to charge her for it two days in a row and she never came back. She must have got the message. You probably get heaps of positive messages through the day but it's the one negative in a hundred that stays in you mind.
  • I think looking at it from a customers perspective helps to understand what a reasonable price for a coffee is. Price of coffee and barista aside is the coffee worth the amount being asked, customers rarely understand anything more than what the coffees are called. Personally I don't mind paying above $3.00 for a 'good' coffee as long as its always consistant. Some places charge $3.50 for something that's more like dirty water and thats not even upmarket. Some customers just dont realise that at the end of the day cafe/restaurant owners are there to make a living and not merely for their entertainment, maybe they need buy a monkey ? :)
  • When pricing a coffee obviously the quality of the bean, milk, machinery costs, fixed expences such as rent etc should be taken into consideration. However the price competitors are charging must be taken into consideration. For example if your next door neighbour is selling coffee for 2.8 it may be risky to charge 3. Even in the event your coffee is of better quality and costs more to produce, not every consumer is capable of distinguishing between a great cup and an ok cup. Obviously some customers will be able to tell and will be prepared to pay the extra but the average consumer will probably be heavily influenced by price.   Thats my thoughts, but what do you guys think? Should you try and undercut your nextdoor neighbour, match them or if your coffee is of higher quality charge more. Also what do u guys think of loyalty cards (every 8th coffee free etc). I know that the customers at the cafe i work at seem to place a great deal of value on them, with approx 4 out of 5 customers presenting a card for stamping. WOuld some people  not drink coffee there if such a promotion was removed and do some ppl deliberately seek out places who offer this promotion? thanks, bonya
  • This term 'fair price' is really another way of saying 'what do we think the customer is prepared to pay'. However, lets be realistic... its got nothing to do with what we 'think' the customer is prepared to pay. Its got to do with making and maintaining a profit margin. We should be looking at this from a business perspective and working out what we need to charge the customer for the business to make a PROFIT after owners wages have been taken into account. For reference, my cafe is based on the North Shore of Sydney. We charge: $2.80 Esp/Rist/Mac $3.00 Small (8oz) $3.50 Regular (12oz) $4.00 Large (16oz) 50c extra for soy, extra shot, syrups Almost all costs associated with running cafe businesses have gone up significantly over the past 6 months. Council outdoor seating, rates, rent, electricity, interest rates, petrol, raw material costs, etc etc etc... the list goes on. Nearly every supplier I deal with has had at least one price increase (some have had 2) this yr. Coca Cola was the latest (sorry folks, I sold my soul to the devil and let them put a fridge in!!) But customers dont wont to pay more than $2 for a can of coke either! From a customers perspective, there definately seems to be a psychological barrier in Sydney on charging more that $3.00 for a small coffee, regardless of "how good" the coffee is. As an independant owner/operator, I struggle to maintain profitability in the current economic climate while attempting to resist the need to increase prices from a $3.00 'entry point' on the key product that I sell. Instead, I am attempting to "squeeze" my suppliers. I asked one supplyer to scrap their "delivery fuel levy" if I got us down to just one delivery a week thereby saving them petrol - they agreed!. I scrapped my Detpak cups in favour of double wall cups imported from China which cost literally half the price, and surprisingly are just as good! I have also tried to 'hide' some minor price increases on food items which are less price sensitive or noticable than increasing the price of the coffee. None of this 'gets me ahead of the game' it just keeps me at the same financial point as last yr... Till the next supplier driven price increase, which will have to result in a coffee price increase as I have now almost exhausted all other cost cutting options I can think of. I dont blame my suppliers for this... they are being forced by external factors as well. I know I am constantly resisting the urge to break that $3.00 entry point, even though my MYOB reports are telling me I need to do something about it soon or risk my business moving from profitability back to a break even situation.
  • yes, I too can say that I am in the process of changing over from my detpak cups to something else - I sell around 650 takeaway coffees a day, using premium coffee, in a university environment, and I too charge below recommended retail to increase my sales. As a result I've got great cash flow for half the year, and minimal profitability for the rest. Time to redress the balance. ACG
  • Just back from a week in Sydney, coffee prices follow - Darling Harbour $3.60 The Rocks $3.90 Our Hotel $4.80 in the morning & $5.00 at night!! & a small cup!!! Our local coffee shop in Vic @ $2.90 tastes just as good.
  • I was recently attacked by a customer who thought paying $3 for a flat white was both "obscene and disgusting".
    I agree that $3 for a poorly made flat white is probably 'obscene and dgusting', although I wouldn't word it that way and especially not to the PBTC.. I just wouldn't order coffee there anymore. However, if I enjoy the coffee then I see no dramas in paying $3 for a flat white. The cafe/owner has to pay for: - wages, super, sick leave - rent - electicity - beans - milk - staff training (I hope) plus, sometimes it's too much effort to sun a few shots through my machine and adjust the grind, then clean my machine up and what not at home if I'm only going to be making 1-2 coffees.
  • I am in line with Tamper and ACG'posting. We do mainly coffees with food only as a sideline. The cost of preparing a cup of coffee has definately gone up over the past 12 months. We tried hard not to pass the cost on to customers. With the result that the balance sheet looked a lot less healthy this financial year even with sales up. We are now looking at reducing cost - etc changing from Det pac to ?, bargening with suppliers etc and putting the prices for coffee up. $2.70 for the real thing $3.00 for 8oz $3.50 for 12 oz  Milk coffees. No charge for extra shots, but extra for syrups and soy The customer response so far has been great with nearly all of them saying our coffee and our smile is still of real value to them even with the added 50cents. Mokka  
  • I forgot to add GST to my costs list which is a big one... there's 10% of the revenue gone everytime. I don't know specifics of GST - I assume you pay it at the end of every financial year and not on a weekly/monthly basis? Anyway, surely the owner/manager would at least put this money in an account earning interest on it so it's not just dead money.. maybe the more gambling types would invest it, I know I would! ;D
  • ATCG: 800 coffees per day at your extraction rate of 40sec per, given you do 9 to 5 mon to fri with 50 kgs per week......something doesn't add up. Oh unless you have one barista per group of course. Wow melbourne Uni must be so impressed.
  • Barging in, even so it is not directed at me : Why doesn't it add up ? Last Sunday for us: (and quite typical) 11am to 3pm (4 hours) 547 coffees/ ~ 7kg. 2 guys on the machine plus 1 as pourer/runner/customer service etc. Is it fun - No, definitely not! but it is absolutely possible if you have a good team. They certainly deserve to be taken out for a drink after  ;) Mokka
  • Uups, just woke up to the 40 sec extraction time  ??? Mokka
  • Barging in, even so it is not directed at me : Why doesn't it add up ? Last Sunday for us: (and quite typical) 11am to 3pm (4 hours) 547 coffees/ ~ 7kg.
    I was calculating at 16grams of  grounds per. 40 second(?)extraction over the 8 hour day(previous posts reveal ATCG pays his baritsa for a twelve hour day, lots of a/h cleaning I suppose. so...16grams times 547 coffees is just over 8.75kgs, simple. Had you been doing a 40 sec exstraction, without stopping between shots it would take a little over 6 hours without a millisecond gap between shots. I imagine you to be using a 25-30sec extraction in which case 4 hours is spot on. I'm sorry, I know it sounds obsessive/compulsive. I try to moderate my interrogation but sometimes I can't help myself, I will now go to my room without dessert. ;)
  • He,it's good to have a mathematician to keep the more creative  souls among us on track. Because of your little exercise I've just learned and also checked that I actually did use more coffee than quoted. A gold star plus dessert for you  :) Mokka
  • Awe shucks. Thanks for that! :-*
  • re-raised for comment -A
  • Hi Have to agree with everything that Andreas M said, particularly with the huge raft of increases that most cafe owners have had to absorb in the last 12 months. There really is no fair price, simply what people are willing to pay.  The price of food and coffee  is determined by a lot of variables such as rent, cost of goods and staff.  By that I mean, a cafe which uses a premium boutique blend, employs a competent skilled barista and paying premium rent has to charge more than a cafe which uses a $18.00/kg blend, with a coffee maker who also doubles as the sandwich hand and grill cook in a small surburban shopping centre. In the city of Sydney, the price of coffee seems to buck the trend (charging between $2.50 and $3.00 for an 8 oz) simply due to the massive amount of competition there is.  Everywhere you turn there is an espresso bar or cafe.  Despite the huge rents they are paying, they are able to charge less simply due to the huge volumes they are doing, and if they don't follow suit, they will lose patronage. My cafe is in a very affluent suburb in Sydney.  For the last 2 years, we have been charging: $3.00 8 oz takeaway        $3.50 cup sit in $3.50 12 oz takeaway      $4.00 mug sit in No one even bats an eyelid, and we have increased usage from 28kgs/week to 40kgs/week in that time.  At the start of this year, we began charging for extra shots and soy which we hadn't before.  Once again, no reaction as people simply love the coffee we serve.  I note that the franchises such as Michels and GJ's are charging more than us, so we feel justified. The price of making a cup of coffee will continue to rise as the cost of milk, coffee and staff increases.  Rule of thumb is that a cafe must make a profit of 300 to 400% on their cost of sales in order to make a decent living (to justify the 60 hour weeks we do).  As it stands the cost of making a cup of coffee is now running at about $1.10, so $3.50 does seem like a fair price.  Assuming that we make an average of 70 cups of coffee (small and large) to a kg of coffee: Barista @ $22.00/hour average          $0.30c per cup Coffee beans @ $24.00/kg                 $0.35c per cup Milk (average of reg. and skim price)  $0.30c per cup Cost of cup and lid                             $0.15c per cup Rgds L2L
  • Sorry, previous post was in reply to  "Price of Coffee" subject in crema/trade page. Tks L2L
  • in line with L2L's last post, can we please have all comments relating to this on the 'Price of Coffee' thread on Trade Page; have locked this for that reason. -A
This discussion has been closed.

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