Working out what a bag of your coffee actually costs

Most roasteries can tell you what they paid per pound of green. Rather fewer can tell you what a finished retail bag costs them, and the gap between those two numbers is where margin quietly disappears.

Roast loss divides, it does not multiply

This is the single most common error and it is worth being precise about. If you lose 15% in the roast, a pound of roasted coffee does not cost 15% more than a pound of green. It costs the green price divided by 0.85, which is 17.6% more.

At $4.00 a pound green and 15% loss, your roasted cost is $4.71, not $4.60. Eleven cents does not sound like much until it is every pound you sell.

What gets left out

• The bag, the valve, the label and the box. Individually trivial, collectively often more than a dollar.
• Labour for roasting and for packing, which are different rates and different people.
• Gas. Measurable, rarely measured, and it moves with the profile.
• The coffee that did not sell. If 5% goes stale, the 95% has to carry it.
• Samples and cuppings. Real coffee, roasted and given away, and correctly a cost of doing business.

The sanity check

Take last month. Total green cost, total packaging, total labour touching production, divided by bags sold. That figure is blunt and it is honest, and it is usually higher than the per-bag number people carry in their heads.

If your bottom-up estimate and that top-down figure disagree by more than a few percent, the bottom-up one is missing something from the list above.

There is a free calculator for this on our tools page that does the arithmetic including the division most spreadsheets get wrong. It requires no signup and computes in your browser. Use it and close the tab; that is a perfectly good outcome for us.