What shops are paying for roasted beans

caffe biscotto

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Hahaha Andrew, you must reread the topic, LOL.
He's asking how much money coffee shops are currently paying for roasted beans.
Too funny. :D
 

cafemakers

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Oh, so that's what he or she meant... my mistake. ;)

The wholesale cost of roasted coffee depends largely on the varietals and quality selected, as well as volume of coffee consumed, which provides leverage for price negotiation. I suspect that on the bottom end (office coffee service) retailers in North America are paying somewhere in the vicinity of US$4.50 / lb wholesale and on the upper end (Stumptown, Intelligentsia, Counter Culture, 49th Parallel and better micro roasters) between US$7.00 to $8.50 for "average" varietals and blends or SOs intended for espresso. In developing markets around the world, I've seen chains pay (and some fairly sizable ones) as much as 40 euro / kg (US$25 / lb) for something consistent but not exceptional, like Illy.

Keep in mind, though, that depending on the origins selected, prices may vary dramatically: for example, if a business specializes in premium micro lot coffees (94+ review), it may be paying $30 - $50 / lb wholesale for something like a Panama Esmeralda, Ethiopia Beloya or the natural process Kona Sweet from my friends down the road at Hula Daddy.

Not sure how, but hope that helps!
 
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wmark

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It all helps.

I was unsure what to charge a shop as I have never sold to a shop.

Like any good capitalist, I want to be able to get as much as I can without resorting to calculating my costs and then taking an acceptable margin...............does anyone use that model past the 1960's ?
 

cafemakers

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Applying a simple commodity pricing model to a specialty product seems like a bad idea. You might want to take a look at book that I like very much, which may give you some guidance on the subject, called The Strategy and Tactics of Pricing.

Consider the perception of value in addition to actual value. Customers that may otherwise be attracted to your company's products may be dissuaded by the substantial difference in your cost versus market leaders. A price set too low implies poor quality, whether or not this is the case.

Furthermore, by setting prices too low, your business will attract opportunity seeking customers who value pricing over quality and service. These sorts of customers generally see coffee as an expense rather than an income generating opportunity and will constantly look for other sources.

The better business, in my experience, is on the upper end of the specialty coffee market. You don't want to put yourself in competition with OCS suppliers and foodservice companies that thrive on volume or cross-selling with other products, as their size puts the smaller roaster at an immediate disadvantage.

Good luck,

Andrew
 
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wmark

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I am aware of using pricing for segmentation in the retail environment.


The difficulty for me was the wholesale pricing. (to the retailer stores)

A concept being toyed with was to price the product higher in the store in order to drive them to your website. Yes you would be competing with your customer.

As mentioned above, the fair margin model of just tacking on 33% is from a different time and place. If microsoft used that concept, windows would be selling for $1.99
 

caffe biscotto

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wmark said:
As mentioned above, the fair margin model of just tacking on 33% is from a different time and place. If microsoft used that concept, windows would be selling for $1.99

Tell me about it, music cds would only retail for like 25 cents, LOL.
 

thewilliams1

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wmark said:
A concept being toyed with was to price the product higher in the store in order to drive them to your website. Yes you would be competing with your customer.

Can you elaborate on the motive here a bit?

I'm getting a hint of absolute genius here.. but I cant understand why lol.
 
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wmark

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Segmentation and direct sales.

Being in a store is also a form of advertising/marketing

There is a tradeoff between wholesale price, commissions paid etc to be in a store and shipping costs, packaging etc to sell from your website.
 

GreenDude

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This is a fantastic thread :)

There are a lot of variables i consider when selling coffee to cafes.
1. Are they just trying to save money?
2. Do they really want to offer great coffee?
3. Are they interested in micro-lots?
4. Are they willing to learn and try different things?
5. Are the baristas any good?

These all weigh on my decision when pricing comes into play. I have found that I can offer a basic drip coffee, a higher end specialty coffee, and a nice espresso. I price these all differently and accordingly. So Mr. cafe owner has 3 price tiers to play with. He is offering exceptional coffee (micros, COE Coffee) to his customers at a higher price, but also has the general coffee as well.

I usually price my 'general' coffee at $5.50 / Lb. The higher end ones go up to $ 9.00

I guess the point I am trying to make is that everyone is different (cafes) , and you need to figure out what they are willing to pay, and then work with them.
 
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wmark

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For me, that model takes way too much thinking. Also, people talk so to differentiate pricing to two similar retailers may get around.

I figured out a price. What I have'nt decided is if I want to give rebates/discounts based on volume.
 
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