The Economics of (Really) Good Coffee

I like coffee. A lot. Enjoying coffee is one of life’s best and simple pleasures. It’s roasty, warm and inviting. And it allows us the best excuse to consume the most socially acceptable drug anywhere anytime (caffeine). It makes waking up better, it makes conversations better and if you are deep into the coffee rabbit hole, it makes you a tad bit more pretentious than you’d otherwise like to be. 

But enjoying good coffee doesn’t have to come at an expensive price or at the cost of FIRE. Really great coffee and financial independence are compatible with one another. And if you continue to read, you’ll find my guide in how I best optimize how to enjoy the best coffee of your life at a fraction of the cost of going to your local Starbucks or third wave coffee joint. 

What struck me to write this post and do these calculations is at one of my local coffee shops and roasters, they were offering a Hario v60 coffee pour for $5.50. I thought that was crazy, since I do that daily at my house! So I started really thinking about how to quantify the cost of going out for coffee and for those who buy coffee from a place like this every day. There is quite a debate around this, as there are some personal finance folks who scoff at the idea of cutting out your latte every day, and there are others who even created their own coffee company to sell their “20 cent iced coffee”. I think there lies somewhere in the middle, but my sell here is that I can teach you how to make really great, affordable coffee and you might find in my calculations that the decision to make coffee at home could be a tens of thousands dollar decision. 

$5.50/day

$2007.50/year

I will also outline a “budget” option and a “fancy pants” option. The budget option is for the person who likely doesn’t care too much about the coffee quality, they may enjoy a creamer along with it, the typical person who would buy coffee from a place like Starbucks. The “fancy pants” option is for the person who bleeds third wave coffee. They only support local roasters, they probably have a mustache and will thank me for showing them the way to make at home because they are loaded with student loan debt. 

There are six things you need to make really great coffee at home:

• Coffee (preferably whole bean)
• Coffee making vehicle (here we will discuss Hario v60)
• Coffee filters
• Coffee grinder
• Kitchen scale
• Electric kettle

Here’s where I’ve priced out each for our budget option. I skimmed Amazon for reasonable prices on what you will need to make coffee, your mileage may vary but I feel this is a reasonable median price on what you would pay for each respective item. 

Budget Option	Cost
Peets Coffee	$9.00
Hario V60	$11.35
V60 Coffee Filters	$6.82
Eletric Kettle	$30.00
Kitchen Scale	$10.00
Coffee Grinder	$25.00
Upfront Cost	$92.17

cups per bag	17
bags per year	21.5
cost of coffee per year	$193.24
cost of filters per year	$27.28
total cost per year	$296.87
per cup of coffee	$0.81

So in the budget option, we are at about $76 for the tools you need to make really great coffee. Now calculating the coffee, the budget, run of the mill whole bean coffee likely runs you about $9 per bag. I love buying when there are sales, so when you can buy coffee for $7 per bag if you buy 5 bags, that’s always a great deal to me because I know that $35 in coffee will last me probably 4 months or so. Always keep an eye on the “freshest by date”, but also know the important thing here is fresh ground coffee will outperform already ground coffee. This is your canary in the coalmine when it comes to making great coffee at home. 

But let’s say you don’t give a rip about buying in bulk, you are then buying about 22 bags of coffee per year, which is going to be around ~$200 per year. And the coffee filters will also be about ~$28 per year. So all in all, in your first year of your budget option, you can expect to spend around $300 for that year in getting your coffee gear and spending on coffee. That comes out to about 0.81 cents per cup of coffee, if you did this every day at home instead of going out to buy coffee elsewhere. If we compared to the $5.50 I saw at my local coffee shop, you would spend ~$2,000 buying a similar cup of coffee everyday. That’s an annual savings of $1,700!! Holy shit!

But you’re not the budget type of person. The budget person isn’t necessarily interested in the economics of making great coffee. Your a fancy pants, admit it. You need your locally roasted coffee to go with the John Coltrane record you bought at Target that you listen to on Sunday mornings. Let’s get into the fancy pants way.

Fancy Pants Option	Cost
Intelligencia Coffee (340g/bag)	$13.28
Hario V60	$11.35
V60 Coffee Filters (100/pack)	$6.82
Electric Gooseneck Kettle	$70.00
Kitchen Scale	$35.00
Coffee Grinder	$70.00
Upfront Cost	$206.45

cups per bag	17
bags per year	21.5
cost of coffee per year	$285.13
cost of filters per year	$27.28
total cost per year	$498.76
per cup per year	$1.37

In the fancy pants option, we’re at about ~$187 for the tools. We’re still using the Hario v60, and still the plastic one since that’s what James Hoffman still recommends. But the big cost increase here is on the kettle and grinder. See, you don’t want some ordinary kettle. You need the gooseneck kettle to get a proper coffee extraction and bloom. And cheap grinders just don’t grind the beans as consistently as you’d like, so we need to up the budget there for that and get a higher end one. 

As for coffee, local roasters or third wave pioneers are only acceptable (that’s what I prefer too). So I priced out about $14 bucks for this, as this is what a bag of Intelligencia goes for at my local store. 

By increasing the prices here, we’re looking at almost $500 in that first year for your coffee setup. That comes out to $1.37 per cup of coffee. Now, I almost remember the days where a Starbucks Americano only costs $2-$2.50, so this disparity doesn’t seem as impressive. Until you remember how inflation has wrecked coffee prices and now that’s like a $4 cup. Again though, that is a $1,500 savings each year on coffee if the alternative is buying everyday at a coffee shop!!

Now let’s extrapolate that to a decade. Over the course of 10 years, you would buy 215 bags of coffee. From our regular ol budget option, you’d spend $1,933 on coffee alone over 10 years. That’s a much as our local coffee joint in a year! Add in 10 years worth of filters and I also calculate that potentially you would need to replace your coffee maker, scale and kettle once over 10 years (which, probably isn’t that likely but let’s be charitable here). Our budget option over the course of 10 years is $2,338 with all that. That comes out to 0.64 cents per cup. Not too bad for over 3,600 cups of coffee. 

For the fancy pants option, you will spend ~$2,800 over the course of a decade on your high quality, ethically sourced coffee. Same logic applies, let’s say you need to replace supplies once over the decade and your total comes out to $3,478, or 0.95 cents per cup of coffee. 

Over the course of a decade, if you we’re to pay that $5.50 every day for ten years, you are looking at $20,000 for coffee!!

If we calculate the difference between $20,000 and the $2,338 from our budget options, you are left $17,750 richer. If you just put that money in a total stock market or S&P500 index fund getting an inflation adjusted 7% on your money, by the end of that decade of coffee goodness you’d have $29,346!! Insane!

Let/s do the same thing with the fancy pants option. Your net over the course of a decade here is $16,610, and invested at 7% is $27,522.

Now, is all this just a little bit extreme? Probably. But these coffee statistics show that 51% of coffee consumers buy coffee from a coffee shop at least once per week. Which isn’t so bad. But 8% purchase coffee every day! So it’s those 8% that are missing out on at least tens of thousands of dollars. 

So is UnbiasedEsti saying you should never buy coffee from a coffee shop? Of course not. But this analysis should show you the tradeoffs of buying coffee, and hopefully I encourage some to consider their coffee spending and at-home coffee making habits. For me, I love going to a coffee shop with friends, or as an accompaniment when Mrs. Unbiased and I run errands. That way, the suitable frequency for my lifestyle is about 1 every two weeks or so (if that, honestly). I am more willing to spend $132 per year on coffee to enjoy myself than $2,000.

If you love coffee, I encourage you to scrutinize your coffee habits just a little bit more and consider the tradeoffs. If the luxury of buying coffee outweighs the science on making your own at home, have at it! But you might just find when you fall down the coffee rabbit hole, you will enjoy what you find.