How to Work Out the Cost of One Iced Coffee Milk
Step by step costing for one iced coffee milk: coffee, milk, sugar, ice and cup, then how to set a selling price that still makes a profit.
Cost of goods is what the ingredients for one drink cost you. Many new shops set prices by looking at the shop next door, then discover months later that the margin is thin. Costing every drink tells you exactly what each cup costs to make.
Step 1: write a standard recipe
We will use our classic iced coffee milk in a 360 ml cup: 18 g of coffee for a double shot, 30 g of condensed milk, 120 ml of fresh milk and 130 g of ice, plus a cup, lid and straw. The measurements must never change, because costing only works when the recipe is weighed.
Step 2: work out the price per gram or millilitre
Divide the purchase price by the pack size. The prices below are examples only. Use your own shopping prices.
| Ingredient | Purchase price (example) | Used | Cost |
|---|---|---|---|
| Coffee beans | Rp 180,000 / 1 kg | 18 g | Rp 3,240 |
| Condensed milk | Rp 13,000 / 370 g | 30 g | Rp 1,054 |
| Fresh milk | Rp 20,000 / 1 litre | 120 ml | Rp 2,400 |
| Ice | Rp 10,000 / 5 kg | 130 g | Rp 260 |
| Cup, lid, straw | Rp 1,200 / set | 1 set | Rp 1,200 |
| Total | Rp 8,154 | ||
Step 3: allow for waste
Some ingredients always go to waste: shots pulled while dialling in, spilled milk, damaged cups. Add 5% to 10%. With 5%, the cost becomes about Rp 8,560.
Step 4: set the selling price
Ingredient cost does not include rent, wages, electricity or water. That is why many shops keep ingredients at around 30% to 35% of the selling price. The formula: selling price = cost ÷ ingredient cost percentage.
- Rp 8,560 ÷ 0.35 = Rp 24,457
- Rp 8,560 ÷ 0.30 = Rp 28,533
So a healthy price for this example is between Rp 25,000 and Rp 28,000. If prices in your area are lower, look for savings in the ingredients, for example a blend with Robusta, or offer a smaller cup.
Step 5: recalculate whenever prices rise
Milk and coffee prices change. Keep your costing table and update it every month. If ingredients go above 35%, it is time to adjust the price or the recipe.
To save time, use our cost-per-cup calculator. Enter prices and amounts and the result appears straight away. You can cost iced palm sugar coffee milk and bottled coffee milk the same way.
