How Much Should You Charge for a Cup of Coffee?
A guide to pricing your coffee in 2025 for profitability, value and long-term success
With coffee prices on the rise and hospitality costs climbing across the board, café owners everywhere are asking the same question: How much should I charge for my coffee?
In this video, we’ll help you work out your costs, understand what your customers are paying for, and find a pricing strategy that keeps your business profitable without scaring people off.
Why Coffee Prices are Increasing
Right now, coffee prices are higher than ever. Commodity coffee recently hit a record high: more than double what it cost this time last year. But it’s not just the beans. From rent and heating to staff wages and VAT, the cost of running a coffee business is going up across the board.
At the same time, customers are feeling the squeeze too. They’re becoming more price conscious, more selective about where they spend, and more focused on getting value for money.
So how do you price your coffee in a way that keeps your business healthy and still feels fair for your customers?
How Much Does it Cost to Make a Cup of Coffee?
Breaking down the real costs
Let’s take a standard 12oz latte using 18g of coffee and 250ml of milk.
- Coffee beans: At £16–£20 per kilo, and around 55 shots per bag, that’s about 29–36p per drink.
- Milk: A 4-pint bottle of whole milk costs around £1.40, giving you about 9 servings. That’s 16p per drink.
So, the raw ingredients for a latte typically cost 45–52p. But that’s only the start.
The hidden costs in every cup
Customers aren’t just paying for beans and milk. Your coffee price also has to cover:
- Labour and rent – often around 50% of your total cost
- Utilities, training, admin and overheads – roughly 10%
- VAT – 20% straight to the government
- Profit – ideally, what’s left over
- If you charge £4 for a latte, 80p of that is VAT. Once you’ve paid staff, rent and bills, your profit margin might be smaller than you think.
And remember, every café’s costs will be different depending on your volume, staff wages, and location. So while benchmarks are useful, you’ll need to run the numbers for your own setup.
What to Charge for Coffee: Balancing Price and Value
Think like your customer
Once you understand your costs, it’s time to look at pricing. And this starts with putting yourself in your customer’s shoes.
- What are their options?
- Who are your competitors?
- What value are you offering in comparison?
You shouldn’t just copy the café next door or aim to undercut everyone. That can hurt your margins and lead to a race to the bottom. Instead, think about the experience you offer. If you’re serving high-quality coffee, using great equipment and well-trained baristas, your pricing should reflect that. It’s perfectly fair to charge more than the local shop with a bean-to-cup machine.
Know Your Competition
It’s not just other cafés you’re competing with. Customers now have more ways than ever to get their coffee:
- Pod machines and home brewing kits
- Energy drinks or convenience store options
- Cheaper cafés in department stores or garden centres
To keep them coming back to your shop, you need to offer something better – whether that’s the quality of the coffee, a welcoming space, fast service, or all of the above.
Multi-site pricing and location strategy
If you run multiple locations, pricing can get more complex. Should you charge the same price across all stores? Some things to consider:
- Rent and labour costs might vary
- Local competition might be different
- Some locations may justify higher pricing if they’re more exclusive
There’s no one-size-fits-all solution, but consistency in your value proposition is key. As long as customers feel the price makes sense for what they’re getting, you’re on the right track.
How to Raise your Prices (without losing customers)
It’s never easy to increase your prices, but it might be necessary to keep your business profitable.
Start small and stay consistent
Rather than waiting until you’re under pressure, make smaller, regular adjustments – for example:
- A 10p or 20p increase every 6–12 months
- Avoiding large, sudden hikes that are more noticeable
Going from £3.50 to £3.60? Most customers won’t blink. But £3.90 to £4.00, even though it's the same actual increase, might feel like a bigger jump due to reaching the £4.00 mark.
Be honest and transparent
If prices need to rise, let your customers know why. Most people understand that costs are going up everywhere – they’ll respect your honesty and your efforts to maintain quality.
Focus on showing that the value is still there – great service, great coffee, and a business that genuinely cares.
Want to Be Known for More Than Just your Prices?
Pricing your coffee isn’t just about margins – it’s about understanding your costs, knowing your competition, and offering real value to your customers. If your coffee isn’t profitable and you know your service is worth more, it’s okay to increase your prices. Just do it thoughtfully, clearly, and with your customers in mind.
Pricing is important – but it’s only one piece of the puzzle. If you want to build lasting loyalty and attract customers who keep coming back, it all starts with your brand.