What Does a Bag of Coffee Cost?

[@bhagmeister]

thank you kindly for sharing. I notice you haven’t included capital equipment (e.g., roaster, grinders, makers) or energy to power the equipment in your cost structure.

[@ForgeValleyRoasters]

Heya yes I should update this with where we are at in year 2. We have LPG costs calculated now we have a year of data. But I wouldn't include capital expenditure (such as equipment) in the item costs/profitability because that's recorded as an asset to the business with a depreciating value over time.

[@CampervanCookout]

What about power and gas costs, as well as machines, Must be more costs in that overhead?

[@ForgeValleyRoasters]

Heya, machinery and equipment is a capital expenditure rather than an overhead and for power consumption that's something I only recently got a view of as we needed to see how far fuel could take us. I work it out to be about 20p per 250g bag at the moment!

[@bgskjs]

Awesome video! Thank you. If you're willing to share, I'd be curious to learn more about the labor cost build-up. Are some costs variable to the number of bags while others are fixed? Do you assume you'll continue as the > roaster and, if so, did you account for your own salary in this estimate?

[@ForgeValleyRoasters]

Hey thanks so much! For labour cost we did rough timings for roasting, label/package design (with that cost spread across all bags of that origin/blend) and then packing up the order for pickup. We used an average salary number to come up with the per hour labour cost and that's what we built into the margin. Ideally at some point I'll hire a roaster to work with me and they'd take the labour cost and we'll pay ourselves through dividends from profit and not a salary. Does that help?

[@TazBo-wd2ig]

Is it hard to get into something like coffee club where they send out your samples ?

[@ForgeValleyRoasters]

Not particularly but we don't want to lose control of the final price to customers. We are currently working with Coffee Nerdery though which is worth checking out if you haven't heard of them!

[@RichardGregory-hb9zk]

I love the video and the series (and the coffee!) 1) your video (loved it btw) didn’t mention energy. You ever calculated this? 2) you can roast beans to different levels of intensity e.g. dark roast / medium roast. But can every bean be roasted to every level of intensity? Ie. Could you take a arabica bean and have it as a light roast / medium roast / dark roast or are some beans better not being a light roast for example?

[@ForgeValleyRoasters]

Hey good questions! 1) Because we run the roaster through our residential energy supply it's hard to tell but the bulk of energy use would come from the propane supply. That I CAN cost and you are right I should have included it here. That being said it's relatively small because at our volumes as a micro roaster we use so little. To give an idea it's a probably the same cost as running a gas BBQ for 15 minutes. I'll work it out! 2) Yes every bean can be roasted to every level it's just a matter of time and temperature. It's definitely a question of preference/taste. One person might like a fruity Colombia roasted lightly to bring out the acidity and brighten the fruit flavour but another might like it roasted darker to add some caramel or dark sugar flavours. Every bean will have a different roast 'recipe' to get to a light, medium and dark roast though and part of our process is to figure this out!!

[@jimschofield968]

Great content and useful to consider all facets, including 20% weight loss for green due to water removal I presume ;) As a baseline for comparison, Green Beans in Hong Kong for a good brazil natural, is around 8GBP /kg sk usually would retail at 20GBP for 250g bag. We @thelotroastery are small-scale but want to grow, ao having your experience will prove handy as time goes on. Cheers

[@ForgeValleyRoasters]

Wow that's nice margins!! For the UK we might get our Brazil's between £5-£8 but the retail would only be £10ish for a 250g bag where we are (more if you are in London)

[@jdp8191]

Loved the video really useful! How did you go about getting your website set up and designed and also for your packaging/logo etc? Did you do this yourselves or hire an artist? I’ve been looking on Fiverr recently

[@ForgeValleyRoasters]

Heya first I tried SquareSpace but found that wasn't very well geared toward ecommerce so at the recommendation of someone else I switched to Shopify and haven't looked back. Started with standard template but then upgraded to a paid one and was simple enough to configure it all myself. For graphic design that's all me and my wife (Tash) doing it. Tash is pretty creatively minded and taught herself the basics of Canva to get things designed. The logo I literally took a picture of the castle with my phone and used Adobe Lightroom to convert it to the silhouette that it is in our logo today. Again, when we've a little more cashflow we will likely buy a graphic design package from a pro! Does that help?

[@Love-combe]

Is it easy to set up google pay per clicks? My online sales need a boost

[@ForgeValleyRoasters]

Relatively straightforward yes but it's one of those things that goes REALLY deep if you want to. First thing we did was set up our business profile on Google and verified ourselves and after that Google guides you through the advertising process with a wizard 🪄. There is also a Google Ads app which is good for giving you realtime performance updates, setting your budget etc. For the next level you can start exploring the Google merchant centre and stuff (for example we integrated our Shopify site with Google so our products appear when people search for us) but that starts to get technical very quickly.

[@XMaymoX]

I roast on a very small scale for myself but am considering roasting for friends and work colleagues, and charging them. I am interested in the price of green coffee, atm I pay abt £16 uk per kg. I am only buying 4kg at a time. I don't think that I will be able to even break even on a bag if I skimp on some of the more commercial costs. At what volume could I expect the price of green coffee to reduce?

[@ForgeValleyRoasters]

Yup definitely a challenging one but I'm afraid it won't really drop until you're buying full sacks which are about 60kg (sometimes larger) OR unless you can find a smaller independent importer. Is there a reason why you cant price it the way you need to in order to make money and see if your market will accept that? No point in running a business for free :)

[@XMaymoX]

@ForgeValleyRoasters there is probably a economics of scale where below a certain volume it will be very difficult to make a profit, after that as costs cost come down then profit is possible. I'm not sure if I really want to make a business, I think that I will stick to a 1kg roaster and keep it as a hobby. Maybe charge work colleagues to help recoup some of the cost.

[@ForgeValleyRoasters]

Yea you are right on the scale thing, it's really a volume game sadly. But I think you have a good plan for getting started! ☺️

[@TazBo-wd2ig]

The question is how are you going to get rich? What are you going to do to stand out apart from what you are already doing?

[@ForgeValleyRoasters]

Not doing it to get rich (though obviously that'd be nice one day) doing it to make a wonderful product and create a community built around education and sharing knowledge and passion for coffee in the UK. Maybe that's what makes us different?

[@TazBo-wd2ig]

@ that’s why I love you guys!!!

[@ForgeValleyRoasters]

Haha thank you 🙏

[@mrseanbaines]

How many bags were you selling when you started out? How does that compare to now?

[@ForgeValleyRoasters]

It's getting harder to track because we started selling 1kg bags and then sample boxes etc. but looking at rough numbers we are 8 months in now and in our first month we did 20 bags and we should finish June about 115. By end of this calendar year we aim to be at 350 per month. Do you think it would be useful/interesting for me to make and share some analytics when we finish the first year?

[@mrseanbaines]

Awesome 🙌 I would find that very useful and interesting!

[@ForgeValleyRoasters]

Ok stay tuned!!

[@craig_drummond]

@@ForgeValleyRoastersyes please!!!