Well, it’s around 8p. Wow, loads of profit in that. You’d think.
Add some milk – another 8p.
Oh and you’ll need a cup to put it in, and a stirrer and possibly a napkin – another 16p.
So we’re now up to a cost of 32p. Still plenty of profit, right? At this point it’s Gross Profit - £1.88. Nice.
But you’re going to need a shop to sell your coffee from and pay the rent – another 66p.
And then somebody to serve you and make the coffee – another 55p.
Then the government have to get involved – tax – that’s another 37p.
So, your 8p of coffee has turned in to £1.90 of total cost and you make 30p/cup – That’s your bottom line profit. Still not bad, particularly if you sell thousands of them.
And what’s the point of all this, you ask, other than obsessing about coffee?
Well, every business is different and they each have their own structure and costs but it’s not always obvious what’s driving these costs, even to business owners. That’s where I come in…..
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