A practical, step-by-step method to calculate your true roasted coffee cost per bag, set a defensible price, and protect margins while staying competitive. Built from real roastery experience in Indonesian origins and global DTC sales.
We went from $0 to $10,247 in 90 days using this exact system. Not from ads or hype. From getting the pricing right on 10–12 oz bags so each sale actually made money. In our experience exporting Indonesian coffee and supporting small roasters globally, the difference between a hobby and a healthy business is a defensible price built on real costs.
The 3 pillars of fast income generation (for coffee bags)
Pillar 1. Know your true roasted coffee cost per bag. Your “roasted coffee cost per bag” isn’t just green price and roast loss percentage. It also includes packaging, labor, energy, inbound freight, outbound shipping subsidies, and payment/marketplace fees. If you don’t account for all of them, your margin leaks.
Pillar 2. Price to margin, not to the competitor’s anchor. Use a simple coffee bag pricing formula that locks a minimum target margin after fees. If your competitor is at $17 but your floor price is $20, either change the offer (size, origin mix, channel) or accept you’ll lose money at their number.
Pillar 3. Engineer your product for both flavor and cost. We love showcasing Indonesia’s best. But we also build blends that hit price points. For example, pairing Sumatra Mandheling Green Coffee Beans with a value-forward base like Sumatra Tiger Grade 3 Special Green Coffee Beans can deliver chocolatey depth at a lower COGS than a pure microlot. For brighter profiles at mid-tier price, consider Arabica Bali Kintamani Grade 1 Green Coffee Beans. If crema and body at a commercial price point is the goal, strategic Robusta like Robusta Lampung Green Coffee Beans (ELB & Grades 2–4) can work in blends.
Takeaway: A competitive price starts with an engineered cost structure, not a guess.
Week 1–2: Market research and validation (tools + templates)
Start with measurement, not marketing.
- Measure your green-to-roasted yield. Run 5 roasts of your target profile and record charge weight and drop weight. Calculate roast loss percentage per batch, then average it. Typical ranges we see:
- Light/City: 12–14% loss
- Medium/City+: 14–16%
- Full City to Vienna: 16–19%+
- Build a simple COGS sheet. Include:
- Green cost landed (per kg or lb)
- Roast loss adjustment (green to roasted yield)
- Packaging and labeling (bag, valve, label, tape, mailer/box)
- Labor per bag (roast + pack + QC minutes x fully-loaded wage)
- Energy and consumables (gas/electric, water, filters, QA cups)
- Inbound freight per kg (allocate by volume)
- Outbound shipping subsidy per order (if you offer “low/free shipping”)
- Payment processing and marketplace fees
- Sample and waste allowance (1–2% of volume)
- Price check your channel. Look at 8–12 brands your customers would compare you to. Note bag size, roast level, origin, story, fulfillment method, and price. The goal is to see the price bands for your category and your geography.
How do I calculate the cost of a 12 oz bag after roast loss?
Use this shortcut:
- 12 oz bag = 340 g roasted.
- If your roast loss is 15%, green needed = 340 g / (1 – 0.15) = 400 g.
- If landed green is $6.00/lb ($13.23/kg), green COGS per bag ≈ 0.4 kg x $13.23 = $5.29. Now add packaging, labor, energy, etc. That’s your true per-bag COGS before fees.
What percentage weight do coffee beans lose during roasting?
Most small roasters we work with average 13–18% depending on roast level, drum design, and moisture. Measure your own. A 2% error in roast loss can swing $0.30–0.50 per 12 oz bag.
Should I count labor and packaging in my coffee COGS?
Yes. If a human touches the bag, that’s COGS. A common starting point is 2–4 minutes per bag. At a fully-loaded $18/hour, 3 minutes is $0.90. Packaging often runs $0.45–$1.20 depending on bag quality and whether you include mailers and inserts.
Coffee bag pricing formula you can trust
Let:
- C = all pre-fee COGS per bag (green adjusted for shrink + packaging + labor + energy + inbound + shipping subsidy)
- f = payment/marketplace fee rate as a decimal (e.g., 0.029 for 2.9%)
- F = fixed fee per order (e.g., $0.30)
- m = target margin as a decimal (e.g., 0.55 for 55%)
Solve for price P: P = (C + F) / (1 – f – m)
Example. C = $8.64 ($5.29 green + $0.70 packaging + $0.60 labor + $0.10 energy + $0.45 inbound + $1.50 shipping subsidy). f = 0.03, F = $0.30, m = 0.55. P = (8.64 + 0.30) / (1 – 0.03 – 0.55) = 8.94 / 0.42 = $21.29. Round to $21.50.
What’s interesting is how sensitive P is to shipping subsidies and labor minutes. Trim either by 20% and you can often shave $0.50–$1.00 off price without touching green quality.
Week 3–6: MVP creation and testing
Build a minimum viable offer and test two things: price and size.
-
A/B test 10 oz vs 12 oz. Many buyers perceive 10 oz at $18.99 as more approachable than 12 oz at $21.50, even if your per-kg price is the same or better. If your category’s price band is tight, reducing bag size is usually smarter than dropping price.
-
Validate roast loss on production batches. New lots roast differently. Track shrink weekly for your top two SKUs.
-
Test two price points in the field. Farmers markets and local delivery let you hear objections directly. We’ve seen a $1 difference swing conversion 5–10% in some cities.
-
Keep a “roaster margin calculator” handy. A simple sheet with the formula above lets you update price when fees or freight change.
Do I need different prices for online vs farmers market sales?
Often yes. Online orders carry payment fees and higher packaging/fulfillment time. For markets, your fee might be booth rent plus a lower payment rate. Many roasters run a $1–$2 lower market price or include a multi-bag discount to move volume without shipping costs. Just make sure both prices clear your floor.
Week 7–12: Scale and optimize
Now protect margin at scale by tuning inputs.
- Buy smarter. Consolidate origins and negotiate volume breaks on bags and labels. Shaving $0.12 on packaging can be equal to lowering green by $0.50/lb.
- Reduce shipping pain. Carriers implemented general rate increases this year. Counter with cubic shipping, lighter mailers, and regional fulfillment if volume allows. Charging realistic shipping instead of “free” is sometimes the only way to avoid death by a thousand labels.
- Engineer blends that customers love and you can produce consistently. A chocolate-forward base with a highlight component can hold a strong MSRP. For reliable chocolate and low acidity, Sumatra Mandheling Green Coffee Beans or Sumatra Tiger Grade 3 Special Green Coffee Beans are proven. For bright, clean acidity in a single-origin SKU, Arabica Bali Kintamani Grade 1 Green Coffee Beans is a favorite with medium roasts. If you need to lower COGS without sacrificing body, test a 10–20% inclusion of Robusta Lampung Green Coffee Beans (ELB & Grades 2–4).
- Lock your margin targets by channel. We recommend 55–65% target margin for DTC bags, post fees. Wholesale is different and lower by design, but that’s a separate playbook.
Need help building a cost model for your origin mix and channels? We’re happy to sanity-check your numbers and suggest Indonesia-based options that fit. If it’s useful, Contact us on whatsapp.
The 5 biggest mistakes that kill small roaster margins
- Ignoring roast loss and aging. Roast loss percentage changes by batch and roast level. Measure monthly. Past-crop or aged lots can also behave differently.
- Excluding labor and fixed fees. Those 3 minutes per bag and $0.30 transaction fee add up quickly.
- Free shipping too early. Offer threshold-based shipping once your average order value supports it. Or price shipping honestly and highlight quality and freshness.
- Discounting without a plan. A 15% coupon can erase your entire margin. Use bundles instead: two bags for a small break that keeps unit economics intact.
- Chasing a competitor’s story instead of building your own. If they’re selling a rare peaberry at $25, resist the urge to undercut with a different product view. Sell what you can win: flavor, freshness, or traceability your customer values.
Quick answers to common questions
How do shipping and payment fees affect my coffee bag price?
They’re part of your floor. If your payment processor is 2.9% + $0.30 and your average label costs you $6.00 but you charge the buyer $4.99, your COGS must absorb $1.01 plus the fee. Put those into C before you solve for P.
What is a good profit margin per bag for a small roaster?
For DTC coffee, we recommend targeting 55–65% gross margin after fees. At markets with minimal fees, 50–60% can work because you often move more units and build local repeat.
Is it smarter to reduce bag size or lower price to stay competitive?
Reduce size first. A 10 oz bag at the same per-kg pricing preserves your margin story. Big price cuts train customers to wait for deals and are hard to recover from.
How to set MSRP for coffee beans without losing margin
Use the formula, validate against your category’s price band, then choose the price that gives you room for promos. Example: if your floor is $21.29, set MSRP at $22.00 and run a 2-bag bundle at $41. That bundle moves inventory efficiently without killing margin.
Resources and next steps
If you only do one thing this week, build the calculator and measure your shrink. A clear roasted coffee cost per bag and a defensible “break-even price coffee” number will immediately change how you buy, roast, and sell. When you’re ready to expand your lineup, browse origins and blends that map to your flavor and cost goals: View our products. We can recommend specific Indonesian lots that align with your price tiers and channel strategy.
Our team has priced tens of thousands of Indonesian bags, from microlots to commercial blends. The reality is simple. You don’t have to be the cheapest. You do have to know your numbers, engineer your offer, and protect your margin with discipline. Do that, and competing gets a lot less stressful—and a lot more profitable.