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Permalink Reply by Jay Caragay on December 2, 2011 at 11:22am

How much is your time worth?

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Permalink Reply by Tim Pearson on December 2, 2011 at 7:17pm

Well, time is not what I'm mainly concerned with here. My question is, how much do you think the skill of roasting coffee is worth to charge per pound? My guess is anywhere between .30/lb up to $1/lb. I'm just curious to see if anyone out there has a rate that they charge, or to hear some opinions. 

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Permalink Reply by Brady on December 2, 2011 at 7:18pm

You might be better off approaching it from an hourly rate standpoint. Saves a bunch of math based on roaster capacity, plus keeps you from getting hosed if somebody runs late, asks you to hang out and work on blends, accidentally buries the greens behind the new shipment that just came in, etc.

Will you be a direct employee? If not, it ought to be more per hour than they'd pay an employee since, as a contractor, you cost them less and presumably handle some expenses on your own.

Totally legitimate question, by the way, and a nice complement to the one Jay asked. It is definitely relevant to know what a buyer might expect to pay others to do something... especially if that number is higher than what you thought your time was worth. No need to undercut yourself right out of the gate.

For reference, according to a couple of online surveys, looks like median annual salary for a professional roaster is $30k-$35k (but could be quite a bit higher). That works out to $15-$16 or so per hour.

Hope that helps. I really know very little about this though, so take it with a grain of salt :).

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Permalink Reply by Jonathan Aldrich on December 3, 2011 at 11:30am

How much does it cost you to roast each pound of your own coffee(including your pay)? I would subtract your green cost from your wholesale cost, average the remaining margin and use that as a starting point. Unless they're doing they're own labeling and bagging, it's costing you just as much to do their coffee as it is to do your own.

So, for example (all numbers made up and round for simplicity sake), if your wholesale cost for a $3 green coffee were $9, I would charge them at least $6 per pound. You still have to pay your costs and make your margins, otherwise why should you spend time doing this for someone rather than working to bring in more full-paying business for yourself?

Whether or not you charge more than you do for your wholesale beans is up to your prerogative but I definitely wouldn't charge less.

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Permalink Reply by John P on December 3, 2011 at 1:16pm

You mentioned it was a client.

 

If it's desirable green, you can always barter for some. That would be the easiest solution.

 

Otherwise...

Depending on the relationship you have with this client, and if they ask you to roast because of convenience or because they really want YOU to roast it -- I would either charge the same you charge for them normally per pound (no discount for using their greens) or I would charge a bit more than you charge to roast your own coffee.  I don't know if I would charge double, but at least one and a half times as much. Both for the time it takes you to roast and the time it takes away from you roasting your own coffee.

 

It's time and skill they are paying for. Specifically your skill. You mentioned "skilled roaster". This makes a difference, in how you see yourself and how you are viewed. Charge appropriately!! Err on the side of overcharging, you can always allow them to "negotiate" a lower rate. It's hard to raise the price after the fact if you realize you have undercharged for your skills.

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Permalink Reply by David Myers on December 3, 2011 at 2:04pm

I believe the rate for toll roasting is closer to the $1.50 - $3.00 range per pound. Everyone's situation is different.

Tim Pearson said:

Well, time is not what I'm mainly concerned with here. My question is, how much do you think the skill of roasting coffee is worth to charge per pound? My guess is anywhere between .30/lb up to $1/lb. I'm just curious to see if anyone out there has a rate that they charge, or to hear some opinions. 

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Permalink Reply by Jay Caragay on December 3, 2011 at 3:05pm

How much your time is worth really will guide you in the direction of what you should charge.

You stand there for an hour - how much is that worth?  Now, let's say you're worth $15/hour.  You need to take that into consideration as well as the operational costs of your facility for that hour.  That includes rent, utilities and any other ancillary expenses it takes to keep the roasting facility open (this includes support personnel).  Let's say that's another $15 per hour.

Now we're talking a minimum of $30/hr to break even.  Next question: How big is your roaster and how much production can you get in an hour?

Let's say you can roast three batches an hour.  That's ten dollars per batch. Simple, right? Now, factor in the size of your batch.  Are you using a 3k, 12k, 25k, 60k or larger roaster?  Let's say you have a 3 kilo roaster. Maybe you're roasting five pound batches in that 3k.  That's fifteen pounds an hour or $2 per pound of green.

If the "going rate" is max $3/lb then you've got a 33% profit margin if you charge $3/lb. 

Now consider the size of that customer's order. How much is that customer ordering per week?  10lbs? 50lbs? 300lbs?  How many hours are you going to be standing there filling that order?  

If you have a larger capacity roaster, you could be done in a shorter amount of time.  However, I would still charge the maximum rate to gain the largest profit margin.

John mentioned the margin to allow for "negotiation", which I think is fine.  However, know your bottom price - meaning that price to cover all your costs (do remember ALL of your labor costs: i.e. workers comp, social security and medicare contributions, etc) and a profit margin that makes it worth your while.  Do not go below that number. Fulfill the work that gives you the best margin, don't waste your time otherwise.

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Permalink Reply by Tim Pearson on December 3, 2011 at 4:11pm

Thanks everyone, I appreciate all the input, you ve been a lot of help. 

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