Thoughts

The Cost of Caffeine: A Frugal (or Not So Frugal) Guide to Hot Beverages

According to the Merriam-Webster Dictionary, the word “frugal” means “characterized by or reflecting economy in the use of resources”. In an attempt to be frugal with my energy resources, I have historically been willing to spend a bit of my financial resources. So, I compiled a quick computation to analyze how much money I drink every time I make a cup of one of my four favorite hot beverages. In the computation, I included daily depreciation of the machines (depreciation is a method of cost allocation used in accounting so that the cost of the machine is allocated systematically over the asset’s useful life). Please note, the analysis excludes electricity of $0.0008 per prep and water of $0.001 per prep as well as cost of mug, spoon, trash removal, and labor.

The chart compares the following beverages:

  1. Starbucks Brewed Coffee with 1.5 tablespoon of creamer ($0.51 per mug)
    • 12 ounce bag of Pike Place purchased from Walmart (price as of 5/14/2020)
  2. Original Nespresso Lungo with 2 tablespoons of creamer ($1.05 per mug)
    • $7 for a pack of 10 pods on Nespresso’s USA website (price as of 5/14/2020)
  3. Twinings English Breakfast Tea with 1.5 tablespoons of creamer + sugar ($0.31 per mug)
    • 50 count bag from Walmart (price as of 5/14/2020)
  4. Twinings Pomegranate, Raspberry & Strawberry Green Tea ($0.22 per mug)
    • 20 count bag (price as of 5/14/2020)
Starbucks BrewedNespresso LungoTwinings English BreakfastTwinings Green Tea
Raw Materials:
Coffee Beans0.32
Coffee Filter0.01
Lungo Pod0.70
Tea Bag0.130.16
Half & Half0.100.130.10
Sugar Cube0.02
Material Cost$ 0.43$ 0.83$ 0.25$ 0.16
Fixed Asset
Cost of Machine30.00100.0020.0020.00
Useful Life (in yrs)6.007.005.005.00
Annual Depreciation5.0014.294.004.00
Daily Depreciation$ 0.08$ 0.22$ 0.06$ 0.06
Cost for a Mug$ 0.51$ 1.05$ 0.31$ 0.22
Note: This cost analysis is based on what I paid for my own ingredients in the year 2020. Actual prices may vary.

Overall, my caffeine habit is not economically frugal, but it preserves my energy resources. I may, however, consider buying in larger bulk, re-evaluate the cost-benefit of my brand choices, or change my consumption patterns. Food (or perhaps drink) for thought.

Cheers,

Kristin

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