Just as a budget is allocated for food, clothes, and shoes, it is necessary to allocate a budget for coffee because coffee is a “must-have” in life, right? Do you know the price of coffee in coffee shops? Do you know how much you spend on a weekly or monthly basis on certain types of coffee you buy on your way to work? Do you know how much coffee you drink at home costs per cup? Depending on which coffee you prefer to drink, this text will present a comparison of not only the price but also the quality of the coffee you consume.

Arabica vs Robusta

Since I'm comparing the types of coffee consumed by Americans, let's first start with the coffee beans used to make your favorite caffeinated beverages.

Arabica

Arabica is the most popular type of coffee, but it also has advantages and disadvantages. The advantage is that it has a sweeter taste, is typically used for black coffee, but has less caffeine.

Robusta

The advantage of robusta is that it is cheaper and stronger. It contains more caffeine and if you consume coffee made from its beans, know that it will wake you up immediately. It is usually used for espresso and instant coffee blends.
 

Coffee in a Cafe vs Coffee at Home

The price difference between coffee in coffee shops vs homemade coffee is substantial. If you learn anything from this post, the key point is if you don't have a coffee maker at home, setting aside a budget to buy one is a good idea because the payback is fast. 

For the sake of argument let’s say a cup of coffee at a coffee shop is approximately $3.00 including tip. While at home, a cup of coffee can be $0.20 - $0.50. So if a machine is $100, the return comes after just 20 - 40 days. If you have a cup every day, over the course of a year it would cost $1,095 at the coffee shop and just $173.00 - $282.50 at home, for a savings of at least $812.50.

When it comes to a standard cup of drip coffee the quality of home made coffee is just as good as coffee in a coffee shop. Homemade coffee allows you to dial in on the exact variety and strength you enjoy the most. However, if you prefer a fancy coffee with foamed milk, whipped cream, special syrup, etc, that can be more difficult to make at home and may require an expensive machine + accessories.
 

Coffee in Coffee Shops

Depending on where you live coffee could be so popular it is hard to go more than a few blocks and not run into a coffee shop or drive through coffee stand. The most famous place to get coffee is Starbucks. You can go there on your way to work, gather with friends and hang out, or even buy Starbucks branded coffee to enjoy at home. 

Regardless, there is a wide variety of coffee on the market and the prices vary. Based on these prices, you can determine what your monthly budget will be for the coffee you drink in cafes or buy in coffee shops.

There are many different ways to serve coffee, namely Americano, Cappuccino, Iced Coffee, Latte, Mocha, Espresso, and regular black coffee. Here is a basic price breakdown of what you might pay for different types of coffee in a coffee shop (averaged across US).

For more details see this analysis on the exact price of coffee broken down by state and type of beverage.
 

Coffee at Home

To make coffee at home, you must first buy a coffee machine. You get what you pay for in terms of coffee machines. The type and size you select will lock you into a certain brewing pattern. If you are brewing for just yourself there are plenty of small machines to choose from. If you are brewing for you and your partner, a larger machine is in order. Some machines allow flexibility in terms of how much is brewed. If you and your partner have different tastes in coffee you might be better off with pods or getting two separate machines.

Using good tasting water and fresh coffee is the key to making good coffee at home. In order to brew coffee you need to know how much water and ground coffee to add. This was confusing to me at first, but in the US a cup of coffee is just 5 ounces, not 8 or 12 ounces like you would think. So a 4 cup coffee machine makes just 20oz of coffee. That is probably plenty for one person, but stretching it for two people. Add 1-2 tsp of ground coffee per 5oz cup you want to make.

Now I will describe to you the different types of coffee machines.

• French Press - an entry level way to make a single serving of coffee at home. You can find them from $15 to $150, but you should be careful because some brands use cheap materials such as bad plastic and thin glass, which is not good at all. Hot water can cause the glass to break, or they can be too fragile. That's why you should be careful when buying a French press and make sure it is made of heat-resistant borosilicate glass and a stainless steel frame. A nice press like this will cost ~$30 but will last longer.
   
• Drip Percolator - this is the most common type of coffee machine and can brew anywhere from 4 to 60 cups of coffee at a time. Prices on these ranges from $25 to $350. Again look for stainless steel and borosilicate glass vs plastic parts for a longer lasting product.
   
• Keurig Machine- These coffee makers make one cup (12oz) at a time using a proprietary K-cup pod. There are dozens of varieties of coffee available in K-cups, but compared to drip coffee the choices are fairly limited. The plus side is a Keurig machine only takes a minute or two and there is little to no cleanup. There is some waste associated with the plastic pod which some people don’t like. Some people say that K-Cup coffee tastes thin compared to drip coffee. The price of these coffee machines range from $60 - $198.
   
• Nespresso Machine - similar to Keurig but instead of drip coffee the result is closer to espresso (without the hassle of a big machine, cleanup, etc). A Nespresso machine can run anywhere from $100 to $340.
   
• Fancy Espresso Machine - for advanced brewers who want in-home barista capabilities. If you want homemade espresso, lattes, cappuccinos, etc you will need one of these machines, but be prepared to spend $450 to $1,200!
   
• Additional - In the case of a french press, drip percolator and a high end machine you will also need to buy a grinder if you plan to purchase whole beas (vs pre-ground). A decent grinder is less than $25. For a drip machine you will also need to get a box of filters which runs $3 - $10.
   

What Coffee at Home Costs Per 12oz Serving

Here is a sample of coffee prices from my local grocery store:

Note to convert dry weight to cups of coffee above I’m using 3 teaspoons per 12 oz of coffee (being a bit generous in case you like it stronger). 3 teaspoons weighs about 15 grams, which is about half an ounce. So a pound of coffee would have roughly 32 12 oz servings. In reality it will depend on how strong you like your coffee, absorption in the fitler, your particular machine, how you grind it, etc.

The bottom line is any of these home brew methods are cheap compared to retail. K-Cups are roughly double the price vs standard drip coffee while Nespresso commands the highest premium. With pods you get the convenience factor for the extra price.

The price per service above isn’t too bad, but we can get it down even more by purchasing in bulk. Costco is a great place to find deals on all types of ground coffee, whole beans, K-Cups and Nespresso pods. Here are some price samples from the Costco website.
 

So buying coffee in larger amounts can cut the price per serving roughly in half vs what you can get in smaller quantities at the grocery store.
 

Getting started with Coffee

As you can see from the tables above, buying coffee in larger quantities gives you a much better deal. However, if you are totally new to coffee it can take some time to narrow down what you like, so buying in bulk right away probably doesn’t make sense.

This is where getting input from your friends can really come in handy. Joining the coffee drinker club is a great excuse to get together and sample their favorite blend.

Here’s a neat trick - most grocery stores allow you to buy coffee in the self-serve bulk section. Instead of getting a huge amount of one kind, get 1-2 ounces of several different types to try out. This way you don’t get stuck with lots of coffee you don’t really like.

You’ll know right away if you prefer light, medium or dark roast. From there you can narrow down what region you like your coffee from (Africa, South America, Central America, specific blends, etc).
 

Conclusion: Coffee is an essential item in life. I hope this guide has clarified the various ways to enjoy it and how it impacts your budget.