How to Price a Flat White So You Actually Make Money

The flat white is the workhorse of an Australian café. It's probably your most-sold item. It's also, very often, the item owners have priced by looking across the street.

I get it. Nobody wants to be the café charging more than everyone else. But your rent, your wages and your milk order aren't the same as the café across the street. So their price can't tell you whether your flat white is making money.

It's also easy for a coffee price to drift out of date. Milk, beans and cups creep up a few cents at a time, and a price that worked two years ago can quietly stop covering its costs.

Let's work it out properly. It takes one calm half hour, and you only need to do it once (then update it when costs change).

Step 1: Know what's actually in the cup

A flat white looks simple. Coffee, milk, cup. But your true cost has more layers:

Coffee beans (per shot or per double shot)
Milk (including what gets wasted in the jug)
Packaging for takeaway: cup, lid, and sometimes a sleeve or carrier
Extras like sugar sachets, stirrers and napkins
Labour share: the barista's time to make it
Overhead share: rent, power, machine servicing, insurance and the rest

The first four are your direct costs. Labour and overheads are the costs people forget, and they're the reason a busy café can still struggle.

Step 2: Cost the coffee per shot

Start with your bean price per kilo (excluding GST) and your dose.

Cost per gram = price per kg ÷ 1,000 Coffee cost per cup = dose in grams × cost per gram

Don't forget waste. Dialling in each morning, the shot that ran too fast, the grinder purge. A simple way to account for it is to compare how many cups your bean order should make with how many your POS says you sold. The difference is your real waste.

For example (example numbers only): if beans cost you $X per kg and you dose 20 g for a double shot, your coffee cost is 20 × ($X ÷ 1,000). If you find around 10% of beans don't end up in sold cups, divide by 0.9 to get the real figure.

Step 3: Cost the milk (and the milk you pour down the sink)

Milk is often the biggest single cost in a milk coffee, and it's the easiest one to waste.

Measure how much milk actually goes into each size. Then add your jug waste: the milk left over after each pour, the jugs that get over-steamed and tipped out.

A quick test: for one busy morning, log how many litres of milk you open and how many milk coffees you sell. Divide one by the other and you'll see your real millilitres per cup, waste included. It's usually more than the recipe says.

To cut milk waste, train the team to pour roughly the amount each cup needs, use the right jug size for the drink, and keep any leftover cold milk in the fridge for the next pour rather than tipping it out.

Alternative milks (oat, soy, almond, lactose-free) usually cost more per litre, so cost them separately. That's how you decide what to charge as an extra.

Step 4: Add packaging and extras

For takeaway, add the cup, lid and anything else that leaves with the customer. Check your actual packaging invoice and divide by the number of units in the carton.

If most of your coffees are takeaway, this matters a lot. If most are dine-in, consider the cost of washing and replacing cups too, though it's usually smaller.

Step 5: Work out a fair labour share

This is where people say "but I'm paying my barista anyway". True, but the barista's time still needs to be covered by what they make.

A simple way to estimate it:

Labour per cup = barista's hourly cost ÷ coffees made per hour

Use the full hourly cost, including super and any penalty rates if your busy times fall on weekends. And use a realistic number of coffees per hour across the whole shift, not just the peak rush.

Step 6: Add an overhead share

Overheads are everything that keeps the doors open: rent, power, water, machine servicing, insurance, software, accounting.

One simple method:

Add up your monthly overheads.
Estimate what share relates to coffee (if coffee is a large part of your sales, it's a large share).
Divide that by the number of coffees you sell each month.

It doesn't need to be perfect. A reasonable estimate is far better than leaving it out entirely.

A worked example (example numbers only)

Every number below is a made-up example to show the method. Use your own figures from your own invoices and rosters.

Cost	How it's worked out (example)	Cost per cup (example)
Coffee	20 g dose, beans at 4c per g, plus 10% waste	$0.89
Milk	220 ml including waste, at 0.2c per ml	$0.44
Cup and lid (takeaway)	From carton price	$0.25
Extras	Sugar, stirrer, napkin allowance	$0.05
Direct cost		$1.63
Labour share	Example: $40/hour full cost ÷ 40 coffees per hour	$1.00
Overhead share	Example: coffee's share of monthly overheads ÷ cups sold	$0.80
Total cost per cup		$3.43

Notice something? In this example, the ingredients are less than half of the total cost. If you only looked at beans and milk, you'd think every coffee was hugely profitable. Once labour and overheads are in, the picture is very different.

Step 7: Set your price from a target margin

Now decide what profit you want on each cup. Be careful here, because margin and markup are not the same thing.

Markup is profit as a percentage of cost.
Margin is profit as a percentage of the selling price.

To price from a target margin, use this:

Price (excl. GST) = total cost ÷ (1 − target margin)

Then add GST: Menu price = price excl. GST × 1.1

Continuing our example: total cost is $3.43. Say your target profit margin on the full cost is 20% (an example, not a recommendation).

$3.43 ÷ (1 − 0.20) = $3.43 ÷ 0.80 = $4.29 excluding GST
$4.29 × 1.1 = $4.72 including GST

You'd then round to a friendly menu price that sits at or above that number.

If you want to check it the other way, using only direct costs:

Beverage cost % = direct cost ÷ price excl. GST × 100

In the example, $1.63 ÷ $4.29 ≈ 38%. That gives you a quick figure you can track each month as bean and milk prices change.

What about the café down the road?

Competitor prices are still useful, just not as the starting point. Once you know your own floor price (the price below which you lose money), you can look at the local market and decide where you want to sit.

If your floor price is above what locals expect to pay, you've got some choices:

Reduce waste (milk waste is usually the quickest win)
Review your bean or milk supplier
Improve workflow so your barista can make more coffees per hour
Lean into value: better beans, better service and a nicer space can justify a higher price
Price extras properly: alternative milks, extra shots and larger sizes are often underpriced

And sometimes the honest answer is that a price rise is needed. If you do raise prices, a small, clearly explained increase on coffee that's consistently good is usually an easier conversation than you'd expect.

Give regulars a heads-up with a short, friendly sign at the counter, keep the rise small, and make sure the coffee is just as good the next day. Most people understand that costs go up.

Don't forget the other sizes and extras

Repeat the same costing for each cup size, and for extra shots, alternative milks and syrups. It's very common to find the large size or the oat milk upgrade is quietly making less than the regular.

Quick checklist

Bean cost per dose, including waste
Milk per cup, including jug waste
Packaging per takeaway cup
Labour per cup at realistic speed
Overhead share per cup
Price from your target margin, then add GST
Re-check whenever your bean or milk invoice changes

FAQ

Should every coffee size have the same margin? Not necessarily, but you should know what each one makes. Larger sizes use more milk and sometimes a bigger cup, so cost them separately rather than adding a flat amount to the regular price.

How do I account for coffee I give away to staff or regulars? Track it for a week and include it in your waste figure. It's a perfectly good choice to give coffee away, but it should show up in your numbers so your price still covers it.

Is it better to use margin or markup? Either works if you're consistent. I prefer margin because it's tied to the selling price, which makes it easy to see what share of every dollar you keep. Just don't mix the two up.