Economics of Tea

It pays to sell luxury tea.

Because of the quality and small quantity needed to brew each cup, loose tea is a high-margin product. Compared to tea-bagged teas, the mark-ups can be huge. In fact, in our experience, switching from teabags to loose tea can double your profits or more.

How to achieve up to 400% profits with loose tea.
Luxury loose leaf tea is a very high-margin product. Here’s how to price and sell it.

Setting the retail price
Cost of your tea per selling weight* x (3.5 – 5 times mark-up**) = Your retail price

* Basis is our 2 kg / 4.4 lb pack
** Dependent upon your location, marketing and clientele

Example in Practice
(Please note we’ve selected a hypothetical price for illustrative purposes.)

Givens:

1. 2 kg / 4.4 lb pack =  $60.00 (your cost)
2. This breaks down into 20 retail units (100 g or 3.5 oz selling weight)
3. Typical consumer serving size = 2.5 g or 0.087 oz
4. Each 2 kg / 4.4 lb pack will make 800 consumer servings
5. Each 100 g / 3.5 oz retail pack will make 40 consumer servings 

 
Therefore:

1. Your cost: ($60.00) / 20 retail units = $ 3.00 per retail unit
2. Selling price range:
   Low:   $3.00 x 3.5 = $ 10.50        PROFIT:  $ 7.50 / 235%***
   High:  $3.00 x 5.0  = $ 15.00       PROFIT:  $ 12.00 / 400%
    
3. The cost per cup for your consumer: 
   Low:  $10.50 / 40 =  26 cents per serving
   High: $15.00 / 40 =  37 cents per serving

 
***excluding the price of your packing bag if applicable.