Toronto Buffalo London Sydney
Toronto Buffalo London Sydney

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.

Questions? Please don’t hesitate to contact us.