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.)
- 2 kg / 4.4 lb pack = $60.00 (your cost)
- This breaks down into 20 retail units (100 g or 3.5 oz selling weight)
- Typical consumer serving size = 2.5 g or 0.087 oz
- Each 2 kg / 4.4 lb pack will make 800 consumer servings
- Each 100 g / 3.5 oz retail pack will make 40 consumer servings
- Your cost: ($60.00) / 20 retail units = $ 3.00 per retail unit
- 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%
- 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.