Free, Subsidised or Paid Workplace Coffee? How to Model the Numbers
Short answer: start with the real cost per drink and expected volume, then decide how much of that cost the company wants to fund. Free, subsidised and paid workplace coffee can all be sensible depending on the objective.
The useful question is not simply “should we charge for coffee?” It is “what experience do we want to provide, what does it cost, and how should that cost be shared?”
1. Estimate annual drink volume
A simple starting model is:
drinks per day × operating days per year = estimated annual drinks
Use a sensible range if demand is uncertain. A range is more honest than a single over-confident forecast.
2. Work out the variable cost per drink
Include the ingredients that genuinely change with each drink. Depending on the setup this could include coffee, milk product, chocolate, cups or other consumables. Keep equipment, service and fixed costs separate at first so the model is easy to understand.
3. Model three simple scenarios
Free to the employee
The company funds the full drink cost. This is straightforward for users and can be treated as part of the workplace offering, but the business needs a realistic annual budget.
Subsidised
The employee pays part of the cost and the employer funds the remainder. This can keep the user price well below an external coffee purchase while reducing the employer's annual contribution.
Paid / self-funding contribution
The business sets a drink price and uses the contribution to offset ingredients and potentially some of the equipment cost. The contribution per drink is:
selling price − variable drink cost = contribution per drink
That contribution can then be modelled against equipment or rental cost. It is an estimate, not a guarantee of profit or payback.
4. Compare the employee experience too
The calculation should not be only about company cost. If the workplace drink is convenient and costs materially less than an external purchase, the employee saving can be shown alongside the company contribution. Use an editable external-price assumption rather than hard-coding a claim that will quickly date.
5. Keep productivity claims sensible
A workplace machine can reduce the need for some off-site coffee trips. That can retain time on site, but retained time should not automatically be described as extra profit. Treat it as an operational scenario and show the assumptions transparently.
Model your own scenario
Use our workplace drinks calculators to test different employee charges, drink volumes and equipment costs. If you need the equipment side of the model, contact Café Perfection for a quotation based on the actual site.