"Could having a coffee REALLY cost over $500??"
Posted on April 3rd, 2011

"Absolutely, it can".

How many times have we sent or received requests to catch-up with someone for a coffee? It is one of the most natural occurrences in the business world. In 2004, Wellington had overtaken New York in the number of coffee shops they had per capita!

Just think about it - Assuming it's your treat, coffee & muffins for 2, average cost would be about $20, say, $5 for each. Now, if it takes about 20 mins for you to get there and 20 mins to get back to the office and just over one hour to have the meeting, that's nearly 2 hours out of your day. At cost, that would roughly be about $220, $100 per hour (internal labour - your time as a Business Owner / MD / Director) plus the coffee & muffins.

Now if you consider opportunity costs - if you were doing chargeable work for example in that time, you have just missed out on 2 hours, which you would probably charge out at about $250 per hour or more as someone with your calibre & expertise.

On top of braking your productive flow during the day, that coffee may have cost your business over $500!

I am all for having coffee meetings and catch-ups. I even believe they are an essential relationship management tool in today's world. But we almost never tend to think of the TRUE costs and certainly not of the OPPORTUNITY costs. Could a phone call or an email have been more appropriate? Or is dinner & drinks or a nice gift more appropriate than a coffee for that person, even? He or she could be a major & loyal client of yours or could be someone bringing in loads of decent business your way.

Marketing initiatives are very similar. If they do not generate enough value or you could get a better return on those same investment dollars in doing something else, you should do so. If one of them is working really well, you should do more of it - dinner & drinks or gift, not coffee!

The cost-to-benefit analysis applies to everything in our daily business life and includes everything we do, even THINKING about things - are we thinking about the right things? If it takes time, it costs money. And there should be a healthy return on that cost.

Both thinking & doing what's most beneficial for your business, always!


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2 Comments

James Chang - April 5th, 2011 at 7:18 PM
Thanks, never put much thought to the cost of coffee. I work from home, so I can't meet people at my "office". This means I do a lot of coffee meetings. After reading your post, I checked my books and it looks like I average about $100 a week on coffee. That seems a bit high, even if I don't include opportunity costs associated with my time. Perhaps I should put that towards renting an office...
Steve Crowe - April 21st, 2011 at 4:14 AM
When I started my business I certainly spent a lot of time having "coffees" as part of drumming up new business. But now I am a lot busier I have had to be very selective about who I meet with - there just isn't enough time in the day!

So this is a great post about actually quantifying the cost of these "coffees", and a great reminder to stay disciplined! Thanks Nick.
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