Why is iced coffee more expensive than hot coffee?

Why is iced coffee more expensive than hot coffee?

You can check the answer of the people under the question at Quora “how much is an iced coffee

0 thoughts on “Why is iced coffee more expensive than hot coffee?”

  1. I was a Barnes & Noble Cafe manager for four years (not technically a Starbucks, but we exclusively brewed Starbucks coffee) and this is why iced is more expensive: Iced coffee is brewed double the strength of regular drip coffee. Ice is added to the pitcher which dilutes the coffee somewhat as it melts, but even so, it takes two cups of ground coffee to produce two liters of iced coffee, whereas it takes one cup of ground coffee to make a whole airpot of brewed drip coffee, which is approximately three liters. So yes, it does cost more to make it, and in general, the retail prices are determined by the cost of ingredients, plus the time spent making the drinks. If it takes three minutes to make a Vivano smoothie, or one to two minutes making a custom Frappuccino, it’s going to cost more because you could sell ten or more drip coffees in that time frame. Not that I’m trying to stick up for Starbucks, I just figured maybe this would help clear up some misconceptions.

    Reply
  2. Assuming cost is the driver of pricing is backwards economics when it comes to industries that are not perfectly competitive, like retail coffee sales. Economic actors (in this case, Starbucks or Dunkin Donuts) do not price to cost, but rather price primarily to demand. So the fact that iced coffee costs more than hot coffee is not a result of the higher costs of making it–it is because consumers come to market willing to pay more for iced coffee than hot coffee. Producers price their iced coffee to maximize profit — a maximization that trades off the reduction in demand when prices increase against the increase in per-item profit. Roughly speaking, they choose the highest possible price that can cover their costs and lock in profit without reaching too high and decreasing consumer demand. If the cost of electricity increases, for instance, making it more expensive to chill all the ice for iced coffee, and producers pass all the increase onto consumers, they risk exceeding the price consumers are willing to pay, which would reduce demand. Instead, they do a more delicate calculation to determine the optimal way to take the cost increase into account.
    The only explanation that presents itself for greater demand for iced coffee is consumer preference. Iced coffee is seen as a sort of a luxury item, something you get on a summer day, such as on vacation, whereas a cup of “joe” is a daily staple that you drink at work.

    Reply
  3. The reason is simple: iced coffee costs more if the shop is using the cold brew method.
    Cold brew coffee, for the uninitiated, is coffee brewed with cold or room-temperature water instead of hot water. Since the lower temperatures mean extraction is slow, it can take hours to make—often half a day—and requires more coffee. A standard water to coffee ratio might be 17:1. For cold brew, it might be 4.5:1. This coffee, labor, and time simply makes the process more expensive than a quick hot brew, where the water says goodbye to the grounds in a matter of minutes.

    Reply
  4. You have to use double the amount of coffee in order for it NOT to taste watered down when you add ice.
    Doubble the amount of coffee
    Plastic cups are more expensive then paper or foam hot cups
    Syrups (which are more expensive) is usually used rather then typical crystallized sugar. Syrup mixes and dissolves much easier then sugar in cold beverages.

    Reply
  5. Any good coffee house prepares iced coffee with the cold-brewing process, which requires more coffee per cup than hot brewing. In my experience, 1 serving of cold-brewed coffee requires 1/3 cup of ground beans.

    Victor Allen’s

    Reply
  6. Considering that there is usually 300% mark up on most coffee beverages, we are talking about almost a 400% mark up on ice beverages when in reality your using less coffee because of frozen H2O ( isnt that usually free?) . The reason why they (the big coffee players) charge more is because perception drives reality and people do not realize that its cheaper to produce one single ice coffee than a steamed or hot drink. In fact, until people start to complain or start to question the fact that they are getting less coffee than a hot beverage because of ice and also cheaper prices of using plastic versus paper the price will always be higher.

    Reply
  7. “There is a wide range of health benefits associated with its moderate consumption,” says Dr. Hu. – Many large studies have shown that the presence of coffee in the menu is associated with a reduction in the risk of developing type 2 diabetes, cardiac and neurodegenerative diseases, premature aging. It is also reasonably associated with improving cognitive function and reducing the risk of depression. “

    Why is iced coffee more expensive than hot coffee?

    The exact mechanism by which coffee has the ability to work on all of the above has not yet been studied. However, researchers believe that to a greater extent this is due to the levels of antioxidants, polyphenols and minerals.
    But whilst the brue can clearly boast of the same advantages as the classic espresso, he has one important bonus associated with just the temperature.
    So, if you are not drinking coffee with ice, but it is the coffee of cold brewing, which is infused during the day, then you are dealing with a drink that is less acidic than regular coffee. “This suggests that your digestive system can be easier. This is especially important for people who suffer from heartburn or other digestive disorders, “explains Joan Salge Blake of Boston University.
    Frank Hu adds that, due to the lower acidity, the bru requires less additives. “Since people no longer need to mask acid with sugar, milk or whipped cream, the drink turns out to be much less caloric,” he explains.

    Reply
  8. Every place that sells coffee sells hot coffee, so there is more competition.
    Iced coffee could also be perceived as an upgrade or add-on to hot coffee, or as a specialty item, and people may be less price sensitive due to that perception. Maybe iced coffee is drunk by more upscale customers, and price discrimination is going on. Price discrimination happens with hot coffee as well — you can pay anywhere from $.75 to around $5 for a cup of coffee depending on where you buy it and how it’s made. Coffee (unlike, say, cola) is a product which has many variations, as well as high demand from both low and high end customers, so that lots of price discrimination seems to occur.
    This would be a good opportunity for a representative of Starbucks to step in. Any Starbucks employees on Quora?

    Reply
  9. A fairly basic economic argument.
    Scarcity of iced coffee vs. hot coffee is why iced coffee is more expensive.
    # of places you can get hot coffee – Starbucks, McDonalds, Coffee machine at work, at home (if you own a coffee machine), vending machines etc.
    # of places you can get iced coffee – Starbucks, McDonalds (but NOT at work or home usually)
    The price is higher because it is more scarce.

    Dunkin’

    Reply
  10. Other answer is that the guy who sold/rented the deli the iced coffee machine (they exist..its not just coffee + ice/fridge) told them they should sell it for more..so they do.

    Reply
  11. While that is often the case in the US, it is not necessarily so in other parts of the world. I live in Asia, for example, and for any coffees that are offered hot or cold, the price is the same either way.

    Reply
  12. As Chris Dixon said, it’s got nothing to do with costs.
    inelastic demand.
    in other words – people don’t care if it costs more – they’ll still buy it.
    two reasons:
    1) it’s still only a few bucks and you are REALLY hot – so you don’t care.
    2) And it’s not the kind of thing you buy everyday – so you know it doesn’t matter relative to your income vs normal coffee that you buy daily – so you don’t care.

    Reply
  13. Ok one more attempt at this the price of an item with high demand is set by the use of price discovery and profit optimization. Think of it this way you have a graph with (to make it simple in reality the lines would be curved) a big X on it. The vertical plane is cups sold the horizontal is price. One line graphs cups sold the other line graphs price per cup. Were the two lines meet is the optimum revenue generating price.

    Reply
  14. The trendiest—and most expensive—way to serve “good” iced coffee is to “cold brew” it. Cold brew is made by grinding beans coarsely, having them sit in room-temperature water overnight, and then filtering the grinds out to produce cold-brew concentrate. This extract is then cut with water to make what we know as iced coffee. Some coffee shops dilute the concentrate more than others. But the amount of cold-brew iced coffee you get from one bag of beans is significantly less than what you would get if you used it for automatic drip hot coffee.
    Not to mention, making cold brew requires more labor and planning than making a quick batch of hot coffee. Most industrial-sized setups make about 10 liters of concentrate, and setting each one up can be laborious. So if the coffee shop is making real cold-brew coffee, a price increase is warranted.
    There are other ways to make iced coffee—some cost more, some cost less. But most places utilize the cold-brew method because it’s become nationally known as a “craft coffee” practice.

    Reply
  15. part of it that it cost more to make,also the concept that you can’t get it every where,if you are at an amusement park and thirsty you would pay $3.00 for a bottle of water that other wise cost $1.00 at the store.

    Reply
  16. My theory is based off Robert Cialdini’s principles. People buy coffee out of habit; it’s an internal commitment. While “hot coffee” on very hot day is not so appealing, the psychological urge to maintain consistency persists. People want to be consistent, but they also want the best experience. Combined with the social proof of iced coffee being the trendier choice on a hot day, it makes sense that venues could get away with higher price points

    Reply
  17. Price discrimination, redux: on a hot day, you’ll drink iced coffee to cool down fast. On a cold day, you won’t drink coffee to warm up; you’ll wear a sweater.

    Reply
  18. Different organizations price their products differently. Some will do so on a cost-basis – others on what the market demand will actually sustain.
    It’s worth considering the role that seasonality plays in pricing here. Cold coffee is a treat that you would probably enjoy on a hot day – whereas hot coffee is something you enjoy on a daily basis – or when it’s cold outside.
    Thus the price of both coffees may fluctuate depending on the season – though perhaps not enough for the more expensive drink to become cheaper than the other beverage.

    Reply
  19. Service is required for iced coffee – hot coffee they just brew and pour. With iced coffee, they have to have the space to refrigerate and (hopefully, if it is more expensive) they should be shaking it with sweetener and milk/cream.

    Reply
  20. Iced occasional is brewed otherwise than hot coffee — which means that it prices additional to form. Most occasional retailers create their {iced occasional|ice coffee|coffee|java} employing a totally different methodology than the one they use for warm coffee, and therefore the method is costlier and additional long. … occasional that’s brewed cold uses concerning doubly as several beans as hot brew

    Reply
  21. Cold coffee is expensive than hot coffee because of its costing –
    Cold coffee quantity is almost double of hot coffee.
    Proportionately extra coffee powder or concoction adds to cost
    Cold coffee is more thick and creamy, either full cream milk is used ice cream is added to attain the texture.
    Presentation of cold coffee is better than hot coffee (at least a straw)adds to cost.

    Reply
  22. 1.) Cold-brewing involves mixing pulverized beans with water, but the latter process requires about twice as much ground coffee.
    2.) Clear plastic cups are twice as expensive as paper cups. Straws are another expense.
    3.) Renting an ice machine for ice coffee costs more.
    4.) For a coffee shop to thrive, its owners must keep their cost-of-goods around 28 percent of menu price.

    Reply
  23. At starbucks the reason iced coffee is mote expensive since it is sweetened. You are paying extra for the classic sweetener that is standard to recipe. As well as more labor intensive and stuff!

    Reply
  24. Eh? No-one has come near the answer that immediately occurred to me: They charge more for it because they can . That’s capitalism.
    That the thought occurred to someone to charge more for something cold when it normally comes hot – that’s marketing 🙂

    Reply
  25. Both of my answers have been said but thinking in the NYC context…
    1) just about any office has a hot coffee maker, which drives down the price of hot coffee relative to iced.
    2) one usually buys iced coffee on a hot day to cool off, so the utility you gain and your willingness to pay go up.
    Thanks for the Quora invite!

    Reply
  26. I think it has something to do with scale. Just like a 50″ TV is more than 50/42 the price of a 42″ TV (it’s usually 2x the price), iced coffee faces a similar dynamic.
    Ice coffee is made in pitchers for demand that is not even day to day, while normal coffee is made in huge vats that have predictable demand throughout the day.

    Reply
  27. If it’s a *good* iced coffee, then the coffee should be brewed a lot stronger than hot coffee. This is because as ice is added, the coffee is diluted. So a normal strength brew would become weak and watery after adding ice, but a strong brew will stand up to the additional water added by the melting ice. So besides ice, more coffee beans and grounds are consumed when brewing the coffee, therefore driving the price up.

    Eight O’Clock

    Reply
  28. Two more reasons:

    Iced coffee costs more to make , because it takes a while to brew / cool it
    Price discrimination . Iced coffee, at least in my experience, is viewed as a somewhat upscale drink, compared to normal coffee which is drunk by everyone. Moreover, iced coffee drinkers have higher demand for it – because they not only want coffee but relief from the heat.

    Reply
  29. Call me simple, and I kowtow to the coffee experts out there, but I’m guessing the price increase is due to the additional time/effort it takes to make fresh iced coffee. Do your own A/B test. (A) Brew a cup of hot coffee and enjoy. (B) Brew a cup of hot coffee, then transfer it into a cooling environment, then enjoy. (B) is more painful (although not by much) every time.

    Reply
  30. Iced coffee is a different beast than hot coffee, both literally and from a marketing perspective.
    Literally, iced coffee is cold brewed. This process takes longer and is more expensive than normal brewing methods for hot coffee. This has been outlined above.
    More importantly, you should remember that iced coffee became popular after what I call Starbucks’ “Britney Spears on US Weekly Cover” phase. This is when little girls and non coffee purists started buying frappuccinos in bulk and coffee shops started profiting heavily from iced coffee. This led to the price discrimination detailed above.

    Reply
  31. This question has caused many coffee lovers to shun iced coffee without even trying the glorious summer drink. It doesn’t make sense to most people. Why on earth would it cost more to put ice in coffee?
    The answer: There’s more to it than pouring coffee over ice.
    In good shops, iced coffee is all cold-brewed. That means that the shop is using more beans to brew the coffee. Try making good cold brew coffee from home and the cost per cup will suddenly make sense. You’ll go from using a few scoops of grounds for eight cups of coffee to using one cup of grounds for four cups of coffee.
    If you’ve ever watched a chain coffee shop pour hot coffee over ice and serve it as iced coffee, though, there’s more to the answer. It’s the ice. It might not make sense at first, but electric bills rocket when a coffee shop runs an industrial ice maker. Coffee shops also spend top dollar on the best blenders, which still must be replaced often.
    The cups are another part of why iced coffee is pricier. Those clear plastic cups cost more than the paper cups and, like all plastic, their price varies depending on the price of petroleum. While we’re on the topic of expensive plastic, there’s also the straws. Straws aren’t optional for most iced coffee and each straw adds a couple cents to the cost of your iced coffee.
    It sounds silly, but if you were running the business, it’d make sense to you, too.

    Reply
  32. The best way to brew iced coffee is to slowly drip cold water through coffee grounds… this way the iced coffee does not become acidic/ bitter… this is a very slow process and can take hours. The amount of time it takes could be why the cost is higher..

    Reply
  33. Namely because they can and believe they are revenue maximizing by doing so. However, if they chose to argue on the basis of cost, vendors could argue:

    1) Labor: It’s brewed, cooled, placed in a storage pitcher, and placed in storage (not served in real time)
    2) Storage: It’s stored in a fridge
    3) Time: Takes longer to make because it needs to be cooled.
    4) Scarcity: Time + Storage
    5) Cup: the plastic cups cost a few cents more
    Most places will sell you a hot coffee and give you a free cup with ice, to make a watery ice coffee.

    Reply

  34. Reply

Leave a Comment