While It wasn’t the original purpose of the article, I found an interesting business lesson in an article by Stephanie Nolen in the Globe and Mail on coffee.
Nevertheless, a typical Ethiopian coffee farmer still receives less than 1 per cent of what Canadian consumers pay for their lattes. (The farmers sell red cherries for 1 birr, or 11 cents per kg, it takes six kg of cherries to make one kg of green beans, 1.2 kg of green beans to make 1 kg of roasted beans, and each kilo of roasted beans makes 60 cups, sold for an average of $3 each, or $180.)
That makes me think. When we’re examining the business potential in our work, how much is there that we purchase for which we don’t know the margin? If Starbuck’s price margin was more generally known, would competition and price wars start up? Perhaps it’s just idle speculation on my part, but I love learning how things work. As a child I would take apart toys, and now as an adult I take apart economics. Not only does this outlook help me find opportunities, it also helps me find savings. So, next time you’re out buying something, just ask yourself how much of that is cost, and what’s the markup?
Originally posted on May 19, 2006 @ 3:11 pm