Sunday, April 5, 2015

How To Rationalize a $1,000 Coffee Machine

My Current Setup - Overly Manual...

Justifying an expense coffee machine... it's payback time!

A Seattle Times article about the rise of single cup brewers, Single-serve coffee revolution brews industry change, states 1 in 5 Americans are using Single Serve brewing machines like Tassimo, or K-Cups.

These machines are convenient, fast, and reduce waste by allowing you to only make as much coffee as you need. The ability to quickly switch between different drinks (espresso, bold, vanilla hazel nut, tea, decafe) is also a strong differentiator between these machines an other alternative ways of making coffee.

What If I Want Something Fancier?



While single cup pod machines that cost $100-$200 are good, there is a whole world of $600-$4,000 fully automatic machines that take whole beans, grind them and turn them into coffee. One example, a $1000 Jura fully automatic machine. At the push of a button, these machines take whole beans and make coffee or espresso. Some of the fancier models allow settings to control the drink strength, and even better, have internal counters for statistics like how many cups they've made!

While most people would consider $1000 an outrageous amount of money for a coffee machine, through the power of math, I will convince you this is not true and these machines are comparable to pod machines.

Assumptions

To calculate the difference between a machine that takes whole beans as input, versus pods, I'm using the following assumptions:

  1. Coffee consumption is 1 cup per weekday, 3 cups on a weekend = 11 cups per week. This is rather low for a household, but is what my consumption is currently at.
  2. Whole bean coffee is $15.99 / KG. I've seen it at my local grocery store as low as $10/KG for Lavazza Rossi, although I often buy one that is $30 per KG Gran Orno and delicious. .
  3. A 1KG bag of coffee will make 85 cups of coffee - I reached this by tracking the 
  4. Pod coffee are  $0.54 per pod.
  5. Maintenance on either machine ($100 pod machine or $1000 whole bean super-automatic) is not required.
  6. Excluding cost of electricity.
  7. Excluding cost of cleaning kits for a fully automatic machine, since any nominal cleaning cost would be made up for by superior taste.



The Power of Math Compels You

Fancy grinder machine: $16/KG = $16/85 cups of coffee = $0.19 per cup = $2.09 per week
Pod machine = $0.541 per cup = $5.95 per week

Price difference per week = $3.86
Price difference per year = $200

So a $600 machine has payback in 3 years.
A $1000 machine pays back in 5 years.

If your consumption is more than 11 per week, then the payback is even faster. If you have 22 coffees a week, your payback on a $600 machine drops to a very reasonable 1.5 years.

Conclusion

The primary advantage of a pod machine, is the ability to make a variety of different drinks. If you're always making the same drink, namely one variety of coffee that isn't flavoured, then for a comparable cost you can have an automatic grinding machine which freshly grinds beans and makes coffee or espresso at the push of a button.

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