3 ms·

The long running mystery of ice coffee pricing

12 points by jonsteinberg 16y ago

JacobAldridge 16y ago
Depends what exactly they mean by 'ice (or iced) coffee'. When I was on holidays in Italy we discovered the 'cafe freddo' almost by accident. (Needing to buy a coffee to use the cafe bathroom, my wife didn't want a hot coffee, and in my limited Italian this was the best I could think to ask for). They made an espresso, and poured it over ice. Quick. Easy. And the same price (90 cents) as an espresso. In other words, there was no price difference or mystery. Back home in Australia, an Iced Coffee is a very different beast. There's probably fresh coffee in there ... plus milk, ice-cream, cream, some chocolate syrup on top. It's twice the size of a flat white. On a menu it is always associated with iced chocolates and milkshakes, not hot coffee. In this context, comparing ice coffee to hot coffee is almost like comparing buffalo wings to buffalo mozzarella. The similarity in name doesn't necessitate similarity in pricing.
scott_s 16y ago
My local coffee shop (Bollo's in Blacksburg, VA) charges the same for iced coffee as they do for a house mug and a small to-go.
jrockway 16y ago
I have never noticed much difference between iced coffee and hot coffee, but I am mostly an espresso drinker. In the case of iced espresso beverages, most coffee shops around here (megachain or otherwise) typically add an extra shot of espresso to the iced drinks, presumably to compensate for the melting ice. This adds to the cost, as more coffee is going into the drink. Now, whether or not a shot of espresso costs a dollar is a whole other issue, but it does make sense. You aren't paying for coldness or the different cup or "seasonal rarity", you're paying for that extra shot at the usual extra shot price.
jonsteinberg 16y ago
In New York and the northeast in general, they usually brew, cool, refrigerate and then ice the coffee.
ihodes 16y ago
Iced coffee or cold-press? There's a difference, though both are served over ice. Cold-press is actually brewed cold, and it takes hours to have a well-brewed batch. That is a major reason the costs are different—prep time is much longer, and there are risks associated with preparing food in advance. Iced coffee, real iced coffee (not cold press), is crap. It's hot brewed coffee refrigerated and/or poured over ice. This messes with the composition of the liquid, and generally causes it to become bitter. (Though if it's espresso, the results are different...) Mystery solved, perhaps?
- jonsteinberg 16y ago
  Unlikely to be cost-plus pricing. It's about what the market will bear
  - ihodes 16y ago
    Right. It would have nothing to do with the tangible increase in labor and materials: electricity, space, more grounds-per-oz of coffee. Come on, really? Yes the price is dependent on what people are willing to pay, but there is a very real and legitimate reason for the drink to cost more.
    - mynameishere 16y ago
      Come on, really? Umm, yes? A lot of coffeeshops will charge say 1.50 for an Americano, but 50 cents for an additional shot of espresso in a normal coffee. The only explanation is: That's what the market will bear.
    - techiferous 16y ago
      Come on, really? Yes. There's a great explanation from The Undercover Economist. It's a great read. Highly recommended: http://www.amazon.com/Undercover-Economist-Exposing-Poor-Decent/dp/B0018SYWWU http://www.amazon.com/Undercover-Economist-Exposing-Poor-Dec... Update: Here's a link to the explanation: http://books.google.com/books?id=YAA8hPloNRcC&pg=PA30&lpg=PA30&dq http://books.google.com/books?id=YAA8hPloNRcC&pg=PA30&#3...
psyklic 16y ago
I bet it has to do with our psychological willingness to pay more for a cold drink on a hot day.
ghshephard 16y ago
I guess I shouldn't mention the coffee shops I know that simply refrigerate their hour-old coffee and then put it on ice when someone asks for an iced coffee...
kgermino 16y ago
To answer the author's closing question (why hasn't anyone lowered the price and advertise it). It's likely because so far there's been room for everyone and noone wants to start a price war on what I assume is a cash cow.
joecode 16y ago
The real mystery is why regular coffee is so cheap in the U.S., compared to say, France or Germany. I think Americans have just come to expect regular coffee to be $2 maximum, and react irrationally when it is any higher. But iced-coffee is a different beast, where market forces work more normally, and so it is priced on par with lattes and other drinks.
wanderr 16y ago
My favorite coffee shop actually charges less for iced coffee than hot, but: -They brew hot coffee one cup at a time with very high quality coffee -They use an admittedly lower quality coffee for iced so that it tastes stronger. It's still good, but their cost of supply is lower. -They brew iced coffee in batches, so the labor involved in making 40 cups of iced coffee is significantly lower than 40 cups of hot coffee. Side tangent: It annoys the crap out of me that Starbucks makes it /cheaper/ to get a large iced americano with 4 shots compared to a medium with 4 shots. Obviously a large americano costs them slightly more (bigger cup, more ice), but they should at least be the same price. Absolutely ridiculous that I have to pay more to get it in a smaller cup and have it be less diluted.
- pasbesoin 16y ago
  It used to be that, in some of these situations at Starbucks, you could request the cheaper drink with a modification that made it essentially into the more expensive drink. For example, ask for the large but with only so much ice. The experienced baristas often knew what you were about, but never seemed to mind. A bit of a waste of a larger cup, but then... Maybe you could order the large drink in a medium cup? If you order a hot tea with only one bag but in a grande (medium) cup, they are supposed to only charge you for a tall (small) (or were supposed to, at one point). (Some staff knew this; others did not.) I feel a bit silly, making this comment. On the other hand, it is another aspect of Starbucks allowing the customer to customize/"hack" their drink. It seems to accomplish a certain level of customer "engagement" with the purchase activity and product offerings.
  - wanderr 16y ago
    My girlfriend was a barista in college, so I know about the hacks but I feel like enough of a dork ordering a "tall quad iced americano with a splash of soy" without making it even more complicated. Honestly I'd rather just pay the extra at that point. :P
    - pasbesoin 16y ago
      Ah, yes, the "splash of soy". And, will they charge you the soy upcharge, or not? ;-) (Back when I was a more regular customer, it seemed to depend on the staff and/or attitude/directive of the management at the particular store.)

12 points by jonsteinberg 16y ago

Depends what exactly they mean by 'ice (or iced) coffee'. When I was on holidays in Italy we discovered the 'cafe freddo' almost by accident. (Needing to buy a coffee to use the cafe bathroom, my wife didn't want a hot coffee, and in my limited Italian this was the best I could think to ask for). They made an espresso, and poured it over ice. Quick. Easy. And the same price (90 cents) as an espresso. In other words, there was no price difference or mystery. Back home in Australia, an Iced Coffee is a very different beast. There's probably fresh coffee in there ... plus milk, ice-cream, cream, some chocolate syrup on top. It's twice the size of a flat white. On a menu it is always associated with iced chocolates and milkshakes, not hot coffee. In this context, comparing ice coffee to hot coffee is almost like comparing buffalo wings to buffalo mozzarella. The similarity in name doesn't necessitate similarity in pricing.

scott_s 16y ago

My local coffee shop (Bollo's in Blacksburg, VA) charges the same for iced coffee as they do for a house mug and a small to-go.

jrockway 16y ago

I have never noticed much difference between iced coffee and hot coffee, but I am mostly an espresso drinker. In the case of iced espresso beverages, most coffee shops around here (megachain or otherwise) typically add an extra shot of espresso to the iced drinks, presumably to compensate for the melting ice. This adds to the cost, as more coffee is going into the drink. Now, whether or not a shot of espresso costs a dollar is a whole other issue, but it does make sense. You aren't paying for coldness or the different cup or "seasonal rarity", you're paying for that extra shot at the usual extra shot price.

jonsteinberg 16y ago

In New York and the northeast in general, they usually brew, cool, refrigerate and then ice the coffee.

ihodes 16y ago

Iced coffee or cold-press? There's a difference, though both are served over ice. Cold-press is actually brewed cold, and it takes hours to have a well-brewed batch. That is a major reason the costs are different—prep time is much longer, and there are risks associated with preparing food in advance. Iced coffee, real iced coffee (not cold press), is crap. It's hot brewed coffee refrigerated and/or poured over ice. This messes with the composition of the liquid, and generally causes it to become bitter. (Though if it's espresso, the results are different...) Mystery solved, perhaps?

jonsteinberg 16y ago
Unlikely to be cost-plus pricing. It's about what the market will bear
- ihodes 16y ago
  Right. It would have nothing to do with the tangible increase in labor and materials: electricity, space, more grounds-per-oz of coffee. Come on, really? Yes the price is dependent on what people are willing to pay, but there is a very real and legitimate reason for the drink to cost more.
  - mynameishere 16y ago
    Come on, really? Umm, yes? A lot of coffeeshops will charge say 1.50 for an Americano, but 50 cents for an additional shot of espresso in a normal coffee. The only explanation is: That's what the market will bear.
  - techiferous 16y ago
    Come on, really? Yes. There's a great explanation from The Undercover Economist. It's a great read. Highly recommended: http://www.amazon.com/Undercover-Economist-Exposing-Poor-Decent/dp/B0018SYWWU http://www.amazon.com/Undercover-Economist-Exposing-Poor-Dec... Update: Here's a link to the explanation: http://books.google.com/books?id=YAA8hPloNRcC&pg=PA30&lpg=PA30&dq http://books.google.com/books?id=YAA8hPloNRcC&pg=PA30&#3...

psyklic 16y ago

I bet it has to do with our psychological willingness to pay more for a cold drink on a hot day.

ghshephard 16y ago

I guess I shouldn't mention the coffee shops I know that simply refrigerate their hour-old coffee and then put it on ice when someone asks for an iced coffee...

kgermino 16y ago

To answer the author's closing question (why hasn't anyone lowered the price and advertise it). It's likely because so far there's been room for everyone and noone wants to start a price war on what I assume is a cash cow.

joecode 16y ago

The real mystery is why regular coffee is so cheap in the U.S., compared to say, France or Germany. I think Americans have just come to expect regular coffee to be $2 maximum, and react irrationally when it is any higher. But iced-coffee is a different beast, where market forces work more normally, and so it is priced on par with lattes and other drinks.

wanderr 16y ago

My favorite coffee shop actually charges less for iced coffee than hot, but: -They brew hot coffee one cup at a time with very high quality coffee -They use an admittedly lower quality coffee for iced so that it tastes stronger. It's still good, but their cost of supply is lower. -They brew iced coffee in batches, so the labor involved in making 40 cups of iced coffee is significantly lower than 40 cups of hot coffee. Side tangent: It annoys the crap out of me that Starbucks makes it /cheaper/ to get a large iced americano with 4 shots compared to a medium with 4 shots. Obviously a large americano costs them slightly more (bigger cup, more ice), but they should at least be the same price. Absolutely ridiculous that I have to pay more to get it in a smaller cup and have it be less diluted.

pasbesoin 16y ago
It used to be that, in some of these situations at Starbucks, you could request the cheaper drink with a modification that made it essentially into the more expensive drink. For example, ask for the large but with only so much ice. The experienced baristas often knew what you were about, but never seemed to mind. A bit of a waste of a larger cup, but then... Maybe you could order the large drink in a medium cup? If you order a hot tea with only one bag but in a grande (medium) cup, they are supposed to only charge you for a tall (small) (or were supposed to, at one point). (Some staff knew this; others did not.) I feel a bit silly, making this comment. On the other hand, it is another aspect of Starbucks allowing the customer to customize/"hack" their drink. It seems to accomplish a certain level of customer "engagement" with the purchase activity and product offerings.
- wanderr 16y ago
  My girlfriend was a barista in college, so I know about the hacks but I feel like enough of a dork ordering a "tall quad iced americano with a splash of soy" without making it even more complicated. Honestly I'd rather just pay the extra at that point. :P
  - pasbesoin 16y ago
    Ah, yes, the "splash of soy". And, will they charge you the soy upcharge, or not? ;-) (Back when I was a more regular customer, it seemed to depend on the staff and/or attitude/directive of the management at the particular store.)