Hey folks! Mark here, founder and primary weirdo behind Latigo Coffee. Very soon we'll be increasing our subscription rates, but wanted to take a hot second before doing so and explain "why." We try to keep things honest and transparent 'round here, and I hope you find this account below helpful. To get in touch, just send me a note at firstname.lastname@example.org. Thanks!
When we first set out to build the business model for Latigo (back in summer of 2016), we came up with an average "green coffee" price of $3.50/lb. Now more than a year into business, our actual green coffee cost averages $4.74/lb (a solid 25% increase over what we had originally predicted). That might not seem like a lot, but it certainly adds up when running a coffee business where margins are already quite thin.
(Side note: "green coffee" refers to the unroasted beans we purchase directly from a variety of high-quality importers. Once picked, processed and shipped - coffee retains a blue-green color that's really quite beautiful).
We've tasted incredible coffees where the green cost is $3/lb ... and we've tasted really lame coffees where the green cost is $6.50/lb. The trick is constantly cupping whatever you can get your hands on, and being open to something that might surprise you.
Aside from our "green coffee" costs, the next biggest expense with every roast is shipping. At the moment, our current "First Class" USPS rates are as follows: $3.18 for the 6oz option and $4.94 for the 12oz option. We ship Priority Mail for the larger 24oz "Tandem" option, and depending on where that's going within the USA it may vary from $7-10.
Since launching in January 2017, the USPS "First Class" rates have increased roughly 25%. That's a lot in a short amount of time. Since we have no desire to ever tack on a "shipping rate" at checkout (and in order to prepare for inevitable future USPS rate increases), a bump in the base subscription costs is a must for us.
We're also in the process of making all of our packaging (coffee bags + mailers) better. We want to use less material, and get everything looking as professional as possible when it shows up at your door (our 6oz subscribers might have noticed a recent change). This process (from design, to min. order quantities, to more sustainable packaging) also requires more money.
In our very short time of existence, we've done something very important that probably takes other companies many years to do: we figured out our "voice." That encompasses quite a bit: from the way we talk about the coffees we feature, to the Latigo Q&A Series, to the Spotify playlists, to our outdoor activism. We took the stuff we know and love and created a brand around something that connects (mostly) all of us - coffee.
That is not to say that we're making heaps of money in the process. In fact, up until this point we've basically been breaking even on most roasts. Some businesses get lucky and start making money right away (certainly a rare circumstance), and most will lose money in their first few years of existence. We're happy that we've been able to get the word out and create the foundation for our company without taking a hit financially. Latigo is a 100% self-funded venture.
We were also pretty timid to charge "specialty coffee" prices from the get-go, as a brand new business with zero traction in the market. 15 months and 33 coffees later (with hundreds of stoked subscribers), we have a lot more confidence built up in the product and would stack any of our coffees next to Big Dogs.
By way of comparison, take a look at Stumptown's "Hair Bender" subscription (for home and office). On the lowest end, you're looking at $16 for an 8oz bag of coffee - the same price we charged for our standard 12oz offering, for 33% less beans. You could run the same calculations for Blue Bottle, Intelligentsia, Counter Culture and other subscription-based coffees and discover that we've been priced on the lower end of the spectrum. We certainly have no desire to give the impression that "... if it's that cheap, it's probably not good." Which - if you've been rad enough to taste our coffees - you'll know 'aint right.
We're not the only subscription coffee company out there - but we certainly aim to be the most fun. In order to continuously improve and deliver goodtimes to our subscribers, we're looking to grow from a small operation to a thriving business in 2018. Will you help us get there?