How to Price a Latte: Formula, Cost Breakdown & Profit
What a latte should cost you, and what you should charge
A latte priced correctly covers its recipe cost, labor, and overhead while hitting your target beverage cost percentage. According to Zest Specialty Coffee Roasters (2025), coffee shops should aim for a coffee cost of goods sold (COGS) of 20–25% of coffee sales. If your latte costs you $1.20 to make, you need to charge at least $4.80 to stay at 25% COGS, or $6.00 to hit 20%.
The formula in words: Menu price = recipe cost ÷ target beverage cost %. Round up to the nearest quarter dollar for simplicity at the register.
Example: pricing a 12 oz latte (fictional cafe, realistic numbers)
Recipe cost breakdown:
- Espresso (18 g, $28/kg green, roasted in-house): $0.50
- Milk (10 oz, $4.50/gallon): $0.35
- Cup and lid (12 oz compostable): $0.20
- Sleeve and napkin: $0.05
- Total recipe cost: $1.10
Target beverage COGS: 22% (middle of the 20–25% range).
Suggested menu price: $1.10 ÷ 0.22 = $5.00 (rounded to $5.00).
Check: $1.10 ÷ $5.00 = 22.0% beverage cost. Contribution margin per latte: $5.00 − $1.10 = $3.90.
If you sell 120 lattes per day, that is $468 in contribution margin per day, or $14,040 per month, before labor and rent.
Five reasons your latte margin is lower than it should be
- Prices have not been updated since your supplier raised theirs. Milk, coffee, and disposables all went up in the past 12 months. If your menu still shows last year's prices, your COGS percentage climbed without you noticing.
- Free pours and inconsistent shots. A barista who pulls 20 g of espresso instead of 18 g adds 11% to the cost of every drink. Over 3,600 lattes per month, that is $198 in lost margin.
- Cup size creep. You charge for a 12 oz latte but the barista fills a 16 oz cup because "the customer is nice." That extra 4 oz of milk costs you $0.14 per drink, or $504 per month at 120 drinks per day.
- Waste in milk pitchers. Steaming more milk than needed and dumping the rest costs you 5–10% of your milk budget. Measure pitcher volumes and train your team to steam only what fits in the cup.
- No cost tracking for seasonal or flavored drinks. A pumpkin spice latte with house-made syrup might cost you $1.80 instead of $1.10, but you charge the same $5.00. Run the numbers for every drink on your menu, not just the plain latte.
What to do this week
- [ ] Cost out your three best-selling drinks. Weigh the coffee, measure the milk, add the cup and lid. Write down the total recipe cost.
- [ ] Check your last invoice from your coffee roaster and dairy supplier. Compare the prices to what you used when you set your menu. If they went up more than 5%, your menu is out of date.
- [ ] Calculate your current beverage COGS percentage. Beginning inventory + purchases − ending inventory, divided by coffee (or beverage) sales. If it is above 25%, your prices are too low or your portions are too big.
- [ ] Pick one drink to reprice. Use the formula above. Round to the nearest $0.25. Update your POS and print new menu boards.
- [ ] Train one barista on portion control. Show them the gram scale and the pitcher fill line. Measure three drinks together and compare the cost.
FAQ
What if my customers complain about a price increase? A $0.25 or $0.50 increase on a latte is normal when costs go up. Most customers understand. If you are worried, raise prices on new or seasonal drinks first, then adjust the core menu in three months.
Should I charge more for oat milk or almond milk? Yes. Alternative milks cost more than dairy; check your supplier invoice for the exact gap. Add $0.50 to $1.00 per drink to cover the difference and keep your beverage cost percentage in range.
How often should I recalculate my menu prices? Every time your supplier raises prices, or at least twice per year. If your beverage COGS percentage drifts above 25% for two months in a row, reprice immediately.
Track your real beverage cost percentage this month
You cannot price a latte correctly if you do not know what your current beverage cost percentage is. Download the free Food Cost & Prime Cost Calculator to see your real numbers in two minutes: beginning inventory, purchases, ending inventory, and beverage sales for the month. The sheet calculates your beverage cost percentage and shows you how it compares to the 20–25% benchmark.
Get the free calculator here — works in Excel and Google Sheets, no sign-up required.