Hello everyone!
This morning we (Josephine, Rosita, Rasam, Shiva, Mussa, Vishal, Menno) sold coffee at the KTH campus at the V-building. We first thought that this would not be a great success. However, it turned out to be a real niche in the market, because there is no coffee store nearby in this building! Some people even told us that we were heroes! 😉
Our goal/strategy was to make as much profit as possible. We tried to do this by keeping our overall costs low and selling coffee at a location where we are the only supplier. This worked out perfectly.
We decided to sell instant coffee (pretty cheap) together with a cookie. Additionally we bought milk and cups. In the end the variable costs were 125,- SEK. Our fixed costs were 0,- SEK, because we did not made any capital investment and there were no labor costs. So we managed to keep our overall costs low.
Since the costs were so low, we were able to sell the coffee against a competitive price of 10,- SEK per coffee. Next to the coffee people got a free cookie.
We promoted our “coffee company” by contacting the people directly and by hanging promotion signs around the building.
Lets have a look at some micro economic stuff:
– Total costs: 125,- SEK
– Total revenue: 365,- SEK
– Total profit: 240,- SEK
– Total output: 36 coffees sold
– Average costs: 125/36 = 3.47 SEK
– Price: 10,- SEK
– Profit mark-up per coffee: 10-3.47 = 6,53 SEK
So, if you want to make money on a Monday morning when everybody is desperately looking for coffee, go to the V-building and sell it.
Thanks for reading!
Menno Koens