· Model A – “Straight 60% Profit” (only one markup on source, no other costs)
· Model B – Realistic Staged Model (from previous answer: tariffs, logistics, wholesale, retail markups)
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Assumptions (same for both models)
Item Value
Green coffee source price (Nicaragua) $0.003 / gram ($3.00 / kg)
Roasting loss (14%) & packaging Ignored for simplicity – focus on markup comparison
Shipping/logistics (container, trucking) Model B includes; Model A assumes zero
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Model A – Straight 60% Profit on Source Cost
“Buy at source, add 60% profit, sell directly – no other costs.”
Stage Cost per gram Calculation
Source cost $0.003000 –
+60% profit (markup on cost) + $0.001800 0.003 × 0.60
Final price to consumer $0.004800 / g
Per 12 oz bag (340 g): $0.004800 × 340 = **$1.63**
Profit margin on final price: 60% markup = 37.5% margin
(Profit = $0.0018, Price = $0.0048 → $0.0018/$0.0048 = 37.5%)
✅ Result – Extremely low final price. Impossible in real world because it ignores shipping, roasting, warehousing, retail.
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Model B – Staged Model (Tariffs + Logistics + Wholesale + Retail)
Based on typical Nicaragua → California supply chain.
Stage Cost per gram Calculation
Source cost (green) $0.003000 –
+ U.S. tariffs & fees (0‑18% – use 10%) + $0.000300 0.003 × 0.10
+ Ocean freight + trucking (approx) + $0.001000 fixed estimate
= Landed cost (importer/wholesaler) $0.004300
+ Wholesaler markup (30% on landed) + $0.001290 0.0043 × 0.30
= Wholesale price $0.005590
+ Retailer markup (40% on wholesale) + $0.002236 0.00559 × 0.40
Final price to consumer $0.007826 / g
Per 12 oz bag (340 g): $0.007826 × 340 = **$2.66**
Total markup from source to final: $0.007826 / $0.003 = 161%
Retailer’s profit margin on final price: 28.6% ($0.002236/$0.007826)
Wholesaler’s margin on final price: 16.5% ($0.001290/$0.007826)
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Side‑by‑Side Comparison Table
Metric Model A (Straight 60%) Model B (Staged)
Final price per gram $0.00480 $0.00783
Final price per 12 oz bag $1.63 $2.66
Total markup from source 60% 161%
Number of profit‑taking entities 1 (direct seller) 3 (importer, wholesaler, retailer)
Does it include shipping/tariffs? No Yes
Realistic for actual coffee trade? ❌ No (ignores logistics & retail) ✅ Yes (typical)
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Key Insight
A straight 60% profit on the source cost alone would require the buyer to absorb all logistics, roasting, packaging, and retail costs without adding any further markup. That is only possible if you are:
· Buying at origin and selling directly to a consumer who picks up locally,
· With zero freight, zero tariffs, zero roasting cost, zero packaging, zero storefront.
In any real cross‑border coffee trade, those unavoidable costs more than double the final price per gram compared to the “straight 60%” fantasy model.
Conclusion: A 60% profit on the source price yields a $1.63 bag. Real costs force the bag to **$2.66** – a 63% higher final price – even though the profit percentage on the final sale is actually lower (37.5% margin in Model A vs. ~28% retail margin in Model B).