How to price a latte, cappuccino and flat white by size

Most cafes price a large coffee at the small price plus 30 or 40p, because that's what the cafe down the road does. It's a fine starting point, but the large uses more milk and a bigger cup, so the gap you choose decides whether it earns its keep.

1. Cost each size

Using the same prices as our flat white example (beans £22 a kilo, milk £1.30 for 2 litres):

• Small latte, 8oz: double shot 40p, about 200 ml milk 13p, cup and lid 9p. About 62p.
• Large latte, 12oz: double shot 40p, about 300 ml milk 20p, cup and lid 11p. About 71p.

A cappuccino uses a little less milk and a flat white less again, so each costs a few pence less than the latte of the same size.

2. Take VAT off the price

If you're VAT registered, a sixth of every hot drink price goes to HMRC. A £3.40 small latte gives you £2.83, and a £3.70 large gives you £3.08.

3. Compare the margins

• Small: £2.83 − £0.62 = £2.21 gross profit, 78%.
• Large: £3.08 − £0.71 = £2.37 gross profit, 77%.

The large makes 16p more in cash but a slightly lower percentage. That's often fine: what pays the rent is pounds, not percentages. Just make sure it's a choice, and check again when milk goes up, because the large feels it first.

4. Work back from your target

To set a price from the margin you want, divide the cost by (1 − your target), then add VAT. For a 78% target on the large: £0.71 ÷ 0.22 = £3.23 ex VAT, or £3.87 with VAT. Round to a price that looks right on the board, like £3.85 or £3.90.

5. Don't forget the extras

Oat milk can cost around three times as much as dairy. On 200 ml that's roughly 25p more per drink, so a charge of about 30p (with VAT) only just covers it. Cost extra shots and syrups the same way.

Try your own numbers in the free GP calculator. Quokka does this for every item and size, extras included, and updates it when a supplier's price changes.