Wednesday, April 29, 2015

Coffee, Costs, and Collaboration

by Kent Aitken RSS / cpsrenewalFacebook / cpsrenewalLinkedIn / Kent Aitkentwitter / kentdaitkengovloop / KentAitken

Espresso people are intense. Everything is purposeful: how finely the beans are ground, the temperature of the water, the relative amounts of each. So it's not shocking to find that online communities of espresso people have thoroughly investigated their price-per-cup. There's a range, but let's go with one person's assessment of $0.20.

Which, we all recognize, is hardly the full cost of enjoying espresso at home. Espresso people are intense about their equipment, too, which can easily run into the thousands of dollars for machines and grinders. (PhD dissertations could be written about the subtleties of grinders.) Which makes the first cup of espresso cost, say, $1,000.20, not $0.20. After 100 cups, you're at $10 per cup, and you get near Starbucks prices at around 500 cups or so.

There's a big difference between the marginal cost per unit (the cost of an additional cup once producing) and the total cost per unit.

One of the reasons for excitement about the digital world is "zero-marginal cost collaboration": connecting with anyone, anywhere, for free or cheap. I wrote a couple weeks back that we still have much to learn about online collaboration, and I think part of that is that we get excited about 'free' collaboration - we think about the price of the beans and forget about the machine. "Can we crowdsource this?" "Let's ask people for input." "Can we work with someone on this?" Etc.

Such collaboration is undoubtedly worth it - but have you bought the machine yet? That is, have you done the up-front work? Are you a part of that community, do you have credibility, do you know the lay of the land, have you built relationships?

Otherwise, it's like watching someone make espresso at home and thinking, "Man, how great would it be to have free espresso every morning?"

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