An economics view of total cost of ownership (TCO), rework, and opportunity cost
Cheap capsules win on one line of the invoice: price per capsule.
But buyers don’t actually purchase “a capsule.” They purchase a reliable, drinkable cup—delivered with minimal waste, minimal interruptions, and minimal machine drama.
The moment you measure cost as cost per good cup, the math changes.
Coffee Capsule TCO Calculator
The hidden economics behind capsule pricing
When someone says, “These capsules are cheaper,” they’re usually comparing only:
- Unit price (e.g., $0.33 vs $0.49)
But the long‑term cost is driven by three often-ignored buckets:
1) Total cost of ownership (TCO)
Even though capsules are consumables, there’s still “ownership” cost:
- extra cleaning and descaling
- clogged needles / residue buildup
- higher chance of downtime or service
- higher variability → more troubleshooting time
2) Rework (redo cups)
Rework is the silent budget leak:
- watery or under‑extracted shot → you brew again
- capsule fails → you brew again
- “This tastes off” → you toss it and brew again
The cheapest capsule is the one you don’t have to use twice.
3) Opportunity cost (time + attention)
Every redo costs more than the capsule:
- someone’s time
- disruption (context switching)
- queues, frustration, “I’ll just go buy one” coffee runs
In an office, café, studio, clinic, or any environment where time is money, opportunity cost dominates quickly.
Cost comparison (example you can copy/paste)
Below is a simple, transparent model. The goal isn’t to claim everyone has these exact numbers—it’s to show how small quality differences compound into real spend.
Assumptions (edit these for your situation)
- 10,000 good cups/year (roughly 40 cups/day × 250 workdays)
- Cheap capsule price: $0.33
- Premium capsule price: $0.49
- Rework rate (cups needing a redo): 15% cheap vs 2% premium
- Time per redo: 2 minutes (dispose, swap, rebrew, wipe, restart)
- Labor value: $25/hour (fully loaded; adjust up/down)
- Extra cleaning time: 6.5 hrs/year cheap vs 2.0 hrs/year premium
- Service/downtime allowance: $300/year cheap vs $126/year premium
(repairs, parts, emergency descaling, “we bought coffee out today”)
Cost comparison table (annual)
| Line item (annual) | Cheap capsules | Premium capsules | What’s really happening |
|---|---|---|---|
| Capsule unit price | $0.33 | $0.49 | Sticker price only |
| Rework rate (redo cups) | 15% | 2% | Variability shows up as “brew again” |
| Capsules used to deliver 10,000 good cups | 11,500 | 10,200 | You buy your mistakes |
| Capsule spend | $3,795 | $4,998 | Premium costs more on paper |
| Rework time | 50.0 hrs | 6.7 hrs | 1,500 redos vs 200 redos |
| Rework labor cost (@$25/hr) | $1,250 | $166.67 | Opportunity cost is real cost |
| Cleaning labor cost (@$25/hr) | $162.50 | $50.00 | More residue/cleanup time |
| Service/downtime allowance | $300.00 | $126.00 | Lumpy costs buyers forget to budget |
| Total cost of ownership (TCO) | $5,507.50 | $5,340.67 | The “more expensive” capsule wins |
| Effective cost per good cup | $0.55 | $0.53 | ~2¢ cheaper per cup |
What this means:
Premium costs +$1,203 more in capsules, but saves about:
- $1,083 in rework time
- $112.50 in cleaning time
- $174 in service/downtime
Net: ~$167/year saved in this example.
Practical break‑even insight: with these assumptions, premium wins if your average “redo” costs more than about 1 minute 41 seconds of time, or if cheap capsules force a redo on more than about 1 in 7 cups.
Timeline table (how the costs show up over time)
One reason cheap options feel appealing is that the savings are immediate—and the hidden costs are delayed and lumpy.
Here’s the same example spread across 12 months (≈833 good cups/month).
- Month 8 includes a single cheap-capsule-related service/downtime event in this model.
- Month 12 includes the premium option’s planned maintenance.
| Month | Cumulative cost: cheap | Cumulative cost: premium | Delta (premium − cheap) |
|---|---|---|---|
| 1 | $433.96 | $434.56 | +$0.60 |
| 2 | $867.92 | $869.11 | +$1.19 |
| 3 | $1,301.88 | $1,303.67 | +$1.79 |
| 4 | $1,735.83 | $1,738.22 | +$2.39 |
| 5 | $2,169.79 | $2,172.78 | +$2.99 |
| 6 | $2,603.75 | $2,607.33 | +$3.58 |
| 7 | $3,037.71 | $3,041.89 | +$4.18 |
| 8* | $3,771.67 | $3,476.44 | −$295.22 |
| 9 | $4,205.63 | $3,911.00 | −$294.63 |
| 10 | $4,639.58 | $4,345.56 | −$294.03 |
| 11 | $5,073.54 | $4,780.11 | −$293.43 |
| 12† | $5,507.50 | $5,340.67 | −$166.83 |
* Month 8 includes one service/downtime event for the cheap option in this example.
† Month 12 includes planned maintenance for the premium option in this example.
The buyer-education punchline:
Cheap capsules often look like savings—right up until the first meaningful disruption. After that, the “cheap” option becomes a pattern of small leaks plus occasional big hits.
How to reframe the price objection (premium positioning without sounding salesy)
When a buyer says: “These premium capsules are expensive.”
A trust-building response is:
- Agree with the visible math
“You’re right—the unit price is higher.” - Change the measurement
“The fair comparison isn’t cost per capsule. It’s cost per good cup delivered with minimal rework.” - Ask the question cheap pricing can’t answer
“How often do you have to redo a cup today? And what does that interruption cost you?” - Offer a simple test instead of an argument
“For two weeks, track:
- redos (second capsule used)
- time spent fixing/cleaning
- any downtime
Then we’ll compare your cost per good cup.”
This approach doesn’t insult cheaper options (trust), but it puts premium in the category of predictability, reliability, and lower total cost (revenue).
