Every roast starts with a good quality of green coffee beans. But what are the options for buying green beans? When you are just starting out in roasting this can be quite a challenge. We will tell you all about it.
It’s important you understand the terms when we talk about buying green coffee beans. For example, do you know what a fixed price means? Or spot purchasing? Today we explain the most important terms.
Differential pricing and fixed pricing
There are two ways of buying green coffee for your roasting business; differential pricing and fixed pricing. Let’s dive into it.
Differential pricing means that there is an adjustment to the C-market price to account for the unique qualities and attributes of a given coffee. In other words: you are charging different prices for the same type of product.
Fixed pricing means that there is a set price for coffee based on the cost of production and allowing for a profit margin. The best option varies from person to person. You can make your own choice here. Both options have advantages and disadvantages
Forward buying and spot purchasing
Besides choosing the way in which coffee is priced, you can also purchase your coffee in various ways. Choose between forward buying and spot purchasing. Forward buying means that there is a contract for a buyer to purchase coffee and a producer to sell coffee. This is set at a specified quality, location, and price at an agreed-upon date in the future.
Spot coffee means that coffee is available for purchase in a specified warehouse for delivery at the time of sale. Both options have their own advantages and disadvantages.
Find out more about these terms and buying green beans in our webinar: Roasting business planning – Giesen webinar #8