A coffee parable

So it's another gray New England winter afternoon, which means it's time for my caffeine fix. I walk down the street to my usual Starbucks, but for some reason the line is longer than usual and I don't feel like waiting. Then I notice a coffeehouse that I had never seen before. It's surprising because it's bigger than normal and has a very staid, conservative name. More like a string of names, actually, followed by a "P.C." I take this to mean "professional coffeehouse," or something.

The first thing I notice inside is that the décor is heavy on the mahogany and expensive modern art. A sign on the wall talks about how they have stores in 30 states and eight countries, and that they just opened a location in Shanghai. The sign suggests that they're very excited about this.

I go to the counter and I'm greeted by a tired-looking twentysomething. Her nametag says she's a "Coffee Associate." She asks me what I would like, which I expected, but then she asks me when I need it by, which surprises me.

"As soon as possible," I say. "Is that going to be a problem?"

"Well, it depends," she says. "There are a lot of variables involved. It's hard to say." She then starts talking about arcane developments in coffee production, bean types, and brewing methods. She uses a kind of jargon that I can't really follow, and though I have the sense that it was second nature to her, I'm not sure she really understands it herself.

"How do you want your latte?" she asks. I tell her: triple shot, nonfat milk, extra hot. She writes this all down very carefully on the side of the cup. Then she walks over to a coworker, whose name is Dave. I notice that his nametag identifies him as a "Coffee Partner," so I assume he's some kind of supervisor. They discuss something — I'm not sure what, but I'm hoping it's my coffee order.

They finish their conversation, and then she walks over to a back corner where there's a desktop computer with the store's logo on the screen. She taps away at the keyboard, all the while taking notes from her research. After a while, she logs off the computer, then delivers her written notes to the supervisor. They have another discussion.

I'm starting to get impatient. "Is my coffee on its way?"

She smiles apologetically and assures me it's coming soon. "I just have to talk to Elizabeth about the extra-hot issue. She's our dairy specialist." And she walks away and confers with another woman who I assume is Elizabeth.

When I'm all but delirious from my lack of caffeine, my barista finally tells me that my latte is ready. It seems well made, and it tastes fine, although I would have preferred to have it more quickly. The young woman thanks me and wishes me a good day.

"But I haven't paid you yet."

"Oh, don't worry," she says. "We'll send you an invoice."

Nearly two months later, I receive an envelope with the name of the coffee company on it. By now, I've already forgotten what I had gotten. I open the envelope and nearly faint.

"What the heck?"

Inside is a three-page invoice. The dollar amount is outrageous for a cup of coffee. But what's truly staggering is the level of itemization. First, there's a charge for the young woman's time with the following description:

Conference with customer in regards to customer's preference for beverage. Further discussion with same in regards to size, temperature, and fat content. Online research conducted in regards to same.

The time she spent is tracked to the nearest tenth of an hour.

Next is an entry for the time that she spent speaking with Dave the coffee partner about my order, as well as an entry for his time speaking with her. I notice that his rate is considerably higher. Then there is a pair of entries for the woman's conversation with Elizabeth the dairy specialist, covering both women's time. Again, the dairy partner has a high rate.

Underneath the time entries is a section for expenses. There's a charge for the paper cup, a charge for the cardboard sleeve, a charge for the fancy raw sugar in the brown packets. There was a charge for the stirrer and a charge for the lid. There was also an "online research" charge. And there was an energy surcharge for the additional steam required to make my latte extra hot.

I am livid. I pick up the phone and dial the number on the invoice. I ask for Dave the coffee partner, and after several tries, I finally reach him. I ask him why all this stuff is on the bill.

"Those were the costs of producing your cup of coffee, sir. We have to charge you for the costs, or it wouldn't be fair to the other customers."

"But a charge for the cup?" I ask. "Everyone gets a cup. Why is there a charge for it?"

"We charge you our cost, plus a reasonable markup," he says. "Same with the lid and the sugar and the other client expenses."

I am unmollified. "What about these so-called internal conferences that my barista had with you and the dairy specialist?"

"Well," says Dave, "she's just a first-year coffee associate. It's part of her training. She needs to consult with experienced coffee partners."

"Hmmpf," I say. "I'm not sure I should have to pay for her training. Plus, it ended up taking an awfully long time to get my coffee."

"I understand, sir. But we want our associates to be as thorough as possible." He pauses. "I'll tell you what: I can take ten percent off the bill."

•   •   •

Lawyers: if you're using cost-plus pricing (to wit, billable hours and marked-up expenses), keep in mind that your clients are probably just looking for a fast cup of joe.