Why Does Iced Coffee Cost More than Hot?

A Toddy Cold Brew Coffee System in action. CREDIT: BMRR | Creative Commons View full size image

It's the time of year when many coffee drinkers make the big switch from ordering hot coffee to opting for iced. And with the temperature change comes the need for extra change — as in, about 80 cents more per cup. Iced coffee is pricier than hot coffee, but not just because it contains ice or looks fancier.

If you try to make iced coffee by simply brewing hot coffee the normal way and cooling it down, the product turns out tasting too weak. To override the numbing effect that frigid temperatures have on our taste buds, good iced coffee must be brewed extra-strong. That's why, at high end coffee shops, iced coffee is cold-brewed, and the process warrants a price hike.

According to Grubstreet, cold-brewing involves mixing pulverized beans with water (just like brewing it hot), but the process requires about twice as much ground coffee. Those grounds infuse filtered water for 12 to 24 hours, creating iced-coffee concentrate. That liquid is cut with water at a ratio of about one to one, but even after that dilution, a cup of cold-brewed coffee includes about 62 cents' worth of coffee beans to a hot cup's 35 cents' worth. 

The higher price of clear plastic cups compared to white paper ones — which disintegrate when holding iced drinks on hot, humid days — accounts for a few more pennies of iced coffee's markup. Coffee shops pay about 6 cents each for hot coffee cups, and 9 to 12 for plastic ones. A straw adds 1 or 2 cents more, and the oversize wads of napkins snatched by many iced coffee drinkers add up, too.

Lastly, the ice does come with a small per-cup cost. Most cafes rent ice machines during the summer at a rate of $12 per day. If or when the machines stop working, they must buy bags of ice, tacking on between 12 and 13 cents to each cup's bottom line.