November 12, 2008
The Math on the Starbucks Gold Card

Starbucks recently announced their Gold Card for frequent buyers. The Starbucks Gold card costs $25.

Here are the main benefits of the Gold Card (with my comments):

  • 10% off most purchases in participating U.S. Starbucks stores (the main benefit)
  • A free drink when you purchase your membership in-store (one time savings)
  • Option to pay however you’d like (cash, credit card, etc.) (as opposed to being forced to pay?)
  • A free beverage on your birthday (birthdays ftw, one time savings)
  • Exclusive offers and discounts throughout the year (umm, yeah, whatever)
  • Free Wi-Fi access for up to 2 hours each day in participating Starbucks stores (good, but the free Starbucks stored value card gives you the same thing)

So the real benefit is the 10% discount. Simply put, you break even if you spend more than $250 a year at Starbucks (10% of $250 = $25). But let's put that into more familiar terms, in cups of coffee. I'm an engineer, I like to the math on things like this.

I considered two basic scenarios, someone that buys the simple cup of coffee and someone that buys the proverbial $4 Starbucks MochaFrappaLatteChino. I usually order a small cup of coffee, a 'tall drip' in Starbuckese, but many people enjoy a more elaborate drink at a higher price.

For the general case, let's consider how many cups you need to buy to break even on the investment, if you simply look at the 10% discount.

The price of a small cup of coffee is $1.60, a $4 Starbucks costs $4, and a Starbucks Gold Card costs $25. So you are looking at a 16˘ off a small coffee, and 40˘ off a $4 Starbucks. I assumed that there are 50 work weeks in the year.

Doing the math for the general case shows that to break even:

You need to buy ~156 small cups of coffee, that's just over 3 a week or 13 cups a month
You need to buy ~62 $4 Starbucks, that's just over 1 a week or 5 a month

If you consider the maximum case, meaning you take advantage of the free cup when you buy the card and a free cup on you birthday, you get a shorter break even point.

Doing the math for the maximum case shows that to break even:

You need to buy ~136 small cups of coffee, that's just under 3 a week or 11 cups a month
You need to buy ~42 $4 Starbucks, that's just under 1 a week or 4 a month

Looking at it another way, if you a a heavy drinker of $4 Starbucks, say two a week, you are buying 100 cups a year. On that scenario, the math pencils out to a savings of $15 over the year.

So the basic conclusion is that the Starbucks Gold card is probably best for people that drink $4 Starbucks once or more a week. Another way to look at is if you spend more that $5 a week a Starbucks, the card can save you a little money.

For people that just want a small cup of coffee, they are probably better off stopping at McDonalds. McDonalds sells their small cup of coffee for $1.40, less than the price of a discounted Starbucks Tall Drip. Besides, in a blind taste test, people prefer McDonalds coffee to Starbucks coffee.

Personally, I'm sticking with the Starbucks Stored Value card for ease of payment when at a Starbucks and will continue to drink McDonalds coffee when I have the option. BTW, the best cup of coffee I ever had was from Intelligentsia Coffee. It was fantastic. Alas, there is only one in Los Angeles, not very close to me.

Posted by michael at November 12, 2008 06:24 AM


I concur.
My wife is a 2-3 a week $4 a cup drinker, so I got her one of these cards. She also likes the soy upgrade, so that works in her favor.
I uasually get my coffee from the eBar at Nordstroms as it is the closest to work and they have good coffee, but if I am there before they open, I end up at Starbucks.
That is what happened the day they were launching the gold card locally. I was intrigued and did the same math.
Knowing she goes anyway, I got her one as a surprise.
That, and I knew she would dig the black and gold card.

Posted by: jeff donaldson [] on November 12, 2008 8:18 AM

I was actually wondering about the math on this and was a bit skeptical about the value. Thanks for breaking it down.

Posted by: Doug [] on November 12, 2008 8:27 AM

barginhunter says Costco will sell you a $100 starbucks card for just $80. See

Posted by: SK [] on November 12, 2008 9:38 AM

Do you know the policy on bringing in your own mug/cup to Starbucks? I usually brew at home and take a large travel-mug into the office, but the other day I needed to re-up so I popped down to Starbucks w/ my cup for 16 more ounces of drip and they charged me a whopping $.50!

Posted by: jmv [] on November 12, 2008 9:47 AM

I second the Intelligentsia Coffee shout-out! Second best goes to either Groundwork Coffee or Urth Caffe. Having the starbucks gold card would also limit a person to just starbucks (part of the reason for the card); coffee brand variety would make it much harder to break even.

Posted by: Ben [] on November 12, 2008 11:13 AM

Please, people! use your discount to buy beans! take them home and make your own coffee! do not strive to spend $4 a day at Starbucks! it's just wrong.

Posted by: kp [] on November 12, 2008 12:29 PM

The Consumer Reports test was weak. "Our trained testers?" How many? How were they trained?

I'm not great Starbucks fan, but McDonald's coffee is swill. I challenge their study.

CR recommended a Mister Coffee coffee maker a few years ago. We received one as a gift and it leaked all over the place. It was a design flaw. So...yeah.

Posted by: BillB [] on November 12, 2008 2:57 PM

you just really love math

Posted by: colleen [] on November 12, 2008 3:50 PM

You forgot to take into account the time value of money. At most, it will add a single cup to your break-even point. You figure the future value of $25 amortized over a year is really about $25.50.

Posted by: Grant Henninger [] on November 12, 2008 7:53 PM

You're using 25 bucks as a starting point. But if my drink costs 4 bucks, and I get a free one for buying the card and and for my birthday, then that brings the card cost down to 17 bucks.

Secondly, the fact that I can use it for the discount and still pay with cash or credit or whatever is a big benefit. I don't have to make sure there's money on the card first.

I'm not sure what you proved here. Would it mainly benefit someone that lives at starbucks? Of course, and it's being marketed that way.

Posted by: gary [] on November 13, 2008 11:25 AM

Also, this assumes the discount is applied properly. If the last attempt at a rewards program for stored value cards demonstrated, Starbucks has no automatic way to manage these incentive programs.

That means it's up to the cashier to remember to do it. This leaves you feeling like a cheapskate for constantly having to point out that you get 10% off. Check out the Starbucks forums to see how poorly the Gold card is being rolled out.

Honestly, until Starbucks has a digital infrastructure that allows them to consistently offer a rewards program, all this nonsense is doomed to only aggravate their most active customers.

Posted by: Mr. Nosuch [] on November 14, 2008 6:55 AM

It's funny...I drink a starbucks latte every single day. So when I heard about this card, I too did the math for how much I'd save, and when I'd break even. And all it made me that I really need to quit starbucks. Swiss Miss + Folgers = totally bootleg. P.S. Good coffee is not worth supporting McDonalds.

Posted by: Cindy [] on November 14, 2008 8:21 AM

I work with a guy who averages roughly $17 a day at StarBucks (I believe that's including tips, but still). No joke. He was also told by his local Pizza Hut that over the last year and a half he's ordered $7000 worth of product from them. I'll see if he's heard of this card.

Posted by: Brad [] on November 14, 2008 10:04 AM

good point about use of money, above. $25 is worth more to you now than if you save it again over a year. I did the math for my drink, americano, and decided between the free drinks (2 a year) and my weekly purchase maybe (1.8 times per week?) Plus buying the occasional beans, it's worth it. I wonder if you get 10 percent off of gift cards you buy??

Posted by: Paul [] on November 14, 2008 1:21 PM

Thanks for the math. You forgot to mention that a gold card entitles you to free soy milk, a .40 cent addition to every one of my drinks. The gold card is so worth it for a soy drinker.

Posted by: madzander [] on November 16, 2008 5:19 PM

@madzander: nope, according to the Starbucks information, the gold card does no provide free soymilk or whipped cream (or syrup). The registered card is still your better bet.

Posted by: Kevin [] on November 17, 2008 8:22 AM

Hi guys

Starbucks seem to 'Know' their target market.
My wife likes coffee,me tea and the nearest Starbucks is 20 miles away in the local market town of Bury St Edmunds.We only visit once every couple of months and its usual full.
By the math used here we would take several years let alone months to recoupe the discount.
That is why Starbucks don't offer a priemium card to us Brits!
Enjoyed the blog and the comments.

Posted by: bill porter [] on November 17, 2008 9:33 AM

I think it's only good for those in AA who drink a few Starbucks a day...or at least one every day.
Didn't know about the Costco discount though or the own cup refill - thanks!

Posted by: Steph [] on November 24, 2008 3:35 PM

I think it's only good for those in AA who drink a few Starbucks a day...or at least one every day.
Didn't know about the Costco discount though or the own cup refill - thanks!

Posted by: steph [] on November 24, 2008 3:36 PM

Funny, McDonald's coffee is preferred over Starbucks. McDonald's coffee being Seattle's best, which happens to be owned by Starbucks. I bet Starbucks doesn't really care.

Posted by: adam [] on December 4, 2008 4:30 PM

10% off any purchase includes whole bean purchases, which for a dedicated home coffee drinker adds up as well.

Posted by: miden [] on December 5, 2008 8:30 AM

Your math fails to take into account the free Wifi access and the initial drink for free discount - therefore the payback schedule can be accelerated much quicker for many folks to as little as one month.

Posted by: jeremy [] on December 17, 2008 4:59 AM

We occassionally go to Starbucks and I was taken by the card...the cashier failed to explain to me that the $25 dollars does not go on the card. Even when she asked how much I wanted to put on the card and I said nothing since there is already the 25 on the card and she said yes. Now I feel really foolish...

Posted by: taken [] on December 24, 2008 11:37 AM
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