It might be finicky, but learning how to set your drink prices is a critical skill behind the bar.
Not only do you need to make a profit, but you need to make sure your drinks sell—finding the perfect balance between the two can take some time. There are a few specific equations to consider before making your drink prices: liquor costs, garnish costs, and non-liquor ingredient cost.
Making sense of your cost per-pour is the most straightforward part of deciding prices, simply divide the price of your bottle by the number of ounces of liquid are inside. If you have a 20oz bottle that was $20 the price per one ounce pour would be $1. Once you have the price per ounce you can figure out a pour cost by dividing the cost per drink by the price you sell it for. On average you’ll want a 20%-25% pour cost to ensure you’re making enough money off your drinks.
With different spirits you’ll want to adjust your pour costs. With well spirits you can have a higher pour cost and use a 30% equation – meaning your profits will be highest off of your well based drinks. Call brands tend to run at 25% while premium is 20% and super premiums are 15%. This difference in pricing means you make the highest profit margin off your well spirits as there’s only so high you can hike your prices before your customers balk.
Pricing Garnishes and More
Pricing you garnishes and non-liquor ingredients can be tricky. With some things it may be straightforward—you can use the same equation of 20-22%/ serving size. With homemade components you might be making, like flavored syrups or shrubs, you may also want to factor in the time as well as the ingredients used into the price. While this may not always be possible, it is something to consider.
To get the optimal drink price for your drinks, take your pour cost, your garnish cost, add in an additional 20% to cover shrinkage for lost product and then round your costs up. While there may be other factors to take into account, this equation will at least get you started.
Once you have your ideal prices figured out know that there are chances that you may want to increase or decrease the price as time goes by. Keep an eye on similar restaurants and bars in your area—if their prices are higher or lower than yours you may want to adjust accordingly. If others have lower prices, you may also try adjusting your menu or using social media to give context to higher prices. This is an area where having good cocktail photos and a well written menu description can have a huge impact as they significantly help spur consumer interest.