Setting Drink Prices in Your Bar

One of the hardest things to master when you own a bar is setting drink prices. Finding the sweet spot where you can make profits and still drive sales is important. You definitely don’t want to be the bar that is too expensive and always empty or too cheap and losing money. So, how do you set drink prices to come out on top? Read on as we help you figure out how to properly price your drinks to make you the most profits while still keeping customers happy.

Set the Cost

Most restaurants set a beverage’s cost at 20 to 30 percent higher than the cost of the purchase price of the products. Depending on the type of bar you own – high-end, local sports pub, or nightclub – the beverage cost will vary. To give you an idea, many high-end bars set the cost around the 15-18 percent range as their ingredient costs are often higher than say the local sports bars that can get away with around 30 percent selling domestic beer and cheaper rail options.

Pricing the Ingredients

When setting drink prices, you need to figure out how much the ingredients cost for each drink to accurately set the cost. Here is an easy guide for reference:

  • Beer Kegs –  divide the total keg capacity by the serving sizes of each pint.
  • Beer Cases – divide the number of bottles of beer by the price of the case.
  • Wine – divide the price of the bottle by the serving size in ounces.
  • Cocktails – determine the pricing for each menu item individually, and then figure out the liquor cost by dividing the cost of the bottle by the amount it holds.

Putting It All Together

If you have a cost percentage at 20% and the total ingredient cost of your fancy martini is around $2.05, to calculate your drink price you would take the $2.05 x 5 for a total of $10.25. If your price is an odd number just simply round it up. This will ensure your bartenders aren’t cracking out the calculators on a busy night.

Consider Your Competitors

Once you have done all your pricing, also do some research on your competitors and what they’ve set drink prices at. You don’t want to set a bottle of beer at $4 to only find out your next-door neighbour is selling beers at $3.50. Make sure you price competitively but don’t let it impact your bottom line. If you can’t compete, maybe try a new concept that is lacking in your neighbourhood.

Purchase Bar Management Software

To help you determine your prices to bring in the right amount of profit, you should seriously consider purchasing a bar management software system. It can make handling your inventory, control system management, and scheduling a breeze.

The success of your bar relies heavily on setting drink prices correctly. To ensure you have all your prices optimized, consider purchasing a bar management software, and you won’t have to worry again about finding that happy medium and keeping customers happy.

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