Pricing your drinks can sound like a tricky task at first, especially when adding more complex cocktails to your menu. Homemade syrups, bitters, and different spirits all factor into the delicious drinks you’ve come up with for your menu. They can be delicious, but you can’t pick a random number to price your menu and call it a day. How you price your drinks will reflect in your profits and how your customers view your bar or restaurant. Luckily, we’ve got it down to a science. We’re going to give you a quick and simple way to price your cocktails fairly, allowing you to make a profit without overcharging customers.
Calculating Cost of Cocktails Per Ounce
You’ll need to start the process of pricing your cocktails by accounting for your liquor costs, or the cost of liquor per ounce. It’s best to do this for each type of liquor regardless if it’s in a cocktail you’re using or not. You can use your liquor cost to calculate things like batched cocktails as well, making it easier to price out how much you’ll need. If you want to learn more about how to batch your cocktails, read up on it here.
All you have to do to calculate your liquor cost is this:
Bottle purchase price / Ounces in bottle = Liquor cost (cost per oz)
This is an important part of pricing your bar menu items in general, even things like shots. Similarly, you can determine the price of non-alcoholic ingredients the same way. If you make house-made syrups, determining how much the amount of sugar, fruit, or herbs you use per syrup costs lets you price that out as well. If you use sugar by grams, determine how many grams per bag you have to get the cost per gram, and so on.
Calculating Pour Cost
Your pour cost is the amount you charge on top of the liquor cost to keep the lights on and make a profit. This will be entirely up to you based on what you know about your liquor costs. The subjective nature of your pour cost is partially due to the differing needs of every bar. If you were operating in a major city, for example, you have to pay much higher rent and utilities costs to stay open as opposed to a small town bar.
Pour Cost Effect on Cocktail Prices
Calculating your pour cost ultimately depends on you, however. It’ll be a specified percentage that represents how much you’re paying out of pocket for your drinks. The lower the percentage, the lower your costs. The average pour cost can be anywhere from 18% - 25%, lower being better because that means you’re paying less and making more profit. Again, the amount you end up with is completely contingent on what works best for you and there’s no official standard for this cost.
Drink Cost Based on Pour Cost and Liquor Cost
To do the actual calculation, you can start by choosing the percentage you’d like to try. If something seems too expensive or not enough, feel free to change the percentage how you’d like. The formatting looks like this:
Liquor cost / Pour cost = Drink cost
Please note that when dividing with your pour cost, you need to make your pour cost percentage into a decimal. We’ll do a couple of examples below to show the differences in costs:
Let’s say your liquor cost came out to be $1.25 per ounce and you’d like to do 16% as your liquor cost.
$1.25 / 0.16 = $7.81
On the other end of things, let’s say your liquor costs are $1.25 and you want to try 24% instead.
$1.25 / 0.24 = $5.20
The difficulty lies in the balance between what you can charge and what your customers will pay, so don’t be afraid to try out a few different pricing options before you decide.
Building a Cocktail Menu Based on Price
For some specialty cocktails, it’s a good idea to have a higher pour cost percentage to prevent high prices on your menu. Having interesting drinks attracts customers to come and try what you have, but they’ll have a harder time actually trying them if they aren’t priced well. Creating a menu with a good mix of mid-priced and higher-priced menu items gives you the luxury of making things accessible to everyone without looking cheap.
Overall, variety is key when you’re putting together your menu. You should also listen to customer feedback about menu items. It’s not unheard of for customers to complain about pricing every once in a while, but if it becomes a trend, it might be something to look into.