How to Price Your Bar’s Drinks - dummies

By Ray Foley, Heather Dismore

Pricing is a nuance that comes with experience that comes from running a bar. Pricing is determined by what you can get, reasonably, from the customer, and by the area and the kind of bar your have. Of course, you’d like to deposit more money in the bank, but will Joe Customer pay you for it?

Difficult question. From the beginning, you have to do comparison shopping in your area and get your bar prices in the right groove, not too high and not too low.

Raising prices is very difficult in bars. Raise the price 5 cents on a drink, and you could have a customer mutiny on your hands.

The majority of your revenue (generally around 80 percent) in the bar business comes from drink sales. Consequently, pricing them competitively and profitably is necessary. You have to do some math, but don’t be scared.

We can give you formulas and strategies for pricing your drinks, but ultimately your customers have the final say in what you can charge, simply by their buying decisions.

Your pour size, or how much liquor you include in each drink, is critical to figuring out how much a drink costs you and, consequently, how much you can charge.

Most bars pour either 1 ounce or 1½ ounces of alcohol in each drink. (If the customer orders a double, you, um, double that amount of liquor in each drink.) So from a liter bottle you get about 30 or 20 drinks, respectively. Take a look at the example for details on how much different pour sizes of differently priced liquors cost you.

Bottle Cost 1-oz. Pour Cost (30 Drinks per Bottle) 1.5-oz. Pour Cost (20 Drinks per Bottle)
$18 $0.60 $0.90
$20 $0.67 $1.00
$25 $0.83 $1.25
$28 $0.93 $1.40
$30 $1.00 $1.50
$32 $1.07 $1.60
$35 $1.17 $1.75
$40 $1.33 $2.00

To complicate matters further (but actually make your life easier, trust us), most bar owners create a tiered pricing structure for cocktails. They categorize their liquors by price (and presumably by quality): well, call, premium, and super-premium. Then they set their prices for each category (even if the cost per bottle within the category varies a bit).

Here are the categories and gives you some examples of brands that fall within each category.

Well The most basic liquors; least expensive; usually consumed in
mixed drinks rather than by themselves; liquors in this category
are stored in the well (the area where the bartender makes
the drinks) for easy access, hence the name.
Local or supplier brands
Call The most familiar brands of liquor; not too expensive; patrons
call the brand when they order a drink (“I’ll have a
Bacardi and Coke”), hence the name.
Smirnoff Vodka, Beefeater Gin, Bacardi Light Rum, Dewar’s
White Label Scotch, Jim Beam Bourbon, Canadian Club Whiskey, Jose
Cuervo Gold Tequila, Korbel Brandy
Premium Better-quality brands; higher price reflects higher
Absolut Vodka, Fris Vodka, Bombay Sapphire Gin, Captain Morgan
Spiced Rum, Johnnie Walker Black Label Scotch, Jack Daniel’s
Tennessee Whiskey, Crown Royal Whiskey, Jose Cuervo 1800 Tequila,
Courvoisier VS Brandy
Super-premium Highest quality of spirits; most expensive liquors; liquors are
aged longer, distilled in an incredibly pure way, or have elaborate
marketing campaigns.
Johnny Walker Red Label Scotch, Belvedere Vodka, Grey Goose
Vodka, single malt scotches, Patrón Tequila, Hangar One
Vodka, Gentleman Jack Whiskey

Don’t feel like you’re being greedy if you charge patrons four to five times what the liquor costs; remember, you have to cover way more than just the cost of your liquor with your drink prices. You have to cover ice, garnishes, glassware, rent, salaries — the list goes on and on.

If you stock high-end tequilas, cognacs, and scotch, you can pay hundreds of dollars for a single bottle. Set special prices for these special items.

Don’t overprice your drinks, or you’ll have no business. Don’t underprice your drinks, or you’ll go out of business! Balance is the key here. Check out your area for prices because in order to succeed, you must be within the price range of your competitors. So do your homework.