How to Set co*cktail Prices for Your Bar (2024)

// By Kyle Thacker // , Mar 20, 2019

Topics:Liquor Cost

Everywhere we look, it seems like a new, high-level co*cktail program is being offered at bars both new and old. More restaurants and bars are adding inventive co*cktails to their menu, and this means they all need to figure out how to you properly price co*cktails.

The good news? It isn't difficult. Though pricing a co*cktail is a simple formula, there are a handful of decisions you'll need to make along the way because each bar and restaurant has their own unique challenges and considerations. So we'll lay down guidelines that will ensure that your co*cktail menu generates sales and excites customers.

How To Calculate Cost per ounce for co*cktails

Backbar has written about liquor costbefore, but instead of making you hunt down that past post, we'll lay out the basics here.

Here's a recap of what we've written about liquor costs before:

Your “liquor cost” is how much it costs you to purchase each ounce of your alcohol.

To determine your liquor cost properly, you need to follow the formula:

Bottle purchase price ÷ ounces in a bottle = cost per ounce

Figuring Out Pour Cost

So now, we just need to figure out our pour cost, which is the margin between the price you pay for ounce (liquor cost) and the price you charge customers for one. Here is what we wrote about pour costs:

You’ve figured your liquor cost, but now you need to figure out your profit/markup, which is known as your “pour cost”. This is where the drink charge becomes tricky.

Why? Because your pour cost is entirely subjective.

What percentage do you want to make off of a drink? That is entirely dependent on the costs you need to charge to cover your overhead.

If you’re in a downtown area, your rent and advertising needs are steeper, and you’ll need a lower pour cost to cover your overhead. If you’re out in the country, you probably don’t have to pay as much to keep yourself in business, and you can work with a higher pour cost.

Wait—did I just say that higher overheard means a lower pour cost and lower overhead means a higher pour cost? What gives?

Remember: liquor cost is what YOU pay for the drink, therefore a higher pour cost means that a higher percentage of your per-drink income is coming out of your pocket.

Conversely, a lower pour cost means that a lower percentage of your per-drink income is coming out of your pocket, and that therefore you make a higher profit.

How to Calculate the Cost of Non-Alcoholic Ingredients

Many co*cktail bars and restaurants divert from classic drinks like the Manhattan and run menus full of culinary co*cktails that utilize fresh, house made ingredients like fresh pineapple juice or house made shrubs.

To understand how to price more complex co*cktails, it's best to take instruction from the kitchen and how chef's prices dishes.

Portion Control

Portion control in the kitchen is essential. It refers to using the same amount of each ingredient for each dish made. Think of a 6 oz. portion of salmon, or even the amount of hollandaise that comes with a steak. For complex co*cktails, it's crucial for the same portion of ingredients to be used in each drink.

For portion control in co*cktails, bartenders should be using jiggers to measure each ingredient. This also ensures each drink made tastes the same no matter who is making it.

Fresh Juices

If you're making a fresh juice like pineapple juice, you will have to do some testing to see how much juice you get on average from a single pineapple. With fresh produce, there will always be some variance in how much juice each item yields, so an average amount is your best bet.

Account for the cost of each individual item, or the cost of produce purchased in bulk like lemons and apples, and find out your juice cost in the same manner you find out your liquor cost.

For example, if 8 pineapples yield 2 quarts of pineapple juice, and each pineapple costs $1.00, then 2 quarts, or 64 oz., of pineapple juice costs you $8.00. So, use the liquor cost formula from above and take 8 / 64 = .125, or, 12.5 cents per ounce of juice.

Say you use 1 oz. of pineapple juice in your co*cktail, then you would add 12.5 cents to the pour cost of your co*cktail. Still pretty simple, right?

Customer Base

Your customers are definitely an ingredient in your bar or restaurant's success. Understanding what your customer base is willing to pay for a drink will help guide the types of co*cktails you put on your menu. If your bar caters to the beer and shot crowd, then a $12.00 co*cktail might be laughed at.

Engineering Your co*cktail Menu

Shooting for a 20 percent pour cost is a pretty safe bet. But some co*cktails are more expensive to make than others, and applying a 20 percent cost to those co*cktails might make them too expensive for your customers to purchase. It's important to take this into account when pricing high-end co*cktails.

For these co*cktails, a higher pour cost in the 30 percent range can be acceptable. Influential bartender and blogger Jeffrey Morganthaler referred to these co*cktails as loss leaders in a blog on pour costs.

This is a good way to think about it, and it means that a co*cktail sold at a higher-than-average pour cost can be balanced by another co*cktail sold at lower pour cost.

A complex co*cktail is a good way to tell customers that they can come to your bar to try something new and exciting. It boosts the appeal of your bar, without hurting your bottom line too much.

Menu engineering promotes the idea of not strictly relying on margins like pour cost to price and build your menu. It argues that there are other factors to take into consideration when pricing drinks or food, and a successful menu should take other variables into account.

That should should help you when designing your next co*cktail list.

About the author, Kyle Thacker

Kyle is the Marketing Director for Backbar. Before helping Backbar connect with the restaurant industry, he managed multiple bars in Chicago, with a love of whiskey and co*cktails.