Alcohol Pricing: How to Price Liquor for Bars or Restaurants (2024)

A good profit margin on the most common co*cktails is about 80%. That’s, on average, 10-15% higher than food. Not too shabby.

It's why bar profitability can be so high and being a good bar manager is in high demand. There’s no denying that serving drinks is a great way to make money in the hospitality industry-it's why bars focus so much on a great liquor bottle display. If you’re pricing your drinks correctly, that is. So, it’s important to have a sound alcohol pricing strategy to use at your bar, to limit bar costs (learn more on bar costs: how to get a liquor license) and boost profits. Let’s look at how it’s done.

How to Price Liquor for Your Bar

Bars and restaurants consider three things when deciding menu prices: the cost of goods sold for the item being sold, competition, and demand. You can gain valuable insight into your competition by doing a swot analysis. Check out a bar or restaurant swot analysis example to get some ideas on how to do one.

How to Price Alcohol In a Bar with Pour Cost

Using liquor cost as a goal is the most traditional and airtight way to price drinks. Liquor cost, or pour cost, is the amount of the drink’s price that it costs to make the drink. A drink with a pour cost of 15% has a profit margin of 85%. Learn how to become your own liquor cost calculator.

The average bar industry pour cost is between 18% and 24%. Most food and beverage directors expect a pour cost of 20%. That means they’re shooting for 80% gross profit on their drinks.

How to Price co*cktails

Let’s apply the same principle to pricing co*cktails. We have our goals now. A pour cost of 20% and, therefore, a margin on liquor sales of 80%.

Let’s say your bar offers a margarita for $12 and it costs $3 to make. That’s a 25% pour cost. Understandably, you want to lower that.

You’ll use this formula:

Drink Price ($) = Ingredient Cost ($) / Target Pour Cost (%)
Drink Price ($) = 3 / .20
Drink Price = $15

You’d need to price your margarita at $15 to achieve a pour cost of 20%. You can do the same for food, but use your target food cost.

How to Price Shots of Liquor & Spirits

Setting shot prices at bars is an easy exercise. Given that there’s no additional ingredients, the pour cost calculation is straightforward. You just need to know how many shots in a handle and follow the liquor cost formula and set your pricing strategy using the above method we used in the co*cktail example.

The only real issues you have to account for are pouring doubles or serving drinks on the rocks.

Both of which change the serving size and alter liquor cost and profit margin.

This can be easily done by making sure to have a modifier button in your POS system. And making sure your staff doesn’t let rocks pours and doubles slip through the cracks. Variance for that reason is the primary way spirits affect pour cost. Because it’s not accounted for.

How Much Does Liquor Cost?

The average drink costs between $1 and $3 for a bar to make. That’s why liquor markup in bars is so profitable. Alcohol is relatively cheap to acquire.

Average Drink Prices at Bars

Most restaurants are aiming for 20% pour cost and 80% margin on liquor sales. That means the average drink price at bars is between $5 and $15.

Liquor Markup in Bars

The standard liquor markup in bars is around 400 to 500%. That’s the highest of all types of alcohol. And that’s the reason why high-volume nightclubs that sell a lot of shots are some of the most profitable in the hospitality industry. They also help cover a lot of the bar's overhead expenses. Invest in accounting software to ensure you keep an eye on these costs and always charge the optimal prices.

Liquor Pricing: Other Factors


Let's say you’re hitting a 20% pour cost with a $15 margarita. But the bar down the street is selling a similar $10 margarita as an LTO (see LTO meaning). Your pricing strategy may need to be revisited if competition is eating into your units sold.

It’s worth accepting a higher pour cost if it means actually selling drinks. But before lowering your prices because your competitor is, make your co*cktail stand out for what makes it different. Do you use small-batch tequila? Mention it in the description.

A revamped drink description and some good old fashioned menu engineering can likely get your margaritas moving off the shelf at your desired price and provide a great tool for restaurant marketing ideas.


On the flip-side, if your $15 margarita is flying off the shelves, then it may be underpriced. If you increase the price, the demand may not drop proportionately and you’ll profit.

However, if it’s not selling and you lower the cost, you may also profit. Even if that means a higher pour cost. That’s because you’ll be selling a lot more drinks.

There isn’t a one-size-fits-all answer. The bars that get this right test their pricing strategies all the time. You’ll have to do something simple math to figure out your best option. Read on and you’ll see how.


Ever heard of psychological pricing? Our friends over in the retail industry came up with (and perfected) it. But many of its principles are applicable to bars, restaurants, and menus. Even your a la carte menu, table d hote menu, or prix fixe menu can be manipulated in this way. Check it out and use some mind power!

Frequently Asked Questions On Pricing Liquor for Your Bar

Before you put up the sale signs and slap on some price tags, there are a few more questions you should know the answers to. Those questions are:

What is a Reasonable Price for a Drink?

We mentioned before that on average, the cost of a drink in a bar ranges from $5 to $15. There are some bars that charge much higher - usually because of their location, status, or reputation. There are also places like dive bars that charge much more on the lower end. If you were to ask a bar patron, they'd say anywhere from $2 to $5 to $10 is the most reasonable. Finding a middle ground with this, say in the $7 to $10 range, with your best co*cktails being up around $15 - or potentially even higher - will grant your bar the status of having some great reasonably priced drinks.

What is co*cktail Menu Engineering?

How much you can realistically sell a drink for affects its price. That’s where menu engineering comes in.

It’s the art and science of designing menus so that your most profitable co*cktails become your more popular co*cktails.

And all the co*cktails complement each other.

Here are two examples of menu engineering in action:

  • You’ve isolated your most profitable drink. Now you visually emphasize it and place it in a position on your menu where most people look (top right corner, for example).
  • You have a drink with a high pour cost and low margin that you don’t want to change or get rid of. It adds a nice touch to your co*cktail menu and communicates some of what makes your bar special. Create a few simple co*cktails with low pour costs to make up for it. Place them near each other on your co*cktail menu and they’ll temper each other. Your menu won’t look too haughty or too rough-and-tumble.

How Will This Affect My Bar Cost?

Once you've mastered the skills outlined in this article, you'll see the ratio on your bar cost to bar profits begin to shift. You'll be paying the same amount, so technically, your bar cost won't change, but your bar profits will grow.

Alcohol and Drink Pricing Made Easy

Wine by the glass and a wine bottle price work a little differently. A beer pricing strategy is its own animal, too. But figuring out current and target pour costs is the most important factor to a profitable alcohol pricing strategy. Any kind of alcohol.

To boost your bar’s profit margin, drink prices need to change to reflect the reality of ingredient cost, prime cost, competition, and demand. That’s a lot of calculations to do. This also incentivizes your bartenders to upsell and maximize your profits. Just make sure you know things like how many ounces in a pint.

That’s why liquor inventory software like BinWise is so useful. We help bars and restaurants across the country get the data they need to price liquor strategically. It will also prevent you from discovering what happens when alcohol expires.

Reduce inventory counting time by as much as 85%. Schedule a demo now:

Alcohol Pricing: How to Price Liquor for Bars or Restaurants (2024)


How is the price of alcohol determined? ›

Dividing the cost of the container by how many ounces it holds will calculate the price per ounce of the bottle. If the bottle costs $20 and it holds 25 oz (the typical amount in a 750ml bottle), the cost per ounce would $. 80.

How are bar prices calculated? ›

How to Calculate Liquor Cost
  1. Here's an example.
  2. If in a year, your bar sold $10,000 worth of alcohol inventory, and that inventory generated $50,000 of sales, then your beverage cost percentage is 20 percent. Which means 80 percent of your alcohol sales are gross profits.
  3. 10,000 / 50,000 = .2 or 20 percent.

What should beverage cost be in a bar? ›

In general, most bars and restaurants should strive for a pour cost between 18% and 24%. The average bar has a pour cost of 20%, indicating that every dollar of beverage sales generated costs the business 20 cents.

What is the average markup on liquor in a bar? ›

The standard liquor markup in bars is around 400 to 500%. That's the highest of all types of alcohol. And that's the reason why high-volume nightclubs that sell a lot of shots are some of the most profitable in the hospitality industry. They also help cover a lot of the bar's overhead expenses.

What is a typical markup on liquor? ›

Liquor Store Markups

In most cases, the markup on liquor is between 25% and 45%. For example, a bottle of liquor purchased from a distributor at $10 per bottle would then be sold to the customer at a price between $12.50 and $14.50.

How do you calculate profit margin for liquor? ›

The profit margin on alcohol sales by taking the gross profit from a sale of drink like a co*cktail or bottle of wine, and subtracting the liquor cost from that gross profit to provide the net profit margin.

How do you price a shot of liquor? ›

The Traditional Method
  1. Start with your intended percentage of alcohol cost (typically 20-25%), excluding mixers. ...
  2. Determine the cost per ounce. ...
  3. Multiply the cost per ounce by your pour size (usually 1-1.5 ounces). ...
  4. Multiply your liquor cost per drink by 4 or 5 to cover all the other variables.
26 Oct 2017

What is the 50% rule in bartending? ›

The 50 rule in bartending is a very simple one. It refers to 50% of a drink that is still in a customer's glass. Once the glass is halfway empty from consumption, you can serve another drink. This is very important to consider and it will be essential in a bartender's career.

What is a good liquor cost percentage? ›

The average pour cost that most bar operators strive for is generally between 18% and 24%. Having a liquor cost at 37.5% is significantly high.

How do you price drinks for an event? ›

For example, mixed-drink prices usually are based on a beverage cost percentage of 12 percent to 18 percent of the total sales; wines and beers usually are priced to yield a beverage cost percentage of 25 percent. Some facilities will waive bartender charges if the beverage sales reach a predetermined dollar amount.

What are the operating costs of a bar? ›

The Operating Costs of a Bar

Operational costs on average, including items like staffing, rent, and inventory, amount to about $20,000 per month.

How do you calculate an event for drinks? ›

Most guests will have two drinks in the first hour and one per hour after that. So for a two-hour event multiply the number of guests by three, and so on, to determine the number of drinks you'll need to serve.

What profit margin should a bar make? ›

The average net profit margin for a bar is between 10 and 15%. The gross profit margin is the difference between total restaurant sales revenue and cost of goods sold (COGS). The net profit margin is what's left of the gross profit margin after all operating expenses have been taken care of.

What is a reasonable markup price? ›

What is a Good Markup Percentage? While there is no set “ideal” markup percentage, most businesses set a 50 percent markup. Otherwise known as “keystone”, a 50 percent markup means you are charging a price that's 50% higher than the cost of the good or service.

How much is the profit for a 20% markup? ›

Gross margin is the difference between a product's selling price and the cost as a percentage of revenue. For example, if a product sells for $125 and costs $100, the gross margin is ($125 – $100) / $125 = 0.2(20%) = 20%.

Is 40% a good markup? ›

The appropriate markup can vary dramatically. Some experts recommend that the retail markup be set at 40 percent of cost, while others recommend setting the markup at up to 100 percent of cost. A great deal will depend on the area in which the store is located and the item is sold.

How much profit should you make on a bottle of liquor? ›

There is a range of 75-85% gross margin for on-premise sales in bars. In general, more expensive drinks generally have lower margins. Profit margins in bars will also vary based on product type: Liquor: 80-85%

Is 70% a good profit margin? ›

But in general, a healthy profit margin for a small business tends to range anywhere between 7% to 10%. Keep in mind, though, that certain businesses may see lower margins, such as retail or food-related companies. That's because they tend to have higher overhead costs.

How do you price food and beverage? ›

Calculating Actual Food Cost Percentage Per Dish Formula
  1. Calculate what it costs for you to make a dish (a.k.a. Total Cost of Dish). ...
  2. Find out Price of Dish to Customer. ...
  3. Divide Total Cost of Dish Per Serving by Price of Dish to Customer. ...
  4. Multiply your answer by 100 to find out your Food Cost Percentage Per Dish.

How do you calculate beverage margin? ›

You calculate profit margin with the formula: (revenue-cost)/price = margin. Then you give the gross margin as a percent.

How much profit does a bar make per drink? ›

The average pour cost varies by bar type, drinks served, and location; but when we analyzed our customer base, we found that the average pour cost is between 18-24 percent, in line with the industry standard 18-20 percent pour cost; the average bar profit margin is therefore 78-80 percent.

How do you tell customers your price? ›

How to Talk About Pricing Without Scaring People Off
  1. A Note About Tone. ...
  2. A Note About Timing. ...
  3. 1) Don't overwhelm your viewers. ...
  4. 2) Be very clear about the value they'll be getting for the price. ...
  5. 3) If you have pricing levels, help them find the right fit. ...
  6. 4) Address their questions. ...
  7. 5) Reassure their decision.
12 Dec 2012

How do you calculate food and beverage cost in a restaurant? ›

To calculate the ideal food cost, first determine the food cost of each menu item. Then multiply the cost of each menu item by the number of times it was sold in a given period of time. In other words, you multiply by the sales mix. Your POS system should be able to hand you the sales mix at the touch of a button.

How do you determine restaurant asking price? ›

On average, restaurant owners look to sell at anywhere from 25% to 40% of their yearly operating income. To estimate the likely cost of buying a restaurant, determine the restaurant's seller's discretionary earnings (SDE), which is basically net income, and multiply the SDE by the restaurant's industry multiples.

What should my restaurant drink cost be? ›

You might be asking yourself: What is a good liquor cost percentage? In general, most bars and restaurants should strive for a pour cost between 18% and 24%. The average bar has a pour cost of 20%, indicating that every dollar of beverage sales generated costs the business 20 cents.

How do you calculate drinks per person for a party? ›

The formula is short and simple - all you to do is make sure that every guest has a drink for every hour of the party, plus one extra in case they want more. So the formula is: # of soft drinks = # of guests * (party duration in hours + 1) .

What is the profit margin on alcohol? ›

Your liquor store profit margin will typically be between 20% and 30%. These profit margins are in line with averages from other retail businesses. If you're looking to open a beer or wine store, those businesses have about 40% average net profit.

How do you calculate markup on liquor? ›

Determine how much you paid for the bottle and figure out what you expect for your pour cost (20-25%). If you were to pay $10 for a bottle of wine and have a pour cost of 25%, the bottle should be sold at $40. There are roughly 24 ounces in a bottle of wine. Each bottle contains around four, six-ounce pours.

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