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 (see also:how much is a shot)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.

Alcohol Pricing: How to Price Liquor for Bars or Restaurants (2)

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. Especially when you get the right liquor bottle sizes that give more value for money.

Average Drink Prices at Bars

Most restaurants are aiming for 20% pour cost and 80% margin on liquor sales. That means the average drink prices at bars are 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 bar 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!

Additional Revenue Streams for Bars and Restaurants

As the markets become increasingly competitive, some businesses need to reduce their profit margins in order to compete. This can lead to a slower increase in average drink prices at bars compared to inflation. That’s why some owners might turn to additional revenue streams as a way to increase profit without increasing bar prices. Here are some ideas on how to diversify a bar or a restaurant’s income without changing the liquor prices.

  1. Sell merchandise. Selling branded t-shirts, mugs, and pint glasses has the potential to increase revenue and help a business’s brand awareness. These products can also be part of gift sets. Additionally, businesses in the restaurant industry can also sell bar tool sets, branded kitchen apparel, and even household products like scented candles.
  2. Organize events. Events such as live music performances or comedy nights have the potential to expand your clientele. Trivia quiz nights can also be an easy event to organize. Such games can increase customer satisfaction and help a bar or a restaurant increase profits without increasing their bar prices. Most businesses in this niche prefer to organize such events on weekday nights as they are slower compared to Fridays and weekends. In addition to these ideas, a restaurant can also consider organizing online cooking classes. Instead of jacking bar prices, bars can organize various workshop events. They can be related to mixology or beer brewing.
  3. Offer special brunch hours. Weekend brunches are enjoyed by many people. Restaurants can offer special brunch menus. Bars, on the other hand, can partner with bakery businesses and offer specialty coffee and tea drinks combined with delicious pastries and desserts.

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. But read our article on "Does alcohol expire"first, just in case.

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

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


Alcohol Pricing: How to Price Liquor for Bars or Restaurants? ›

Let's understand with an example: If you utilized 25 cents of alcohol and sold it for $1, your beverage cost would be 20%. It is often referred to as beverage cost % or liquor pour cost calculator. The median pour cost for most bars and restaurants ranges between 18 and 24%.

What is the formula for pricing liquor at a bar? ›

To determine liquor cost, use the following formula: Bottle price or crate price ÷ ounces in the bottle/number of units in the crate = Liqiour cost per ounce or unit. Here's an example to make it a bit more clear. You bought a bottle of whisky for $30 and it contains 25 fluid ounces.

What should liquor markup be? ›

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.

How to calculate the beverage cost? ›

To calculate the beverage cost percentage, you need to determine the total cost of your beverage ingredients and divide it by the total sales generated from beverage offerings. Multiplying the result by 100 provides you with the percentage.

What is the format for beverage cost? ›

To calculate your beverage cost percentage, you need to track the value of your opening inventory, purchases, closing inventory, and sales. The formula for beverage cost percentage is (Opening Inventory + Purchases - Closing Inventory) / Sales x 100.

How to calculate the selling price of liquor? ›

Often, you should mark up the bottle four or five times the wholesale price that you paid for the bottle. 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.

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

Most bars aim for a profit margin of around 80 percent. In fact, the overall average gross profit margin for bars is about 75% . The key to reaching that number is to measure and control your pour costs. Pour cost is an essential benchmark for your bar's profitability.

How to calculate liquor cost in a restaurant? ›

You can calculate your restaurant's liquor cost by adding up your beginning inventory for a specific period and any additional inventory purchases you made during that period, and then subtracting your ending inventory from this number. The average pour cost percentage is considered to be between 18% to 24%.

How to calculate profit margin on 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.

What is the average bar markup on beer? ›

Most successful bar managers shoot for a liquor cost of 20% to 30% on their bottled and canned beer. That means if you're paying $1 wholesale for a beer bottle, it'll have a menu price of $3.35 to $5. Another method to set beer prices for bars is using a fixed markup number for all canned and bottled beers.

What should beverage costs be in a bar? ›

What should your beverage cost be? You might be asking yourself: What is a good liquor cost percentage? Generally, 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 to calculate bar sales? ›

To calculate projected sales, you can use the following formula:
  1. Sales forecasting formula. Projected Sales = Number of Customers x Average Drink Price x Frequency of Visit.
  2. Average revenue formula. Average Bar Revenue = Total Revenue / Number of Operating Days.
  3. Profit margin formula. ...
  4. Break-even point formula.
Apr 29, 2024

What is the formula for bar inventory? ›

How is restaurant and bar inventory usage calculated? Inventory usage is calculated with a fairly straightforward formula: Opening inventory + purchases received - closing inventory = inventory usage.

What is a bar consumable? ›

In hospitality, a consumable is the finishing touch to a main product, just like packaging or gift wrapping. Consumables are defined as a unit of input required to facilitate or add value to a process. For example, a coaster is a consumable – you need to consume a coaster as part of the final presentation of co*cktail.

How do you calculate food and beverage cost? ›

The formula for how to calculate restaurant food cost percentage is (Total cost of goods sold / Total food sales) x 100 = Total food cost percentage for a period of time.

What is the food and beverage expense ratio? ›

Prime Costs as a Percentage of Sales

Ideally, prime costs should range between 55% to 65% of the total sales in your F&B business. Prime costs below 50% may suggest issues with food quality, overpricing, or understaffing.

What is the formula for liquor? ›

Ethanol (also called ethyl alcohol, grain alcohol, drinking alcohol, or simply alcohol) is an organic compound with the chemical formula CH 3CH 2OH. It is an alcohol, with its formula also written as C 2H 5OH, C 2H 6O or EtOH, where Et stands for ethyl.

How to calculate cost per ounce? ›

How do I calculate price per ounce?
  1. Note the total cost of the item.
  2. Divide the total cost by the item's weight in ounces.
  3. You have now successfully calculated the price per oz.
Apr 25, 2024

What is the margin on liquor? ›

The average liquor store profit margin typically falls from 20% to 35%. However, this can vary widely based on the factors mentioned above. Smaller, independent liquor stores might lean towards the higher end of the range, focusing on niche markets, personalized service, and specialty products.

How do you calculate liquor inventory? ›

How to count liquor inventory? The easiest and most commonly used method for calculating bar inventory is to visually note how much liquid is in each bottle, separating it into tenths. Look at where the line of liquid stops and estimate how full the bottle is by tenths (half full=0.5, a third full (0.3), etc.).

Top Articles
Latest Posts
Article information

Author: Edwin Metz

Last Updated:

Views: 6195

Rating: 4.8 / 5 (78 voted)

Reviews: 85% of readers found this page helpful

Author information

Name: Edwin Metz

Birthday: 1997-04-16

Address: 51593 Leanne Light, Kuphalmouth, DE 50012-5183

Phone: +639107620957

Job: Corporate Banking Technician

Hobby: Reading, scrapbook, role-playing games, Fishing, Fishing, Scuba diving, Beekeeping

Introduction: My name is Edwin Metz, I am a fair, energetic, helpful, brave, outstanding, nice, helpful person who loves writing and wants to share my knowledge and understanding with you.