Today I want to talk about the most important aspect of the bar and nightclub business, figuring out drink prices. This is how you make your money, and you want to make sure you getting the proper profit percentage by charging the proper drink prices. Here is a great article on the topic: http://nightclubpros.com/drink-prices
The basic idea behind pricing drinks is simple enough, of course. You want to make the price low enough that you get the maximum number of drink purchases, but not so low that you lose money. Or to put it the other way around, you want to price your drinks as high as you can without reducing the number of drinks customers buy or, worse, driving your customers to one of your more reasonably priced competitors.
RULE OF THUMB FOR DRINK PRICES
There are, thankfully some rules of thumb when it comes to pricing that are good starting points. The usual rule of thumb is to price your beer and wines 2 to 3 times higher than they cost you. So if a pint of beer costs you $1, you should charge somewhere between $2 to $3.
For more complicated and sophisticated drinks, like specialty martinis, the rule is 4 to 5 times the cost. So a $2 martini should be priced at $8 to $10.
Of course, you need to remember that it is not just the beverage itself that is figured into your costs. If you include an olive and a straw with each drink that should be figured into the drink price as well. As you start to take all of the factors into consideration, it can actually start to get really complicated. You need to keep early bird specials, reduced drink coupons, and pricing for specialty drinks in mind and make sure they aren’t losing you money during promotions.
There are a series of situations which allow you to charge more than the rule of thumb. In fact, there are some situations where it will seem strange if you don’t charge more than your average neighborhood bar.
What are they? If your bar offers an experience that customers value above your competitors, you should charge more. For example, if you have a burlesque show or live band and you are not charging a cover charge, then you can charge more on drinks. You can also charge more if your bar or nightclub is atop a ritzy hotel or if your bar or nightclub is so hot that people wait outside nightly and have to be turned away.
You can also charge more depending on who your customers are. If your bar or nightclub is just blocks from the financial district and is attended by stock traders and CEO’s, they will hardly notice a couple of extra dollars on their tab and may even relish the opportunity to flex their financial muscle to show off to their girlfriends and business guests.
In the end, it boils down to doing proper research in order to be confident in your drink prices.