When opening a new bar, one of the most important elements to get right is your pricing. It should be fairly obvious why pricing decisions will play a major role in the success of your bar. We’ve written about pricing strategy at great length on this blog in the past, and we can’t stress enough the importance of getting these decisions right.
Emphasize Value over Price
One of the most important points to keep in mind when creating a pricing strategy for your new bar is to emphasize value over price. Most bars tend to discount their cheaper products, but not their higher end products. For example, it’s much more common to see PBR or Budweiser featured in a drink special than craft beers. This is a huge mistake. By failing to offer deals that provide value throughout the price spectrum, you risk cannibalizing your sales.
When you only discount your cheap products, you create a situation where people who would normally order higher end products start buying the discounted cheap drink because it’s a much better deal. The increased value of a $2 PBR compared with a full price IPA will often override a beer drinker’s taste preferences.
A better strategy is to discount a selection of products in all price ranges so that people who normally drink higher end products continue to order them. In this situation, you not only increase your sales for higher end products, but the customers who order these drinks feel like they’re getting a deal.
This is a true win-win. You’ll still make more money on these higher end products than you would on the really cheap low end drink in spite of a slightly increased liquor cost. And by providing great value to your customers, you’ll hopefully keep them coming back to your bar on a regular basis.
Get Assistance with Your Pricing Strategy
We recommend that you download our free liquor cost calculator. It’s a great tool that will help you price out individual drinks sold at your bar.
There are many other elements that going into creating a sound pricing strategy for your bar. We’ve talked about many of these at great length in the past. For a more complete understanding of how to formulate your pricing strategy, please read the following articles:
- Understanding How Liquor Cost Impacts Pricing Decisions at Your Bar
- 6 Frequently Overlooked Strategies for Determining Liquor Pricing at Your Bar
- 2 Important Tools that Will Help You Make Strategic Liquor Pricing Decisions at Your Bar
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To take advantage of a free consultation regarding your product mix or to find out how our bar inventory system can help you streamline your processes and maximize profits, please contact Bar-i today. We serve bars nationwide from our offices in Denver, Colorado.