The craft beer explosion isn't just a trend; it's a new reality. For today's bar owner, navigating the world of draft beer is more complex—and more critical—than ever.

Your customers are savvy, they crave variety, and they’re looking for that perfect pint they can’t get anywhere else. Offering a robust selection of draft beer is no longer a bonus; it’s essential for staying competitive.

But a great tap list is only half the battle. The real challenge, the question that keeps managers up at night, is: HOW TO PRICE IT?

"Price is too high, and you risk alienating customers. Price is too low, and you're pouring your profits right down the drain."

This guide will demystify draft beer pricing. We'll break down the essential formulas, explore strategic considerations, and show you how to turn your tap list into a powerful profit center.

Why a Strong Draft Beer Program is a Must-Have :

Before we dive into the numbers, let's establish why draft beer deserves your focus. It’s a unique product that offers significant advantages over bottles and cans.

• The "Bar-Only" Experience: A customer can buy a bottle of beer almost anywhere. But for a fresh, perfectly poured pint, they have to come to you. A diverse and well-curated tap list gives customers a compelling reason to choose your bar over the one next door.
  
  
• Higher Check Averages: Customers tend to think in terms of "rounds," not ounces. Since a standard draft pint (16 oz.) is larger than a standard bottle (12 oz..), successfully promoting draft beer naturally increases your average check size per customer.
  
  
• Liquor cost is higher on bottled beer – Many owners fear the complexity and potential waste of a draft system. While this must certainly be a consideration when determining your product mix, the reality is that liquor costs on bottled/ canned beer are typically about 6% higher for bottled beer. As a result, draft beer sales are typically more profitable than bottled beer sales. You see a double benefit when you combine the lower liquor cost with the increased cost of serving a pint compared to a 12 oz. bottle. A better margin plus a higher cost per beer make selling draft beers very profitable for your bar.

The key to unlocking this profitability lies in getting the "behind-the-scenes" work right, and that starts with smart, data-driven pricing.

The Modern Challenges of Pricing Draft Beer

The craft beer market has introduced new variables that make pricing more complex than ever before.

• Constant Tap Rotation: To keep things exciting, many bars now rotate half their taps seasonally or even weekly. While this delights customers, it creates a constant need to calculate and update prices.
  
  
• A Variety of Keg Sizes: The standard half-barrel keg is no longer the only option. Craft breweries often use smaller quarter-barrel and sixth-barrel kegs, each requiring its unique price calculation.
  
  
• High-ABV & High-Cost Beers: High-alcohol craft beers are extremely popular but are often more expensive and must be served in smaller portions (e.g., a 10 oz. glass). Additionally, rare or experimental beers can have extremely high keg costs, making it a challenge to set a price that is both fair to the customer and profitable for you.
  
  
• Experimental and rare beers can be very costly – One of Bar-i’s Denver clients, Avanti, has a strong relationship with Dogfish Head Brewery and they often carry some of Dogfish Head’s more experimental beers. Avanti recently offered Dogfish Head’s lobster special edition stout and the cost of this beer was very high. It can be challenging to price these beers at a reasonable level for customers while ensuring the beer makes a respectable profit margin.

All of these factors increase the frequency with which you need to make pricing decisions, and they also make these pricing decisions much more complex.

💡 Pro-Tip from Bar-i: Manually calculating yield for different keg sizes and pour volumes is time-consuming and prone to error. Bar-i's system automates this entire process. Simply tell the software the keg size and your intended pour size, and it instantly calculates your precise cost per serving for every beer on tap.

Finding Your Target Liquor Cost

The first step in strategic pricing is to determine your target liquor cost (LC). This is the percentage of a drink's sale price that the alcohol in it costs you

For draft beer, a typical LC range is 20-26%.

• Bars competing on price (dive bars, fast-casual spots) might have a slightly higher LC.

• High-end venues (upscale bars, stadiums) can charge more per beer and thus achieve a lower LC.

Once you have a target range, you can calculate your price. The basic formula is:

Price = Cost per Serving / Target Liquor Cost% 

For example, if a 14.5 oz. Serving of beer costs you $0.73, and your target LC is 20% (0.20), the price would be $0.73 / 0.20 = $3.65. You would then round this up to a more convenient menu price, like $3.75 or $4.00.

The Strategic Side of Pricing: Margin vs. Profit

While maintaining a target liquor cost is important, a savvy manager knows that total profit per beer is often a more important metric.

Consider this:

• A $100 keg of standard lager, sold at a 20% LC, might yield a $2.92 profit per pint.

• A $180 keg of a high-end IPA, sold at a higher 25% LC, might yield a $5.26 profit per pint.

Even though the IPA has a "worse" margin percentage, you make significantly more cash on every glass sold. This insight allows for strategic pricing. You can afford to price your high-end beers more competitively (at a slightly higher LC) to encourage sales, as each sale drives more overall profit. Aggressively pricing your low-end beers, on the other hand, just encourages sales of low-profit items.

💡 Pro-Tip from Bar-i: Stop guessing and start strategizing. Bar-i's reporting provides a detailed breakdown of the profit margin AND the cash profit for every single product you sell. This allows you to instantly identify your most profitable beers and make data-driven decisions on pricing and promotions.

Calculating Your Pour Cost: A 3-Step Process

To make any of these decisions, you first need to calculate your cost per serving. Here's how:

1. Determine Servings per Keg: Divide the total ounces in the keg by your serving size. Remember to account for the head (a 16 oz. glass usually holds a 14.5 oz. pour).

• 1/2 Barrel Keg (Standard US Keg): 1984 oz.

• Euro Keg (13.2 gal): 1690 oz.

• 1/4 Barrel Keg (Pony Keg): 992 oz.

• 1/6 Barrel Keg (Sixtel): 661 oz.

Example: 1984 oz. / 14.5 oz. serving = 137 servings.

2. Determine Cost per Serving: Divide the cost of the keg by the number of servings.

Example: $120 keg / 137 servings = $0.88 per serving.

3. Determine Liquor Cost: Divide the cost per serving by its sale price.

Example: $0.88 cost / $4.50 price = 0.195 or 19.5% LC.

Ready to Price with Confidence?

As you can see, smart beer pricing is a science. While these formulas provide the framework, the real power comes from having consistent, accurate data at your fingertips. To see exactly how Bar-i's reporting works in action, check out our detailed video guide on using reporting tools to optimize draft beer pricing : 

Guesswork leads to lost profits, while data-driven decisions lead to a healthier bottom line.

Bar-i’s inventory system takes the complexity out of the equation. It automates the calculations, tracks every ounce, and provides the clear, actionable reports you need to price every item perfectly.

"Stop leaving money on the table. Visit bar-i.com to book your free, no-obligation demo today and see how much more profitable your bar can be"