How to Cost a Cocktail and Set Drink Prices for a Bar (UK)

To cost a cocktail, add up the exact cost of every ingredient in the pour — spirits, mixers, garnish, ice loss and consumables — then divide by your target pour cost percentage (usually 18–24% in the UK) to set the menu price. For example, a cocktail costing £1.80 in ingredients, at a 20% target, should sell for around £9.00.

That's the short version. Below is the full method, with UK-specific numbers, VAT, and the mistakes that quietly kill bar margins.

Step 1: Cost every ingredient by the exact measure

UK bars pour spirits in 25ml or 50ml measures by law (the Weights and Measures Act), so cost your spirits per millilitre.

Take a 70cl (700ml) bottle:

• Bottle cost (ex-VAT): £16.00
• Cost per ml: £16.00 ÷ 700 = £0.0229/ml
• A 50ml pour = £1.14

Do this for each component. A Negroni example:

| Ingredient | Measure | Bottle cost | Cost |

|---|---|---|---|

| Gin | 25ml | £16.00 / 70cl | £0.57 |

| Campari | 25ml | £14.00 / 70cl | £0.50 |

| Sweet vermouth | 25ml | £9.00 / 75cl | £0.30 |

| Orange slice | 1 | — | £0.08 |

| Total | | | £1.45 |

Always cost from the ex-VAT purchase price, because you'll add VAT to the sale price separately.

Step 2: Add the hidden costs everyone forgets

Ingredient cost alone undersells your true pour cost. Add:

• Garnishes — citrus, herbs, cocktail cherries, dehydrated fruit. A sprig of mint or a good cherry can add 10–30p.
• Ice — bagged or machine ice has a real cost, and a shaken drink loses volume to dilution. Budget a few pence per serve.
• Consumables — straws, napkins, picks, and for takeaway, cups and lids.
• Wastage and spillage — free pouring, over-measures, spills and remakes. Most bars add 5–10% on top of theoretical cost to reflect reality.

A £1.45 Negroni realistically costs £1.55–£1.65 once you factor waste. Use the higher number.

Step 3: Choose your pour cost percentage

Pour cost (or "beverage cost") is your ingredient cost as a percentage of the sale price (ex-VAT). UK targets:

• Spirits and cocktails: 18–24%
• Wine by the glass: 25–35%
• Draught beer: 45–55%
• Bottled beer: 30–40%

Cocktails carry the lowest pour cost because they involve the most labour and skill. A 20% pour cost is a solid benchmark for a cocktail bar.

The formula:

Sale price (ex-VAT) = ingredient cost ÷ pour cost %

For the Negroni at £1.60 cost, 20% target:

£1.60 ÷ 0.20 = £8.00 ex-VAT

Step 4: Add VAT to get the menu price

UK on-trade drink sales are subject to 20% VAT. The menu price customers see must include it.

£8.00 × 1.20 = £9.60

Round to a sensible £9.50 or £10.00. Rounding up to £10 lowers your effective pour cost and improves margin — always round in your favour where the market allows.

Step 5: Sense-check against gross profit (GP)

UK operators often talk in gross profit percentage rather than pour cost. They're two sides of the same coin:

GP% = 100% − pour cost %

A 20% pour cost = 80% GP. Most UK bars target 70–80% GP on drinks. Check your cocktail:

• Sale price ex-VAT: £8.33 (from £10.00 ÷ 1.20)
• Ingredient cost: £1.60
• Gross profit: £6.73
• GP%: £6.73 ÷ £8.33 = 80.8%

That's healthy. If your GP drops below 70%, either your price is too low or your recipe is too generous.

Step 6: Cross-check against the local market

Costing tells you the floor. The market sets the ceiling. Before finalising:

• What do comparable bars nearby charge for the same drink?
• Does your location, atmosphere and service justify a premium?
• Is the drink a signature that can command more, or a well-known classic where customers know the going rate?

A Margarita at £13 in a high-end London cocktail bar and £8 in a suburban pub can both be correct — the costing method is identical, the market positioning isn't.

Step 7: Use menu psychology to protect margins

Once your numbers work, price presentation matters:

• Drop the £ sign and pence on printed menus (e.g. "10" not "£10.00") — it reduces price sensitivity.
• Anchor high. Put a premium £15 cocktail near the top so £10 drinks feel reasonable.
• Highlight high-GP drinks. House cocktails using cheaper base spirits or batched mixes often have the best margins — feature them.
• Batch where possible. Pre-batching spirit-forward cocktails cuts labour, speeds service and improves consistency, all of which protect your GP.

Common costing mistakes to avoid

• Costing with VAT-inclusive prices. Always strip VAT out of both purchase and sale price when calculating GP.
• Ignoring dilution and ice. Shaken drinks lose 20–30% of pour to dilution — factor it.
• Never re-costing. Spirit and citrus prices move. Re-cost your menu at least quarterly, or whenever a key ingredient jumps.
• Free pouring. Untracked over-measures are the single biggest hidden cost in most bars. Use jiggers or optics.
• Forgetting labour and overheads. Pour cost isn't profit — rent, wages, breakages and licensing all come out of your GP. That's exactly why a 70–80% GP is necessary, not greedy.

A quick reference formula

1. Ingredient cost = sum of (measure ÷ bottle size × bottle cost ex-VAT) for each component

2. Add 5–10% for waste, plus garnish and consumables

3. Sale price ex-VAT = total cost ÷ target pour cost % (use 0.20)

4. Menu price = sale price ex-VAT × 1.20 (VAT)

5. Round up to a clean number

6. Sense-check GP% and local pricing

Do this for every drink on the list and your margins stop being a guess.

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If you'd rather not build the spreadsheet from scratch, try the free food and drink cost calculator at getprepsheet.com/calculator to cost a cocktail in minutes — or grab a ready-made Excel costing template from the PrepSheet shop to cost your whole drinks menu, scale batches and track GP without the manual maths.