Most bar owners slash happy hour prices too aggressively and end up losing money on every drink they sell. You need the right balance between attractive pricing and protecting your bottom line. Here's how to calculate happy hour prices that draw customers while maintaining profitability.
First, calculate your actual pour cost
You can't set smart happy hour prices without knowing what your drinks actually cost. Pour cost works just like food cost - it's the percentage of your selling price that covers the drink ingredients.
💡 Example pour cost calculation:
Draft beer:
- Purchase price 50L keg Heineken: €85
- Per glass (0.25L): €0.43
- Selling price: €3.50 incl. 21% VAT
- Selling price excl. VAT: €2.89
Pour cost: (€0.43 / €2.89) × 100 = 14.9%
Pour cost formula:
Pour cost % = (Purchase price per glass / Selling price excl. VAT) × 100
⚠️ Note:
Always calculate with the price excl. 21% VAT for alcoholic drinks. The price on your menu includes VAT.
Determine your minimum happy hour price
Healthy pour costs run 18-25% for beer and 15-22% for spirits. Your happy hour pricing must stay within these ranges, or you'll lose money on every sale.
💡 Example minimum price:
Same beer, desired pour cost 22%:
- Purchase price per glass: €0.43
- Minimum price excl. VAT: €0.43 / 0.22 = €1.95
- Minimum price incl. 21% VAT: €1.95 × 1.21 = €2.36
Happy hour price: €2.50 (rounded)
Minimum price formula:
Minimum price excl. VAT = Purchase price / (Pour cost % / 100)
Minimum price incl. VAT = Minimum price excl. VAT × 1.21
Compensate with volume and timing
Happy hour succeeds by driving sales during slow periods. Lower margins per drink can still boost overall profits through increased volume.
- Timing: Target quiet hours like 4:00 PM-7:00 PM
- Selection: Focus on drinks with naturally low pour costs
- Upselling: Pair with appetizers or offer premium upgrades
- Limits: Cap at 2-3 drinks per customer to control costs
💡 Volume effect calculation:
Regular evening vs. happy hour:
- Regular: 20 beers at €3.50 = €70 revenue, €11.40 profit
- Happy hour: 35 beers at €2.50 = €87.50 revenue, €12.25 profit
Higher revenue and profit through volume
Test and measure your results
Start conservatively and track results carefully. From tracking this across dozens of restaurants, total profit matters more than per-drink margins.
- Week 1-2: Begin with 25% off regular pricing
- Track: Sales volume, total revenue, overall profit
- Adjust: Lower prices if volume's weak, raise them if margins suffer
- Optimize: Keep winners, drop underperformers
How do you calculate happy hour prices? (step by step)
Calculate your current pour cost
Divide the purchase price per glass by your selling price excl. VAT and multiply by 100. For alcoholic drinks, always calculate excl. 21% VAT.
Determine your minimum happy hour price
Divide your purchase price by your desired pour cost (for example 0.22 for 22%). Then multiply by 1.21 for the price including VAT.
Test and measure the volume effect
Start with your calculated minimum price and measure the number of sales. More volume can compensate for a lower margin per glass through higher total profit.
✨ Pro tip
Track your happy hour sales for 4 weeks and identify your top 3 performers by volume. Focus your inventory buying and promotion efforts on these drinks rather than spreading discounts across your entire menu.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
What pour cost is acceptable during happy hour?
Happy hour pour costs can run 25-30% if you're driving significant volume increases. This is higher than normal operations, but the extra sales often compensate for thinner margins.
Should I offer happy hour pricing on premium spirits?
Generally no - stick to well brands and house wines for happy hour. Premium spirits already have built-in demand, so discounting them just cuts into your best margins without driving much additional traffic.
How do I calculate if my happy hour is actually profitable?
Compare total profit during happy hour periods before and after launching the promotion. You might sell more drinks at lower margins, but if total profit increases, the strategy works.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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