Markup on drinks determines if your bar turns a profit or bleeds money with every pour. Most operators mess up the calculation, confusing it with margin and setting prices that barely cover costs. The markup formula is simple: it's the percentage you add on top of what you paid for ingredients.
What exactly is markup?
Markup shows what percentage you're adding on top of your purchase price. It's different from margin, which calculates the percentage of your selling price that becomes profit.
💡 Example markup vs margin:
You buy a bottle of wine for €8.00 and sell it for €24.00.
- Markup: (€24 - €8) / €8 × 100 = 200%
- Margin: (€24 - €8) / €24 × 100 = 66.7%
Both figures are correct, but they tell different stories about your profitability.
The formula for markup on drinks
Markup % = ((Selling price - Purchase price) / Purchase price) × 100
Or the shorter version: Markup % = (Selling price / Purchase price - 1) × 100
⚠️ Note:
Always calculate with prices excluding VAT. Alcoholic drinks carry 21% VAT, so a beer priced at €3.00 is actually €2.48 excluding VAT.
Common markup percentages per drink type
Different drinks command different standard markups across the industry:
- Beer: 200-400% markup
- Wine per glass: 300-500% markup
- Spirits/cocktails: 400-600% markup
- Soft drinks: 300-400% markup
- Coffee: 500-800% markup
💡 Example beer calculation:
You buy beer for €0.80 per bottle and sell it for €3.00 (incl. 21% VAT).
- Selling price excl. VAT: €3.00 / 1.21 = €2.48
- Markup: (€2.48 - €0.80) / €0.80 × 100 = 210%
This represents a healthy markup for beer.
From desired markup to selling price
If you know what markup you're targeting, you can work backwards to find your selling price:
Selling price excl. VAT = Purchase price × (1 + Markup% / 100)
💡 Example cocktail pricing:
A cocktail costs you €2.50 in ingredients. You want 400% markup.
- Selling price excl. VAT: €2.50 × (1 + 4.00) = €12.50
- Selling price incl. 21% VAT: €12.50 × 1.21 = €15.13
- Rounded on menu: €15.50
Pour cost vs markup
Pour cost works like food cost but for beverages. It shows the percentage of your selling price that goes toward ingredient purchases.
Pour cost % = (Purchase price / Selling price excl. VAT) × 100
A healthy pour cost for alcohol falls between 18-25%. Higher markup means lower pour cost, and vice versa. This pattern we see repeatedly in restaurant financials shows that successful bars maintain tight control over their pour costs.
⚠️ Note:
Cocktails often have a lower pour cost than you'd expect because of ice, garnish and mixers. Count every ingredient, including that lemon wedge.
Adjusting markup to your situation
Your markup depends on several key factors:
- Location: City center vs. suburbs
- Concept: Sports bar vs. cocktail bar
- Competition: What are others charging?
- Fixed costs: High rent means higher markup needed
Start with industry-standard percentages and adjust based on your environment and cost structure. Don't just copy what others do—calculate what works for your specific situation.
How do you calculate markup on drinks? (step by step)
Gather your purchase prices per unit
Note what you pay per bottle of beer, per bottle of wine, per liter of spirits. Convert to the unit you sell in (per glass, per shot).
Determine your desired markup percentage
Use the standard percentages as a starting point: beer 200-400%, wine 300-500%, spirits 400-600%. Adjust for your situation and competition.
Calculate your selling price excluding VAT
Multiply your purchase price by (1 + markup%/100). For 300% markup: purchase price × 4.00. Then add 21% VAT for your menu price.
✨ Pro tip
Track your markup on your top 3 selling drinks every 4 weeks. These drinks typically drive 60-70% of your beverage revenue, so getting their pricing right controls most of your profit.
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's the difference between markup and margin on drinks?
Markup is the percentage you add on top of your purchase price, while margin is the percentage of your selling price that becomes profit. At €8 purchase and €24 sale: markup is 200%, margin is 66.7%. Both are useful, but markup is easier for setting prices.
Should I calculate markup including or excluding VAT?
Always calculate excluding VAT to get accurate numbers. Alcoholic drinks carry 21% VAT in most European countries. A beer priced at €3.00 is actually €2.48 excluding VAT for your markup calculation.
Can I use the same markup percentage for all my cocktails?
You can, but it's not always optimal. Premium spirits might support higher markups, while house cocktails need competitive pricing. Start with 400-500% across the board, then adjust individual drinks based on customer response and competition.
📚 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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