As a former bartender, I became familiar with the costs associated with the profession. One of the most common questions I get is how much alcohol costs and what the markup is.
A shot of alcohol can cost you anywhere from $4 to $15, depending on the bar and the quality of the alcohol served. Liquor pricing is calculated based on the cost per shot of alcohol and the liquor markup set by the bar. The more upscale the bar, the more expensive the price of alcohol is likely to be.
This article will list the calculations that go into pricing liquor at bars and explain each of the factors involved in detail.
A List of Typical Liquor Prices
Here is a table listing typical liquor prices, which shows the calculations that go into estimating prices (with estimates for both the lower and higher end of the range of prices):
|Lower End||Higher End|
|Cost per Shot||$1||$3|
|Typical Liquor Price (Cost per Shot X Liquor Markup / 100)||$4||$15|
How Are Typical Liquor Prices Calculated?
Typical liquor prices are calculated by multiplying the cost per shot of alcohol and the liquor markup and dividing the product of the two by 100. The cost per shot of alcohol, in turn, depends on the bottle cost of alcohol and the shots per bottle of alcohol.
So, the typical price of alcohol is influenced by:
- The bottle cost of alcohol
- The shots per bottle of alcohol
- The liquor markup of the bar
The following sections will comprehensively explain each of these factors to give you a clearer understanding of how I have arrived at the final numbers.
What Is the Cost per Shot of Alcohol, and How Is It Calculated?
The cost per shot of alcohol is the amount each shot of alcohol costs the bar. It’s calculated by dividing the cost per bottle of alcohol by the shots per bottle of alcohol. Typically, this works out to between $1 and $3 per shot of alcohol.
Now, let’s take a closer look at each of these terms and understand the reasoning behind the final calculations.
The Bottle Cost of Alcohol
The bottle cost of alcohol is the cost to the bar of an individual bottle of alcohol. It depends on the brand, type, quality, and size of the alcohol bottle.
Bottle costs can vary widely based on quality. A solid entry-level bourbon is cheaper than a good mid-tier whiskey, which is more affordable than a premium single malt. However, to calculate the typical cost per shot of alcohol, we only need to look at the mid-range of prices, as these account for the most significant volumes of alcohol served at a typical bar.
Alcohol bottles also come in various sizes, containing different volumes of alcohol. They range from a fifth (750 mL or 25.36 oz of alcohol) to a handle (1750 mL or 59.18 oz of alcohol). For this illustration, let us calculate our costs based on a fifth.
Depending on where you buy it, a fifth of a mid-range bar staple like Jameson Original Irish Whiskey should cost you between $20 to $30. Similarly, 750 mL or 25.36 oz of a slightly more sophisticated product, like Hendrick’s Gin, will cost you anywhere from $30 to $40.
Of course, some popular mass-produced brands will be cheaper, and premium bottles can go up to well over $100 a bottle. At the same time, costs will be a little lower in some states and a little higher in others. Apart from this, bars pay wholesale rates for their alcohol stocks, which tend to be lower than retail prices.
Still, based on our quick and dirty survey of mid-tier liquors, it’s safe to assume that a fifth of alcohol should cost a bar somewhere between $20 and $40 a bottle.
Shots per Bottle of Alcohol
The number of shots per bottle of alcohol is calculated by dividing the volume of alcohol in a bottle by the volume of alcohol in a standard shot of alcohol. The standard shot is usually 44.36 ml (1.5 oz) in American bars.
So a fifth of alcohol, which is 750 ml (25.36 oz), should make 750/44.36 or 25.36/1.5 shots per bottle. This works out to 16.9 shots. As there is always some spillage involved in pouring liquor, however careful a bartender, let us assume that a fifth of alcohol will pour, on average, 16 shots of alcohol.
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The Cost per Shot of Alcohol
As mentioned earlier, the cost per shot of alcohol is the amount each shot of alcohol costs the bar. It’s calculated by dividing the cost per bottle of alcohol by the shots per bottle of alcohol.
Assuming that a fifth of alcohol pours 16 shots and that the bottle costs between $20 and $40, we get the following outcomes:
|Lower End||Higher End|
|Shots per Bottle||16||16|
|Cost per Shot(Bottle Cost / Shots per Bottle||$1.25||$2.5|
Based on this calculation, the cost per shot of alcohol at a bar is $1.25 for liquor at the lower end of the mid-range selection. Similarly, the cost per shot of alcohol at a bar is $2.50 for liquor at the higher end of the mid-range selection. Rounding out our figures, it is safe to assume that the cost per shot to a bar is somewhere in the $1-$3 range.
What Is Liquor Markup and How Is It Calculated?
The liquor markup is the percentage of the cost of alcohol that bars charge customers for individual drinks. It depends on a bar’s overhead, the degree of competition it faces in the immediate neighborhood, and the demand for alcohol in its locality.
Therefore, the liquor markup tells us how many times the cost per shot of alcohol the customer pays at a bar. According to Binwise, a maker of bar inventory software, standard liquor markups in bars in the US are between 400 to 500%.
A markup of 400% means that the customer pays four times the cost per shot of alcohol for their drink. Similarly, a 500% markup suggests that the bar charges the customers five times the price per cost of a shot of alcohol.
Why Is the Liquor Markup So High?
The liquor markup is so high because bars need to cover several expenses other than the cost per shot of alcohol to bring the alcohol to their customers. Bars need to pay rent, utility, maintenance bills, and salaries for staff, including bartenders. They also have to maintain inventories.
Running a bar involves several expenses. Even if the proprietor owns the property, a well-run bar has several recurring expenses. Like any other business establishment, bars need to pay their utility costs.
Additionally, bars need to be well-stocked with a wide range of liquor, and they need to stock drinkware and cutlery and maintain their property to create a pleasant ambiance for their customers.
Finally, bars need to pay their staff. This includes bartenders and other staff members, such as cooks, dishwashers, servers, and security.
Together, these expenses can add up to a significant portion of the bar’s earnings. This is why bars need to markup their prices to protect their profits and ensure they can continue to operate in the future.
Typically, liquor prices at an American bar range between $4 and $15 for a shot. While the average shot of alcohol only costs a bar between $1 and $3, they charge their customers between 4-5 times this price to protect their profits.
For more, don’t miss 15 Best Alcoholic Drinks for Beginners or Lightweights.
Anne James has a wealth of expertise in a wide array of interests, including quilting, cooking, gardening, camping, and making jelly.
She has a professional canning business and has been featured in the local newspaper, and has been her family canner for decades. Anyone growing up in the South knows that there is always a person in the family who has knowledge of the “old ways,” and this is exactly what Anne is.
With over 55 years of experience in these endeavors, she brings a level of hands-on knowledge that is hard to surpass.
Lovingly known as “Jelly Grandma” by her grandkids, Anne hopes your visit here has been a sweet one.