Imagine mixing up a martini. You choose a sparkling glass, select a plump olive, and stir it to perfection before straining.
It seems like you have all the makings of an excellent martini, but if you’ve skimped on the most important ingredient — the liquor — you’ll be disappointed when you take your first sip.
That’s what it’s like for your customers when your liquor store prices don’t match their expectations. They might be impressed by your selection of spirits and charmed by your customer service — but if the price tags on your bottles seem off, you’ll lose the sale.
Fortunately, you can avoid this disaster with an effective liquor store pricing strategy.
In this blog, we’ll discuss the factors that should shape your prices, explore four examples of successful pricing strategies, and share some of our top tips for setting the right prices for your spirits.
The Elements of an Effective Liquor Store Pricing Strategy
It can be tempting to trust your gut and set prices that “feel right,” but this approach might not lead to success.
Instead, you should consider these three factors when crafting your liquor store pricing strategy:
- Your Brand: What do your customers expect from your liquor store based on your brand? For example, if you’ve marketed your business as offering the best value in the neighborhood, they’ll expect lower prices.
- Your Competition: What prices do other liquor stores in your area offer? If you’re surrounded by stores advertising the lowest prices, you have room to set yourself apart by offering even lower prices or specializing in rare or fine spirits and charging more.
- Your Product Selection: What kinds of products are on your shelves? Different types of liquors cost more to stock, so consider your inventory costs when setting prices.
Let’s look at four examples to explore how these factors can shape your liquor store pricing strategy.
Pro tip: Use Bottle POS’ suggested pricing calculator to experiment with your prices and calculate your markups and profit margins.
1. The Trendy Cocktail Shop
Meet Maria, an expert mixologist turned small business owner. Maria has always dreamed about opening a liquor store that carries only the finest brands of liquor and mixers, plus professional accessories like shakers and muddlers.
Her branding is upscale, and her store has a boutique feel. Nearby liquor stores are more warehouse-style, offering a wide range of brands at low prices. When customers visit Maria’s cocktail shop, they know they’re getting the best of the best, and they expect to pay higher prices.
Because Maria offers a top-shelf shopping experience and a selection of curated products, she can charge a markup of 35% or more for her products.
2. The Budget Beverage Warehouse
Felix is a savvy small business owner who’s always trying to give his customers the best deal. He decided to open a liquor store when he noticed that all of the options in his neighborhood charged sky-high prices.
His store offers a huge range of spirits in different sizes, and he invests a significant amount of time and money into marketing to bring a steady flow of customers through his door.
Because Felix advertises his low prices and has such a high inventory turnover, he charges a smaller markup of around 20%. While he isn’t making a hefty profit from each customer, his sales volume keeps his revenue growing.
3. The Collector’s Paradise
Marcus is a small business owner who decided to turn his passion for fine whiskeys, bourbons, and scotches into a specialty liquor store.
When customers visit Marcus’ business, they’re always looking for a hand-picked spirit to savor — and they’re willing to pay extra for it. Marcus’ high-end products and loyal customer base allow him to charge higher prices for most of his products at a markup of around 40%.
One thing he does have to keep in mind is that stocking his shelves with rare liquors can be costly. For his most expensive offerings, he may have to lower his markup to keep prices from being too steep.
4. The Local Liquor Stop
Sam was inspired to launch his business when he came across the perfect space for rent in his city’s downtown district. This storefront was on a busy corner in the middle of the city, and he thought it would be a great place for a convenience liquor store.
Sam’s liquor shop offers a selection of the most popular liquors, beers, and wines. Shoppers are constantly popping in to purchase a few last-minute drinks for dinners and events.
Since the main appeal of Sam’s business is convenience, he can charge a markup of around 30% for his products. Because his customers don’t have time to shop for the best prices, they’re willing to pay these higher prices.
Bonus Liquor Store Pricing Strategy Tips
Now that you know what factors influence your liquor store prices, it’s time to put your plan into action. Your point of sale (POS) system should be your main partner in setting prices and calculating profit.
Here are our top tips for using your POS system to execute your liquor store pricing strategy:
- Track your costs: Your POS system’s inventory management system should show how much it costs to stock each of your products.
- Track your profit margins: Use your POS system to track the profit margin of every single product you carry.
- Leverage your sales reports: Consult your POS system’s reporting suite to understand sales patterns and adjust your prices accordingly.
- Launch strategic promotions: Try out different prices and increase your inventory turnover by setting up promotions through your POS system.
Your POS system can help you on your path to developing the perfect liquor store pricing strategy.
Master the Art of Liquor Store Pricing
Ready to take your liquor store to the next level with strategic prices and a powerful POS system? Then you need Bottle POS.
Bottle POS is an all-in-one POS system designed for liquor store owners just like you. Our software includes robust inventory management features, in-depth reporting and analytics, and sales-boosting features like promotions and a customer loyalty program to keep profits as high as possible.
See Bottle POS in action today by scheduling your live demo with one of our liquor industry experts.
