How Do You Calculate Liquor Cost per Bottle?
When running an online liquor business, it is important to have a rough estimate of liquor price per bottle so that you can manage other crucial factors such as average profits, costs, and other things around.
Here's a general method to calculate the liquor cost per bottle:
Determine the Cost of Ingredients: Determine the cost of all the ingredients required, such as base alcohol, additional flavorings, botanicals, etc.
Calculate the Production Yield: Determine the total volume or quantity of liquor produced from the ingredients used.
Calculate the Cost per Unit: Divide the total cost of ingredients by the production yield. It gives you the cost per unit of liquor produced.
Let’s understand with an easy example and the numbers involved:
For example, if the total cost of ingredients used is $500 and the production yield is 100 bottles, the cost per bottle would be $500/100 = $5 per bottle.
It's important to note that this calculation only considers the direct cost of ingredients and production. Other expenses such as packaging, labeling, labor, overhead, and marketing expenses should be factored in separately to determine your liquor business's overall cost and profitability.
Considering all the expenses and after adding your profit margin, you can decide on the final pricing. Keep the pricing considering your target market and market demands.