Beer costing in hospitality: how to price draught and bottled beer

A new keg is tapped and the first beer is flowing – but do you actually know what a glass costs you? Many venues take their beer price from the previous owner, the place next door or gut feeling. When it comes to beer costing in hospitality, every cent counts. Gut feeling works until the brewery or drinks wholesaler raises prices and your margin quietly shrinks.

The good news: beer costing in hospitality is not rocket science. You need the purchase price, a realistic assumption for pouring loss, your target cost-of-goods percentage and the right VAT rate. In this article we work through it step by step – for draught and bottled beer, for 0.3 l and 0.5 l glasses, with worked examples you can check yourself.

1. Beer costing in hospitality: the basic formula

Every beer calculation follows the same logic: first you work out the cost of goods per glass, then you derive the net selling price from your target cost-of-goods percentage, and finally you add VAT.

Step 1 – cost of goods per glass: net purchase price ÷ pourable volume in litres × glass size in litres

Step 2 – net selling price: cost of goods per glass ÷ target cost-of-goods percentage

Step 3 – gross selling price: net selling price × (1 + VAT rate)

Step 4 – check: Through regular stocktaking you determine your actual cost-of-goods percentage and compare it with your target. Section 6 shows what that looks like in practice.

The key word is pourable. A 50-litre keg does not give you 100 full 0.5 l glasses, because some beer is always lost when pouring, when flushing the lines and as foam. If you calculate with the full keg volume, every glass is priced too low. You build this technical loss into your costing. It is different from unexplained pouring loss, which you only find through a target vs. actual comparison – how that works is explained in detail in our article Calculating pouring loss.

2. Costing draught beer: a step-by-step example

Let's take a typical pub scenario. The figures are example values – use your own purchase prices and experience for your venue.

Now your target cost-of-goods percentage comes into play. Suppose you want to reach a cost-of-goods percentage of 25% on beer. For the 0.5 l glass, that gives you:

• Net selling price: €1.25 ÷ 0.25 = €5.00
• Gross selling price (19% VAT): €5.00 × 1.19 = €5.95
• Contribution margin per glass (net): €5.00 – €1.25 = €3.75

For the 0.3 l glass, the calculation is the same: €0.75 ÷ 0.25 = €3.00 net, times 1.19 gives €3.57. On the menu, though, it is better to price the small glass deliberately higher, for example at €3.90 – pouring, washing up and service per glass stay the same no matter how much is in it. Per litre, the 0.3 l glass is then slightly more expensive than the 0.5 l glass.

What happens if you leave out pouring loss?

If you calculate with the full 50 litres, you get €1.20 cost of goods per 0.5 l and therefore €4.80 net. In reality, though, the glass costs you €1.25. Your actual cost-of-goods percentage is then €1.25 ÷ €4.80 = around 26% instead of the planned 25%. That sounds small – but across many kegs a month, this one percentage point adds up to a noticeable amount.

3. Costing bottled beer

With bottled beer there is no pouring loss, so the calculation is simpler. Example: a crate of 20 bottles of 0.5 l costs you €18.00 net (excluding deposit).

• Cost of goods per bottle: €18.00 ÷ 20 = €0.90
• Net selling price at a 25% target: €0.90 ÷ 0.25 = €3.60
• Gross selling price: €3.60 × 1.19 = €4.28, so for example €4.30 on the menu

You get the deposit for crates and bottles back when you return them, so it does not belong in the cost of goods. Breakage, on the other hand, does: if a bottle regularly gets broken, document it and take it into account in your costing. More on this in our article Shrinkage and breakage in hospitality.

4. The right target cost-of-goods percentage for beer

There is no universal percentage that suits every venue. A brewpub with high beer sales calculates differently from a cocktail bar that only offers beer on the side. What matters is that your percentage fits your fixed costs, your concept and your price level. The table below shows how strongly the target percentage affects the price – using the 0.5 l glass with €1.25 cost of goods:

The mark-up factor is simply the inverse of the percentage: 1 ÷ 0.25 = 4. If you prefer working with factors, multiply the cost of goods directly by it. How cost-of-goods percentage, mark-up and contribution margin fit together is explained in our article Costing in hospitality.

5. VAT and price display on the menu

In Germany, drinks served in hospitality are still subject to the standard VAT rate of 19%. Since 1 January 2026, food has been permanently taxed at 7%, but drinks are excluded – as summarised, for example, by the Frankfurt am Main Chamber of Commerce (IHK). For your beer costing, that means: net price times 1.19. All the details on the distinction are in our article VAT in hospitality 2026.

The drinks menu always shows final prices. Under Section 13 of the German Price Indication Ordinance (PAngV), prices in restaurants and bars must be listed in a price list and must include the service charge and all other surcharges. How to structure your menu is shown in our article Creating a drinks menu.

Austria and Switzerland: In Switzerland, the standard rate is 8.1% according to the Swiss Federal Tax Administration (FTA); it also applies to restaurant services. Costing there is done in CHF accordingly. Austria has its own VAT rates – it is best to confirm the rate that applies to your venue with your tax adviser and use it in step 3 of the formula.

6. Checking your costing in practice

A calculation is only as good as the figures behind it. Whether you actually reach your planned percentage only becomes clear when you check. For that, you need a regular stocktake:

Actual cost of goods (beer) = opening stock + purchases – closing stock (each at net purchase price)

Actual cost-of-goods percentage = actual cost of goods ÷ net beer revenue

If the actual percentage is above your target, there are three typical causes: the purchase price has gone up without you adjusting the selling price; pouring loss is higher than assumed; or beers are being served that never make it into the till. When looking for the cause, it helps to review the cost of goods formula and break the figures down by beer.

7. Common mistakes in beer costing

• Calculating with the keg volume instead of the pourable volume: foam, line flushing and line loss belong in the calculation.
• Mixing gross and net: net purchase price, net selling price – VAT only comes in at the end.
• Missing purchase price increases: when the brewery or wholesaler raises prices, your cost of goods changes immediately. Review your costing after every price change.
• Pricing small glasses linearly: a 0.3 l glass takes almost the same effort as a 0.5 l glass.
• Never checking: without regular stocktakes you will not know whether you are hitting your planned percentage.

8. Beer costing with BarBrain

With BarBrain, all the figures for your beer costing are in one place – no Excel formulas that nobody updates after the next price rise. Without software, that often means typing up delivery notes, counting kegs on paper and only noticing deviations when the margin is missing at the end of the month.

• Recipe management: In recipe management you set up every drink with its pour size. BarBrain calculates the cost of goods from your current purchase prices and compares it with the net selling price, so you can see the cost-of-goods percentage for each beer at a glance.
• Up-to-date purchase prices: With the AI delivery note scanner you capture deliveries with a photo. When purchase prices change, your recipes are recalculated automatically.
• Fast stocktaking: With digital stocktaking you count kegs, crates and opened bottles directly in the app, and several team members can count in parallel. The product catalogue with more than 30,000 items saves you from creating many products yourself.
• Target vs. actual comparison: The POS integration links quantities sold with your recipes and compares them with actual consumption from your stocktake, so you spot deviations on beer early.

For hotels and groups: each outlet – such as hotel bar, restaurant or banqueting – is its own account with its own areas, such as counter, cold room or storeroom. In the admin overview you compare outlets with each other – for example their cost-of-goods percentage on beer.

Want to see what this looks like for your venue? In a no-obligation demo we show you BarBrain with your own product range. Book a demo now.

9. Frequently asked questions