Determining Your Beer’s Price in the Marketplace

Making beer is not charity work. Breweries need to make a profit on its wares to continue to make more of that product. And also pay the bills, employees and so on and so forth.

Determining a price point for market sometimes can be a challenge, especially if a brewery doesn’t start by figuring out all of its expenses first.

“Back when I first started, I got the best piece of advice possible from Vinnie Cilurzo of Russian River Brewing,” recalls Jamil Zainasheff of Heretic Brewing. “He told me to make certain to price our beer to make a fair profit. That may seem like simple advice on the surface, but it is critical advice that too many breweries don’t follow.”

Zainasheff noted that many newer breweries in the marketplace think that by selling their beer cheaper they can gain market share.

“That does nothing but hurt the market for everyone and ensures that you will not make any money,” he said. “Too many brewers also fail to count all their costs for a beer, leaving out things like utilities, rent, chemicals, CO2, labor, cost of waste packaging materials, lost beer, etc.

“You need to know what your true cost is and mark it up to ensure you have the cash to grow and succeed. This isn’t charity work. You should be making a profit. If you can’t sell your beer at that price, maybe you need to rethink what you are doing.”

A big determining factor for Blue Pants Brewery‘s prices is getting the raw materials right said managing partner Mike Spratley. Sometimes that might mean brewing a certain beer for market or past a taproom handle would be too expensive to begin with. And some ideas stop even before that.

“We wouldn’t be able to recover the cost in the market, and the process is over before it starts,” he explained.

“With our sales margins, we try to find a happy medium where our products are priced correctly — not so high as to gouge customers, but not so low that we make no profit,” Spratley said. “We have gone through several prices changes with our beers, sometimes up, sometimes down — it’s all dependent on what’s happening in the market, and there’s no strict formula to it.”