The Ultimate Guide to Craft Beer Pricing Strategy

Demand for craft beer has spiked in recent years, and projections for future growth in sales look good, which means that stocking it makes sense for lots of businesses across the retail and hospitality sectors.

Of course, with any specialist product, you need to think carefully about how you price craft beer in order to attract customers while still making a profit. With that in mind, here are some tips on how to handle this strategically, and the factors that will influence your decision-making in this context.

Draft vs. bottled & canned beers

To start with, one of the main distinctions to bear in mind when it comes to craft beer pricing is that there will be differences in the costs and additional considerations of products depending on whether you offer them on draft, or sell them in bottles or cans.

Your draft beer pricing strategy has to be based on the calculations you make for the additional costs that are involved in serving this type of beverage. This includes higher overheads associated with the equipment needed to sell draft beer and the maintenance that this requires, as well as the price you pay for the kegs from suppliers, on top of the serving size that you supply to customers.

Draft beer also has extra issues to take on board, such as the inevitable wastage that comes when pouring a potentially frothy pint, and the expense of supplying the glassware to serve it in, along with the need to replace this when damage occurs.

The main advantage, amongst all this complexity, is that draft beer is typically more affordable at a basic level, since it is sold in bulk containers and provided as part of a robust distribution network.

Bottled and canned beers are the other side of the craft beer coin and are far simpler to store, serve, and price. You can pick your markup according to industry averages, although you should also assess how much competitors are charging to ensure that you are not pricing yourself out of the market in your region.

It is not unusual for craft beer to have a higher markup than mass-produced equivalents, both because costs are higher and because it is necessarily a rarer and thus more valuable commodity, with a target audience that understands these things. Selling draft, canned, or bottled craft beer for anywhere between 3 and 5 times what it cost you to acquire it is entirely acceptable.

Maintaining consistency to avoid customer confusion

Another strategically important consideration when pricing craft beer is that although there are different costs associated with selling draft beer compared with canned or bottled beer, where there are distinct similarities between the two in terms of branding and beer variety, there should be parity in terms of the price that the customer pays.

For example, if you have beer on tap that is also available canned, it should be priced consistently according to the volume offered, not solely based on the aforementioned costs you have calculated. This usually means allowing the costs of draft beer to be essentially reflected in the bottled or canned counterpart, as even though this means the customer will be paying more than might otherwise be the case, it will steer clear of any confusion or consternation.

Price is tied to perceived quality, and that’s a good thing

Because of the burgeoning demand for craft beer, there are not only more people willing to buy it at premium prices, but more opportunities for retailers to secure wins at both ends of the pricing spectrum.

Indeed you need to have a wide variety of beers available, not just because this will cater to different tastes and keep customers coming back in the future, but also because it will provide plenty of price variation as well.

Say you have one or two affordable, somewhat mainstream craft beers at a lower price point. It will then make sense to also sell costlier equivalents that are significantly more expensive because this difference in price will give customers the perception that this correlates with an increase in quality as well.

These are all tried and tested ways to sell more beer and keep customers smiling, but through your own experimentation, you should find the right balance for your own craft beer business.

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About the Author

Dr. Jerry Doby Editor-in-Chief of The Hype Magazine, Media and SEO Consultant, Journalist, Ph.D. and retired combat vet. 2023 recipient of The President's Lifetime Achievement Award. Partner at THM Media Group. Member of the U.S. Department of Arts and Culture, the United States Press Agency and ForbesBLK.