Making delicious, mouth watering recipes is only part of the puzzle for operating a profitable juice bar. How much to charge for your recipes is a very important, and often misunderstood concept. My consulting team at Goodnature has helped create hundreds of profitable, delicious juice bar menus for our clients. I've tried to put together a quick, easy guide here on how to decide what price to charge for each menu item.
1. Know your cost of goods sold (COGS)
If you are just blindly pricing your juices without knowing how much they are costing you, your business is going to fail, period. Real cold-pressed juice is a very high cost item, so it's easy to accidently be actually losing money on your recipes if you don't know your costs. The cost of your juice is made up of two components:
- Food Cost
Food cost is quite simply the cost of the fruits and vegetables in your juice. Food cost does not include packaging, labor, or overhead. Your food cost should be 20%-30% of the price of the juice. So, if you charge $10 for a bottle of juice, the ingredients inside of it should not cost more than $3, and $2 would be best. Learn more about calculating food cost here.
For most juice bars, packaging means your bottle, lid, and label. Packaging cost can vary widely, based mostly on whether you use glass or plastic bottles, and the cost of your labels. If your food costs are in line with the above, you can absolutely still sell a very profitable product even when using premium glass juice bottles.
What about labor cost?
Labor cost is an important cost to know for your business for sure, but it shouldn't be used to calculate cost of goods. There are several reasons why, but the most important reason is because, as a manager, you need to think about them separately. First get your COGS down to a reasonable number, then try to make sure you are using your labor efficiently. For an in depth discussion on this topic, check out this episode of Goodnature Radio:
What Should Cold-Pressed Juice Cost?
What about overhead?
Since fixed costs like your internet bill, building rent, and your manager's salary don't change depending on the amount of juice produced, they cannot be factored into the cost of goods. Think about it like this - if your daily overhead is $300 and on Wednesday you only make one bottle of juice, are you going to say that bottle of juice cost you $300, and sell it for $305 to make a profit? No, absolutely not. Looking at it this way would make it impossible to manage your business effectively.
2. Calculate your minimum price
With both of the items above, you should strive for 40% - 60% gross profit margin per bottle of juice. Using that number, you can calculate the minimum price in the following way:
Food Cost + Packaging Cost / (1 - Required Margin) = Minimum Price
For example: If you decide the required margin for your business is 50% (0.5), and your food cost is $2, and your packaging is $1.50, here's what it looks like:
$2.00 + $1.50 / (1 - 0.5) = $7.00 Minimum Price
This calculates out to be $7.00. So now you know that you can charge $7.00 for this juice and be selling a profitable product with a good margin. However, you are not bound by this price. You could always price it higher to make a better margin.
3. Don't price everything the same
Don't fall into the trap of just making all juices $9.00 or $10.00 or whatever. It doesn't make sense. If you go to a restaurant, it would seem ridiculous if every food item was the same price, regardless if some items cost the restaurant far less to make.
If I walk into a juice bar and and I see a healthy green juice for $10.00, and a lemonade for $10.00 that I know is mostly water, I immediately get a sense that this business is ripping me off and it makes me trust it less. Build trust in your brand and increase affordability by offering a range of prices.
Another good reason to charge a range of prices based on food costs is because you can advertise the lowest priced items. For example "Cold pressed juice starting at $6.00" is only possible if you have a $6.00 juice!
Pricing this way also gives you the freedom to have some very expensive items, like a $12 almond milk, without worrying about if it fits into your pricing model.
4. Check costs regularly
Costs change a lot (celery, am I right??), so make sure you are frequently checking your food costs. If you find that one of your recipes is no longer falling into your target profit margin, either raise the price or take the item off of the menu. By the way, it can feel scary to change prices because you fear backlash from customers. It's usually not as bad as you think. Just make sure you are ready yo explain why, and that all of your staff have the same answer.
For example, "Recently the price of celery has gone up a lot so we had to raise our price fifty cents to keep our costs in line with the supply chain." An honest, straight forward answer! Remember, you are not forcing anyone to buy your product. They are making the choice. If they don't accept the price, they can simply decide not to buy it.
Where to go for help
If reading this makes you feel confused or out of your comfort zone, don't worry, we are here to help! We have the world's leading juice business consultants on staff to help you navigate creating a menu and pricing. Our team is available for a free thirty minute to call to answer any initial questions you might have.
Note: Whether you’re starting a juice bar, a juice delivery service, or a wholesale juice business, this How to Write a Juice Business Plan guide explores the key elements of a successful juice business plan, along with industry tips, resources, and downloadable content to help you write it. Get it for free!
I also recommend using the search icon at the top of our website to search for your juicing questions, we have hundreds of blog articles and recipes made specifically for cold-pressed juice businesses. Check it out!