Just generally curious about this topic because after researching a bit I haven't been able to locate a solid resource on this. I want to know the business side of wine lists a bit more. I studied business in college, but not in relation to wine. I understand contribution margins, COGS, etc, but I'm interested in how to price and how to decide how the wine list will perform.
Any resources or help would be appreciated!
In line with the decreasing margin as wholesale price increases, I realized years ago that, if you do this at thresholds, you'll end up with an oddly priced list. After all, if, for instance, you go from 3x to 2.5x at, say $75 your cost, than a bottle of wine you spend $73 is going to cost more on your list than one that you pay $76 for. To remedy this, I actually sat down with my old HS math teacher and created a logarithm where you enter in two points (what you mark up your cheapest wines and what you mark up your most expensive wines and it returns the suggested mark up given a wholesale price. It's an excel doc that I'd be happy to share.
Mind you, this price is just a suggestion and one should always adjust to what the market will bear or other considerations like David's Screaming Eagle example. There are plenty of wines that I get more aggressive with my mark-up than I normally do given the cost because they'll sell anyway and others that I simply won't move at all if I try to get my expected mark-up. These, of course, balance out.
I would be really interested to see this in action!
This thread turned out to be a gold mine! Thanks, Charlie.
If you could send me that excel doc that would be amazing :D