On a strategy call earlier this year, we met with a small southern brewery doing about $900k per year in revenue.
You might think: not much to see here.
Small town, local brewery, great reviews and a consistent customer base. What more can you do with a taproom like this?
But when we ran the numbers, lo and behold a $136k profit opportunity popped out the other side.
His reaction: “Wow… That’s pretty attractive.”
The Power of Price
Most business owners underestimate the power of the pricing lever. Not only do improvements drop straight to the bottom line, it costs almost nothing and requires very little time and effort.
So why isn’t everybody on top of this?
On paper, people would much rather prevent loss than experience gain (studies show it’s about 3:1). Stack on top of that the emotional impact of just ONE angry customer lighting up your Facebook page about how “ridiculously overpriced” your beer is, and boom… perfect recipe for inaction.
In our example, this owner was already thinking about a price increase, but was concerned about maintaining his 4.8-star Google rating and local reputation. In his mind, he was doing his regulars a favor with their pint pricing.
Reality: Turns out there’s a tap house down the road charging $6.00 for 12oz pours with a line out the door, and the prior year price increase they ran saw no negative consequences.
Enter… the math.
Hard To Argue With Math
With some rough math on his current pricing and a simple increase scenario, we made the “loss aversion” work in the other direction. On a menu, the difference between $5.25 and $6.50 doesn’t seem huge. But when you multiply that over 78,000 pints, the numbers get too large to ignore.
Now we have some ammunition against the fear of a few annoyed customers: the pain of leaving $136,000 in profit on the table, especially as a do-it-all owner/operator stretched thin trying to make it all work. You can solve MANY problems in a small brewery with an extra $136k each year.
Curious what this could look like in your taproom? Get the complete Taproom Profit Plays PDF and schedule a free profit session with our team!