Markup

Definition:
Markup is a pricing method that sets the selling price of a menu item by multiplying the ingredient cost by a fixed factor. It’s one of the most common strategies for pricing cocktails, dishes, and other products in hospitality.

Formula:
Menu Price = Ingredient Cost × Markup

In Context:
Spec uses markup as one of three ways to calculate suggested menu prices, alongside Target Cost % and Target Profit Margin. Many bars aim for a markup between 4.5 and 6, depending on their ideal Pour Cost or gross margin. Markup is especially useful when pricing drinks with consistent ingredient costs, like classic cocktails or house signatures.

Example:
If a cocktail costs $2.00 to make and you apply a markup of 5, the menu price would be:
$2.00 × 5 = $10.00

This would result in a pour cost of 20% — right in the target range for most programs.

Pro Tip:
Markup is easy to use, but not always the most strategic. Two drinks with the same cost might warrant different prices based on popularity, presentation, or guest perception. Spec allows users to toggle between markup and other pricing strategies so you can choose what’s best for each menu item.

Related Terms:

• Pour Cost

• Target Cost %

• Target Profit Margin

• Recipe Costing

• Cost per Serving