Menu Pricing Calculator

Gross margin is the percentage of the selling price that is profit after ingredient cost. A $5.00 drink with $1.50 COGS has a 70% gross margin: ($5.00 minus $1.50) / $5.00 = 70%. Markup is the percentage above cost: ($5.00 minus $1.50) / $1.50 = 233%. A 70% margin does not equal a 70% markup. This calculator shows both so you can be clear about which metric you are using.

Specialty coffee shops typically target 65 to 75% gross margin on beverages (25 to 35% pour cost). This leaves room to cover labor, rent, equipment, and other overhead while maintaining profitability. High-volume operations sometimes operate at the lower end of this range because they compensate with volume. Lower-volume or higher-overhead cafés often need to be at the upper end.

COGS (cost of goods sold) for a beverage should include the direct ingredient costs: coffee, milk or alt-milk, syrups, ice, and packaging (cup, lid, sleeve, straw). It should not include labor, rent, utilities, or equipment depreciation; those are overhead costs, not COGS. Use the Cost of Goods Calculator on this site to add up your per-drink ingredient costs.

No. This calculator shows gross margin on ingredients only. Net profitability requires subtracting labor, overhead, rent, equipment costs, and all other operating expenses from gross profit. Gross margin on ingredients is the right number for pricing decisions: it tells you what each sale contributes before overhead. Net margin is the right number for overall business health.

If your current menu price is below the recommended price, your pour cost is higher than your target, meaning each drink contributes less to overhead and profit. Your options are: raise the price, reduce COGS (negotiate better ingredient pricing or adjust recipe), or accept a lower margin and compensate elsewhere. Raising prices in small increments ($0.25–$0.50) tends to have less customer resistance than a single large jump.