Most winery owners have felt this tension at some point. Your wine is selling, the tasting room is busy, and cases are moving out the door. Yet, when you look at the bank balance or sit down with your financials, the profit does not feel as strong as it should.
Pricing is often the quiet culprit.
At Llamas Financial, we work with wineries every day, from small family-run operations to growing brands selling across multiple states. Based in Napa Valley, we understand the wine business from the inside out, not just as accountants, but as partners who see how vineyard costs, production decisions, distribution margins, and cash flow all collide in real life. One of the most common challenges we see is pricing that was built to drive sales, not sustain profit.
In the wine world, it is easy to price based on what competitors are charging, what distributors expect, or what you think customers will tolerate. But pricing that only focuses on sales volume can slowly erode margins, strain cash flow, and make growth harder instead of easier. Pricing for profit requires a deeper understanding of costs, channels, and the long life cycle of a bottle of wine.
Let’s walk through how to price wine for profit in a way that supports long-term profitability, not just short-term sales.
Why Wine Pricing Is More Complex Than It Looks
Wine is not a simple product. A bottle represents months or years of farming, production, aging, storage, marketing, and compliance. By the time it reaches a customer, costs have accumulated across vineyard operations, winery production, overhead, and sales channels.
Unlike many consumer products, you also sell the same wine through very different paths. A bottle sold in the tasting room has a completely different margin profile than one sold through a distributor or shipped directly to consumers across state lines. If pricing does not account for those differences, some channels may be carrying the business while others quietly drain profit.
Pricing for profit starts with accepting that there is no single “right” price. There is only a price that works for your costs, your brand, and your sales mix.
Step 1: Understand Your True Cost Per Bottle
Before you can set a profitable price, you need to know what each bottle actually costs you. This sounds obvious, but in practice, many wineries underestimate their true costs.
Start with direct production costs. These include grapes, vineyard labor, cellar labor, barrels, bottles, labels, corks, and packaging. These are usually easier to identify, but they are only part of the picture.
Next are indirect and overhead costs. Utilities, rent, equipment depreciation, insurance, administrative salaries, compliance costs, and marketing expenses all support production and sales, even if they are not tied to a specific batch of wine. These costs still need to be absorbed somewhere, and pricing is where that happens.
Finally, all of this rolls into Cost of Goods Sold. A well-structured Cost of Goods Sold system allocates vineyard and winery costs accurately and consistently across inventory. Without this, per-bottle costs are often understated, which makes pricing decisions overly optimistic.
When wineries take the time to calculate a realistic per-bottle cost that includes overhead, pricing conversations become grounded in reality rather than guesswork.
Step 2: Choose a Pricing Strategy That Fits Your Goals
Once you understand your costs, the next step is deciding how you want to price your wine. There is no single approach that works for every winery, but there are a few common strategies worth understanding.
Cost-based pricing starts with your cost per bottle and adds a target margin. This approach ensures every bottle sold contributes to profit. It is straightforward and useful as a baseline, but it does not account for how customers perceive value or how the market behaves.
Target price pricing works in the opposite direction. You start with the price you believe the market will support and then work backward to see if your cost structure allows for a healthy margin. This approach is common when launching new wines or entering competitive categories, but it requires disciplined cost control.
Market-driven pricing looks outward. You analyze comparable wines, appellations, and brands, then position your pricing accordingly. This strategy acknowledges that wine is an emotional purchase tied to brand and story, not just production cost.
Many profitable wineries use a hybrid approach. They set a cost-based floor to protect margins, then adjust within a market-driven range depending on channel and brand positioning.
Step 3: Price With Sales Channels in Mind
One of the biggest pricing mistakes we see is using the same pricing logic across all channels.
Direct-to-consumer sales, whether through the tasting room, wine club, or online, typically offer the highest margins. Wholesale and distribution sales move volume but require giving up a significant portion of the final retail price.
Under the three-tier distribution model, distributors and retailers each need their margin. If a bottle is priced too low at the winery level, there may not be enough room for everyone to make money, or the winery absorbs the hit.
Smart pricing starts by mapping out margin expectations by channel. From there, wineries can decide where to push volume, where to protect margin, and how pricing supports those goals. This often leads to intentional differences between tasting room pricing and wholesale pricing, rather than forcing one model to fit all.
Step 4: Use Margin Math to Guide Decisions
Pricing discussions often get stuck on markup, but margin tells a clearer story.
Markup looks at how much you add to the cost. Margin shows how much of the final price you keep after costs. Two wines can have the same markup but very different margins, especially once distribution cuts are involved.
Contribution margin is another powerful tool. It shows how much each bottle contributes toward covering fixed costs and profit after variable costs are paid. This helps wineries identify which wines truly support the business and which ones look successful on the surface but contribute very little to the bottom line.
Running simple pricing scenarios can be eye-opening. A small price increase, applied strategically, can have an outsized impact on profit without meaningfully affecting sales volume.
Step 5: Adjust Pricing Over Time, Not Just at Release
Pricing should not be a one-time decision made at bottling and forgotten. Costs change. Consumer demand shifts. Inventory levels fluctuate.
Wineries that review pricing regularly are better positioned to respond to rising costs, slower-moving SKUs, or opportunities to raise prices where demand is strong. This does not mean constant tinkering, but it does mean treating pricing as a living part of the business.
Tracking sales velocity, margin by SKU, and channel performance gives owners the data they need to make thoughtful adjustments instead of reactive discounts.
Common Wine Pricing Mistakes to Avoid
Some pricing pitfalls show up again and again.
Pricing solely to match competitors without understanding your own costs is one of the most common mistakes. Another is ignoring overhead and focusing only on vineyard or production expenses. Others include failing to adjust pricing for different channels or holding prices steady even as costs rise year after year.
These mistakes usually do not come from poor judgment. They come from incomplete financial visibility. When the numbers are unclear, pricing becomes guesswork.
Get Expert Advice On Wine Pricing
Pricing wine for profit requires more than a good palate and a sense of the market. It requires clear cost tracking, an understanding of margins by channel, and the discipline to revisit pricing as the business evolves.
When wineries price intentionally, they create space for reinvestment, weather slow vintages, and grow without constant financial pressure. Sales still matter, but profit is what sustains the winery over the long run.
At Llamas Financial, we work with wineries to build the financial systems that support smarter pricing decisions, from accurate Cost of Goods Sold tracking to margin analysis and cash flow planning.
If you want to take a closer look at whether your pricing is truly supporting your goals, we are here to help.
