I already expounded about 18 months ago on why I think 'Free drinks' events are a BAD IDEA.
I believe very cheap booze promotions can be counter-productive too. I just came upon an excellent illustration of the point with the newly opened Red House on Xingfu Zhongjie (it would be rather more helpful to call it Red House II, to avoid confusion with its parent bar of the same name, a moderately successful student dive up in Wudaokou next to BLCU). It's selling local draught beer for 5 kuai a pint.
Now, I can think of a few places in the past that did this too - the sadly demised Pizze e' Core, for example, a favourite neighbourhood hangout of mine on Andelu 6 or 7 years ago. Last time I checked, I think the Russian duo of Traktirr and Traktirr Pushkin (and their nearly indistinguishable neighbour/competitor White Knights) were asking just 7 or 8 kuai for a slightly-less-than-a-pint glass of draught. I've even known a few restaurants that gave the stuff away completely FREE, as part of an all-you-can-eat-and-drink buffet deal - most of those ersatz 'Brazilian Barbecue' places and the Origus pizza chain. But you see what these ultra-budget options have in common? Yep, they're all restaurants - so the beer giveaway is subsidised by all the food you're going to be ordering.
5 kuai for a full pint of draught is perhaps not quite below cost, but it must be getting quite close, I would think. That should start alarm bells ringing in the back of your head.
But, more importantly, whatever the profit margin, or lack of one, for the owner, it's just too close to being completely FREE, and so it invokes all of those negative consequences I mentioned in that earlier post: penny-pinching by owners (watering down, giving short measures, buying fake or out-of-date stock to trim costs), bad behaviour by customers (drinking too quickly and indiscriminately, getting arsey with the staff), and a breakdown in respect - on both sides - between customers and bar staff.
10 kuai a pint might work. That is beguilingly cheap, it's going to tempt people into a substantial detour to give your joint a try once or twice, but... it doesn't immediately start conjuring doubts about the economics of the offer and the likely - almost inevitably - shitty quality of the product being pushed.
If you offer your beer at 5 kuai a pint, I am expecting the worst.
And the new Red House fully lived down to my negative expectations: the cheap draught beer was absolute skank, and all four of my companions and I left our glasses almost untouched on the table, and walked off within 5 minutes without bothering to risk any other sort of drink there.
I'm afraid it doesn't have anything else going for it, either: the solitary barman looks bored and surly, and hasn't got much of a clue what he's doing; there's absolutely zero ambience; and it doesn't even look like a bar from the outside (the brightly illuminated white sign with oddly inconspicuous red lettering - and no other design at all - being more evocative of a noodle joint or a hairdressing salon, to my mind). There had been two Russian lads in there, but they left within seconds of our arrival (I think they'd been drinking something other than the skanky draught, but hadn't stayed for more than one or two). This Red House, I would say, is looking DOOMED.
Getting a decent barman and raising the price of the draught beer would be a big help, though.