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Researching a Franchise

7 Laws Of Great Pricing

Great pricing is about foresight, not hindsight. That means there is always some risk in pricing – but these seven laws will help you reap rewards…

Richard Mukheibir

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How to be sure your price is right

Great pricing is about foresight, not hindsight. That means there is always some risk in pricing – but these seven laws will help you reap rewards…

LAW 1: There is no right price

This might sound like a riddle – but pricing in business is never an absolute. There is no right or wrong price because every price is relative to the market. If your price is too high, your product or service will sell slowly if at all. If it is too low, you will sell out much more quickly than you would normally expect.

Related: Miles Kubheka of Vuyo’s on Getting the Science of Pricing Right

LAW 2: Track your sales turnover

Good pricing means a product or service takes a reasonable time to sell. As an entrepreneur, you must define and aim for the turnover that you can sustain and that brings you the cashflow you need to survive and grow. Sales data is essential for this or you will not be able to decode how effective your pricing is.

An item hanging around on your shelves should be a red flag that your price is too high. Mark it down until the item sells and use this to learn about demand in your market.

LAW 3: Know your pricing benchmark

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Cash Converters is in the second-hand business so our key pricing benchmark is the price of our stock compared to new goods. That does not just mean the recommended retail price.

We recognise our competitors are both other businesses in our sector and other businesses that could cannibalise trade from us – for example, a chain retailer who does a good special on TVs. So look broadly when setting your pricing benchmark.

LAW 4: Understand that prices must be flexible

One price does not fit all. Heavy competition means accepting lower prices. But where customers would have to travel a couple of hundred kilometres to buy a product or source a service, they might be prepared to pay extra for the convenience of avoiding that journey.

A price can change between being right or wrong depending on the particular time and place.

LAW 5: Know your customer’s values

When you are building your base of customers, learn what you can about them to guide you in good pricing judgements. Know what proportion of your customers value getting the lowest possible price, for instance.

If you don’t, they may still buy but suffer from buyer’s remorse and not return. Or your customer might value their time so highly that they will not waste it shopping around, whether in stores or online.

Related: How To Find The Pricing Sweet Spot

LAW 6: Research your position

When I started the first SA Cash Converters store in Parow, we had to get all our competitor information from the advertising inserts in the newspapers. Today the internet makes this process much easier, just as electronic pricing allows you to adjust your price very quickly. But the basic principle still applies that you need to know where your pricing falls in the range of prices in your sector.

If your price is in the higher section of this range, you must ensure that you justify a premium price by offering a consistent buying experience that your customer enjoys.

LAW 7: Keep your costing sharp

If you don’t know what it costs you to produce and sell your goods or services, you cannot track whether you are successfully achieving the margin that you might need to build a sustainable business.

It helps to be familiar with acceptable margins in your sector. Be sure that you include all your costs in your costing calculation – otherwise you could find yourself wondering why you are not reaching your profit projections.

Trading and entrepreneurial instincts are key elements of the business DNA of Cash Converters Southern Africa co-founder and managing director Richard Mukheibir. He traces his family’s lineage in small business development back more than a century to his grandfather who founded Mukheibir Brothers in Barkly East in 1897. Mukheibir co-founded Cash Converters Southern Africa with Peter Forshaw in 1994 and has now been involved with franchising for nearly a quarter of a century, thriving on its energy and the people-driven environment.

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How To Become A Hi-Q Franchisee

Are you looking at investing in a tyre replacement and service industry? Look no further than the Hi-Q franchise.

HI-Q

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Established in 1999, Hi-Q is a successful and diverse multi-product, multi-brand leader in the tyre replacement and service industry with a network of over 130 franchisees nationwide.

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With the support of international tyre giant Goodyear, Hi-Q has established a solid reputation of ‘the one you can trust’, and the Hi-Q approach and philosophy is embedded in this.  We have the trust of our customers, our network and our suppliers – that’s why you can trust us to take you and your business to the next level.

When you’re working with people’s safety, trust forms the most significant part of the equation

Hi-Q introduced the original and innovative TyreSurance initiative – the only aftermarket tyre damage guarantee product that backs the consumer no matter the brand of tyre.

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Related: We Want To Invite You To Join Us On The Hi-Q Journey And Become A Franchisee

Each Hi-Q Franchise offers a broad range of brands within the different product and service categories that customers know they can trust, and at prices they can afford. Product and services include tyres, exhausts, shocks, batteries or brakes, wheel alignment or balancing, and a 10-point safety check.

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We have identified areas of opportunity to extend our Franchise footprint growth.

If you are looking to join a new franchise and you share in our values and vision, we would like to hear from you.

For further information on how to become a franchisee, call us on +27 11 394 3150

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Researching a Franchise

Col’Cacchio – Benefits Of The Franchise Model

Six key benefits of the restaurant franchise model – and what to look out for when considering a franchise.

Russell Otty

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For investors looking to the restaurant industry and considering a franchise knowing it has a proven track record and is therefore possibly a lower risk, there are a few key things to be aware of about the benefits of the franchise model, which if investigated, can also point to a franchise that is not for you.

Russell Otty, Chief Operating Officer of the Col’Cacchio Group, shares some of these key benefits and indicators of whether a franchise is for you:

1. Making the cut as a franchisee gives you the confidence that you are making the right decision

You may think psychometric testing, three days in a restaurant following a franchisee around, and a panel interview with the senior management of the franchisor, is a bit over the top, but the franchisor that puts you through your paces and assesses your ability and commitment to running the business, is doing you a huge favour and may even help you see this is not for you. It goes both ways, and after an intense courtship, you should know if you want to try a long-term relationship.

Related: Col’ Cacchio: A Passion For Pizza

2. Assistance with location selection and negotiation of the terms of your lease

One thing you can do to limit your risk is to not open a restaurant in the first place if your rent is not going to be reasonable or you simply won’t get customers through the door. The franchisor will vet and approve the site – they will have extensive insight into what has worked or not worked location-wise for their brand, and can assist you to weigh up the area and it’s potential to attract customers.

The commercial terms of a lease is very important – you can’t be too ambitious about turnover targets, and having the backing of a franchisor can be beneficial if a landlord becomes unreasonable.

3. Staff training and development tools on hand

Consistency is important with restaurant franchises, as a customer visiting a brand anywhere in the country, goes there knowing exactly what they are going to get. This is best achieved with solid training, perhaps access to resources such as training videos, and regular visits from franchise managers.

You should check with your franchisor what level of training and franchise support you will have on an ongoing basis. Ask about the ratio of field trainers and operations managers to the number of franchisees in the group. You want the franchisor in your restaurant in some shape or form, two or three times a month, whether it be the training manager, the regional franchise manager or the national operations manager.

4. Access to supplier networks to manage your input costs

Negotiating basket pricing with distributors regionally and nationally, the franchisor will leverage their buying power on your behalf. They should assist to manage your suppliers and make sure deliveries happen on time, and ensure that product quality remains consistent. They can also negotiate to ensure your input costs do not increase before the next menu launch – so you can ensure your margins remain intact.

5. Brand loyalty and locality marketing

When you buy a restaurant franchise, you gain a group of customers who know who you are, the food you serve and the way you make them feel. The money you will pay towards marketing each month gives you insight into the broader restaurant market, the experience of what is working across a number of sites, and how best to keep the attention of new and existing customers.

Some franchisors offer locality marketing assistance – your site and area has specific needs that other outlets may not have, or there may be events in the area that can be leveraged to run special offers. Ask if the franchisor offers this as a service, as it can assist you greatly to have an advantage over other restaurants in your area.

Related: Beginners Guide To Digital Marketing In South Africa

6. Business development insights

The franchisor has access to insights gained across the group, and the systems that they have in place to track costs and increase profit margins, can be of huge assistance. If you are looking for business support, a franchise manager can be the one sitting with you telling you that you spent R2 000 too much on cleaning this month or saying you need to wait till next month to make that purchase. The level of business support you will have access to, is an important factor to consider, depending on the level of support you may require.

Recipe for success

Nine times out of ten, a restaurant franchise that fails, fails because the franchisee loses interest or lacks the commitment to make it work. Selecting the best franchise for you as the investor, or as a restaurant entrepreneur, is the most important first step you can take towards success, so do the homework.

Don’t assume that because you are buying into a successful brand that it will be a success – business is not an exact science – you need to do your own due diligence and take responsibility for your business, because it is after all your own investment.

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We Want To Invite You To Join Us On The Hi-Q Journey And Become A Franchisee

As the leader in the tyre replacement and service industry, we are invested in providing our network with the tools needed to thrive and grow in an ever-challenging market.

HI-Q

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This is an invitation to all innovative entrepreneurs who are seeking new and exciting opportunities – here’s your chance to become part of a winning team.

As the leader in the tyre replacement and service industry, we are invested in providing our network with the tools needed to thrive and grow in an ever-challenging market.

The Hi-Q Way

  • Hi-Q’s been voted the 1 tyre retailer by South African consumers in the Ask Africa Icon Brands Survey from 2010 – 2017.
  • Over the years Hi-Q has established itself as ‘the one you can trust’, with customers, the network and suppliers.
  • Hi-Q prides itself on first-class service, a multi-product/multi-brand offering as well as ground-breaking product innovations such as TyreSurance on all tyre brands.
  • Hi-Q has an extensive network of over 130 franchisees
  • Hi-Q has the support of the Goodyear value proposition.

If you are looking to join a new franchise and you share Hi-Q’s values and vision, please get in touch.

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