How can you help franchise owners develop a competitive pricing strategy?

As a consultant, you may work with franchise owners who need to set their prices in a way that attracts customers, covers costs, and generates profits. But how can you help them develop a competitive pricing strategy that reflects their value proposition, market conditions, and brand standards? In this article, we will explore some steps you can take to guide your clients through the process of pricing their products or services.

1 Understand the franchise model

The first step is to understand the franchise model and how it affects pricing decisions. A franchise is a business that operates under a license from a franchisor, who provides the brand name, trademarks, products, and support. The franchisee pays a fee and a royalty to the franchisor, and agrees to follow certain rules and standards. This means that the franchisee has less control and flexibility over their pricing than an independent business owner. They may have to follow the franchisor's pricing guidelines, use the same suppliers, or compete with other franchisees in the same area. Therefore, you need to help your clients identify and comply with the franchise agreement, and find out how much room they have to adjust their prices.

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Uesley Medeiros

Consultor Especializado em Licitação e Contratação Pública, CEO Licitanews, Membro na Septem Capulus, Membro da RIG
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Primeiramente identificar os custos diretos e indiretos pára se chegar a real margem de lucro da empresa. Buscar uma assessoria tributaria para ver se a aplicação da tributação esta correta, ous e existe alguma forma de obter algum beneficio legal. Entender do negócio como um todo. Enxugar os custos. Analisar o mercado em volta da sua sede, e buscar os meiors de alcancar o cliente, em especial por midia digital.

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2 Analyze the costs and margins

The next step is to analyze the costs and margins of your clients' businesses. Costs include fixed costs, such as rent, utilities, and franchise fees, and variable costs, such as labor, materials, and inventory. Margins are the difference between the selling price and the variable cost of each unit sold. You need to help your clients calculate their break-even point, which is the minimum sales volume they need to cover their fixed costs, and their target profit margin, which is the percentage of sales they want to keep as profit. You also need to help them monitor and control their costs, and look for ways to reduce them or increase their efficiency.

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3 Research the market and competitors

The third step is to research the market and competitors of your clients' businesses. Market research involves understanding the customer segments, their needs, preferences, and willingness to pay, as well as the demand and supply trends, and the external factors that affect them, such as the economy, regulations, and seasonality. Competitor research involves identifying the direct and indirect competitors, their products or services, their prices and discounts, their value propositions, and their strengths and weaknesses. You need to help your clients conduct primary and secondary research, use tools such as surveys, interviews, mystery shopping, and online platforms, and analyze the data and insights.

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4 Choose a pricing method

The fourth step is to choose a pricing method that suits your clients' businesses. There are different pricing methods that can be used, such as cost-plus pricing, value-based pricing, competitive pricing, penetration pricing, skimming pricing, and psychological pricing. Each method has its advantages and disadvantages, depending on the goals, positioning, and differentiation of your clients' businesses. You need to help your clients evaluate the pros and cons of each method, and select the one that aligns with their value proposition, market conditions, and brand standards.

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5 Test and optimize the prices

The final step is to test and optimize the prices of your clients' businesses. Testing involves experimenting with different price levels, variations, and formats, and measuring the impact on sales, revenue, and profit. Optimizing involves adjusting the prices based on the feedback, results, and performance indicators. You need to help your clients design and implement effective pricing tests, such as A/B testing, price elasticity testing, and price sensitivity testing, and use tools such as analytics, dashboards, and reports, to track and analyze the data and outcomes.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Juan Manuel Vera Valdivieso

Director General y Estratega Empresarial | Transformador de Negocios | Experto en Customer Experience, Gestión Financiera y Emprendedurismo | Autor |
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La diferenciación es un componente crucial de cualquier estrategia de precios. Identificar los elementos únicos de la franquicia y comunicar su valor agregado puede justificar precios ligeramente superiores. Al mismo tiempo, se debe mantener la sensibilidad al precio del mercado objetivo, asegurando que la propuesta de valor justifique cualquier diferencia de costo.

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How can you help franchise owners develop a competitive pricing strategy?

1

2

3

4

5

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1 Understand the franchise model

2 Analyze the costs and margins

3 Research the market and competitors

4 Choose a pricing method

5 Test and optimize the prices

6 Here’s what else to consider

Consulting

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How can you help franchise owners develop a competitive pricing strategy?

1

2

3

4

5

6

1 Understand the franchise model

2 Analyze the costs and margins

3 Research the market and competitors

4 Choose a pricing method

5 Test and optimize the prices

6 Here’s what else to consider

Consulting

Rate this article

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