Financial Data
Updated 29 Feb 2020

Vuyo’s: Getting the science of pricing right

Here’s how Miles Kubheka, owner of Vuyo’s, shifted from a pricing strategy that wasn’t making money, to a science that upped his profits significantly. 

Tracy Lee Nicol, Entrepreneur, 05 March 2015  Share  0 comments  Print

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Miles Kubheka is the owner of Vuyo’s, a fictional restaurant conjured from a Hansa Pilsener TV advert that he turned into a reality. But being new to business, pricing was one of the things he hadn’t figured out.

“There are four factors to consider with pricing: Who’s your competition, what are they charging, can I charge a premium if my product/service is better, and do you want to get in at the bottom to see if people like it and then up your prices?” explains Kubheka.

Related: Pricing professional services

“In each case, people define your business by its pricing. As an aspirational brand in Braamfontein appealing to middle income office workers and students, I couldn’t go too high with pricing, but after applying formulas, the gross profit (GP) I thought I was making was actually less.

A costly pricing mistake

“A big mistake I made was a blanket price of R35 for three wors rolls with different toppings. It made sense at the time for stock reconciliation at a busy food truck, but one roll has a parmesan cheese topping which halved its GP compared to the other rolls,” explains Kubheka.

Vuyo’s new plan of action

“A customer of mine is the MD of Emzingo fellowship programme where international MBA students are placed in local businesses to gain practical experience. In July two MBA students came in to assess Vuyo’s. We decided to ignore competitors and focus on the value I could offer. It helped define us and protect the brand from a price war.” The focus on value prevented severe attrition too.

Related: Grow sales with the KISS pricing strategy

“If your product is good enough, people will pay for value.”

Kubheka benefited from the students’ work in other ways too. “They custom built amazing tools that help me work out prices better. They worked out everything including costing and GP which has really helped the business to be profitable.”

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About the author

Tracy Lee Nicol, Entrepreneur

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