Raising your prices is the easiest and most crucial factor in building your remodeling company to $10MM.
It’s also the scariest part.
If you think your prices are already high, you’ll still probably need to raise them again.
As a rule of thumb, you need to be shooting for a 3.5-to-1 ratio of price to cost.
In other words, if the hard costs (materials, labor) are $5,000, you should be selling it for $17,500.
I fully realize that most of your other competitors are selling that “same job” for $5,000 to $10,000.
I put “same job” in quotation marks because we both know that most of those jokers are only putting $3,500 of cost into it. They shortcut everything… from material quality, to quality control, to installer ability. They couldn’t care less.
And they’re probably only marking the job up by double, or less. They’re selling $3,500 job cost for $5,000 to $7,500.
As long as they can afford to take their wife and kids to Applebee’s on Friday night, they’re good.
Even your higher quality competitors who DO spend $5,000 on the cost only have the stones to charge double, or maybe a little more—$10,000 to $12,000.
Question: Are any of them doing $10MM in sales?
No, they are not.
If you remember my first email the other day, I gave this simple (and mandatory) 3-step formula to get to $10MM:
- Sell awesome stuff that people genuinely love.
- Charge high prices.
- Use TV advertising.
We’ll talk a bit more about #1, selling awesome stuff that people love, in an upcoming email. It’s crucial.
But I promise you this:
If you’re not a high price, high-quality provider in the market, you’ll never get to $10MM.
You won’t even have a chance.
I’ll give you the benefit of the doubt: I’ll assume that you offer exceptional quality and service to your customers. And if you don’t now, you’re at least committed to doing so in the near future.
After all, step 1 is to “Sell awesome stuff that people genuinely love.”
But even if you do, chances are high that you’re not selling at the coveted 3.5-to-1 ratio. Here’s why:
Your sales people are scared to death that they will lose the sale!
They’re CHICKEN!
-They have that terrified look in their eyes.
-They already struggle to close at the prices you already have that they already think are too high.
-They are SURE that if you make them ask for even MORE money, the customers won’t just say NO… they’ll actually laugh in their faces! Or get mad. Or kick them out of the house!
Meanwhile, Disney World charges $325 for a 4-day pass, even though I can buy a full one-year Six Flags pass (good at 13 different parks) for about $80.
Do you think the gal at the ticket counter at Disney World gets all nervous, starts sweating and stammering, and apologizes when asking for $325 per person for a 4-day pass?
Are you kidding me?
That’s because Disney World is committed to selling awesome stuff that people genuinely love… and because they have massive brand authority, thanks to decades of (wait for it)… being on TV.
I’ll convince you to get on TV in some later emails. It’s non-negotiable if you want to join the $10MM club. I can also give you some pointers on providing a Disney-like experience.
But most importantly, I can help you raise your prices. Here’s how:
- Be better than everyone else. It’s not that hard. The majority of your competitors suck. I mean that, and you know it’s true.
- Clearly articulate how you’re different and why you’re better in all of your marketing. This is harder, but I can help you do it. You’ll learn how in my class.
- Spend a ton of money on TV to get people to believe it. I can help you do this, too.
- FIRE EVERY SALES PERSON WHO IS AFRAID TO ASK FOR THE SALE AT YOUR NEW, HIGHER PRICES.
That’s right, FIRE THEM.
In my experience, you cannot remediate cowards. There’s a good chance you’ll have to fire your sales manager, too.
I know you like some of these people; you’ve become friends with them.
But I promise you they are in the way of your success. Not all of them. But a lot of them are.
You might have to handle some of the sales calls yourself for a while. Hopefully YOU believe in your pricing (and your awesome products and service).
You might have to take 2 steps back to move 10 steps forward.
You might have to gut your entire sales team if you really want to get to $10MM. They don’t just hand out $10MM in sales to anybody.
Don’t worry. Selling for ultra-high prices is not hard when you have the right product and you do the marketing the right way.
That’s the heart and soul of my new seminar.
I really hope you can join me for it. If you’re serious, that is.
Meanwhile, in my next email, I’m going to give you PROOF that people are just begging to pay higher prices for your products and services. You’re actually insulting them by asking an average price.
If you want a sneak peak, check out this book on Amazon.
And/or you can check out more about my “Make the Jump to $10MM” 2-day seminar I’m holding in Dallas in April.
I’ll be in touch.
P.S. If you’ve ever been to Disney World and thought it was worth $325, email me. I’d love to hear your experience.
Click here to read more posts in my “Make The Jump” series:
© 2017, Rich Harshaw. All rights reserved.
