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.
In my last post, I promised I would tell you how to raise your prices, even though you’re probably CHICKEN to do it.
I’ll actually get to that in my next post.
But first, I need to address some important questions I got from readers after my first couple of emails. Here they are:
• Why would I want to grow my business to $10MM? I make plenty of money now.
• I’ve been in business for 22 years and I’m only at $3 million—sounds like you’re selling magic beans.
• Nobody in this market does $10MM—I don’t think it’s even possible.
You can afford to do everything right in your business, and you have enough money to buy pretty much whatever you want.
How’s that for motivation?
But if you don’t want to run a $10MM company, that’s your business. Nobody’s putting a gun to your head to do so.
As for the “is it possible” question, it depends:
If you’re running a roofing company in Coffeyville, KS (shout-out to my 91-year old grandpa, population 10,295), you probably can’t do $10MM. There’s probably not $10MM total in the entire town including change in the couch cushions.
But if you run a remodeling company in any city of any size at all, it’s not only possible—it’s practically inevitable if you just follow the formula I gave you the other day:
1. Sell awesome stuff that people genuinely love.
2. Charge high prices.
3. Use TV advertising.
Think about it for a minute. How much business is there, IN TOTAL, in the city where you sell stuff?
If there are two companies doing $3MM, five companies doing $2MM each, and 100 smaller companies doing $15MM in combined sales, that’s $31MM.
You only need to capture a third of that.
Yes, if you take a full third of the sales in your market, other companies are going to suffer and go out of business.
But what do you care?
You’re already better than them, right? Good grief, if you don’t think so, why are you even reading this?
You already genuinely offer the best value in the marketplace (not price—VALUE), right?
Then it’s not a sack of magic beans. It’s just math.
The business is already being sold. Why not just sell most of it yourself?
Some of that growth came from spreading into new markets.
A lot of it came from OWNING the markets that they’re already in.
They have over 20% market share in 4 of the counties they service, including an astounding 37% market share in the county they’ve been in the longest.
And because they follow the 3-step formula (great products, high prices, TV advertising), they are the most expensive company in the area—by a long shot.
Don’t tell them it’s magic beans. It’s calculated; it’s systematic; it’s expected.
Do yourself a favor. Don’t let anyone else define you. You can do whatever you want. And if that includes growing your remodeling or home services company to $10MM in sales, then go for it.
It has been specifically created for owners of remodeling companies and home services companies that are stuck somewhere in the $2 to $5MM range—and who really want to take it to the next level.
I’ll be writing a few blog posts over the next couple of weeks that talk about different aspects of growing your company that big—from the right mindset, to pricing strategies, to operations… and most importantly—MARKETING.
I’ve worked with dozens and dozens of these kinds of companies in my career, and I know exactly what it takes to break through to the other side.
But before I get into “how” to make the jump, let’s talk for a minute about “why.”
The difference between running a $3MM company and a $10MM one is night vs. day.
But you have to build your company the RIGHT WAY—the way I’m going to show you in my new course.
If you DO build it to $10MM the right way, your whole world changes:
-You can afford to make everything in your company great, and do everything right; you never have to cut corners on anything.
-You can treat your employees better than anyone else. You can pay them so much that they’ll never want to leave because it would require taking a pay cut.
-You can also give them Fortune 500-level benefits: company cars, paid vacation, full health insurance, matching 401(k), trips. Stuff almost none of your competitors offer.
-If you mess up or make a customer mad for some reason, you just pay to have it fixed. You don’t have to risk your reputation by getting in “pissing matches” with angry customers. You just smile, fix the problem, and move on.
-You can afford to use the best materials, and you can hire all the best people. That means you can offer (and service) warranties like nobody else.
-You can afford to hire specialists, consultants, and experts to solve any problems you (inevitably) encounter.
-You build a company with a loyal customer base and have huge brand equity in the marketplace. You can legitimately sell your company because those assets are tangible and valuable. It’s almost impossible to sell a $2MM remodeling company to anyone but an uncle with a drinking problem.
-Your referrals will shoot through the roof.
-On a personal level, you’ll be rich.
-Profits on a $10MM company should be a bare minimum of $1MM and closer to $2MM. Per year.
Now let’s get really personal:
-If your dog swallows a bee and almost dies due to anaphylactic shock, you can easily afford the $15,000 vet bill to keep him alive (recently happened to one of my clients).
-You can build your dream house in whatever neighborhood you want and drive whatever cars you want. My clients drive me to the airport in Maseratis, Range Rovers, and Mercedes.
-You can sit in box seats or front-row seats for any sporting events you want, including the World Series. $8,000 per ticket is affordable when you make $1.6MM a year.
-You can go to Maui twice in less than 3 months; once with your sales staff who qualified for the incentive trip you offered and paid for, and once with your entire family for 10 days because… well, Maui.
-If your parents are elderly and need special care, you can be the sibling who everyone counts on to “just take care of it,” whether that means medicines, in-home care, nursing facilities, or anything else. A few of my clients take great pride in being able to perform this duty.
-You can contribute as much money as you want to whatever causes you want. One of my clients donates over $1MM a year to local charities. Another one donates $600K (and growing) a year to Haitian orphanages and an African well-digging project.
