Posted by Rich Harshaw on March 10, 2017.
I know, it’s hard for you to believe that people WANT to pay more money than you’re charging right now.
I mean, it’s tough enough to get your sales people to sell at your current prices.
But the fact is that people are paying exorbitant amounts of money for all kinds of luxury items in every category you can imagine. It’s been going on for about three decades now.
I’m not talking about super-rich people who can afford whatever they want. Duh.
I’m talking about regular people who live in nice, normal houses in nice, normal neighborhoods that make nice, normal incomes.
Ever hear of Callaway Golf? Or Victoria’s Secret? Or Cheesecake Factory?
These brands have already cashed in on regular people’s desire to pay extra for premium products—and they’ve done it to the tune of BILLIONS of dollars.
It’s simple economics:
In the last 40 years, the average middle-class family enjoyed a doubling of real per-capita income… while the cost of living remained basically flat, in real terms.
Therefore, the amount of money available for “new luxury” has exploded.
That doesn’t mean that everybody is now eating caviar at every meal and driving Bentley’s to drop their kids off at soccer practice.
It means that people have the money to pamper themselves with luxuries on certain purchases that are important to them.
Take Victoria’s Secret. They took ladies underwear from a utility item women bought off the rack at Montgomery Wards to something extraordinary that they really wanted. The average price of a Victoria’s Secret bra is TRIPLE to QUADRUPLE what you can pay for a “plain” one at Wal-Mart or Dillard’s. But women would rather “treat” themselves.
And it’s not just the ladies; there’s a reason you dudes buy Big Bertha drivers and Callaway irons. Who cares if it’s $3,000 a set—it’s worth it!
And guess what?
These same people are DYING to fork over huge sums of cash for the best roof. And the best windows and siding. And the best kitchen and bathroom. And the best air conditioning repair.
Look, not everyone eats at the Cheesecake factory. I get it.
And not everyone is going to pay you $1,400 for a window when Window World is advertising them for $189.
But believe me, friend, when I say there are more than enough who will.
Enough to get you to $10MM in sales and enjoy all the benefits we talked about.
There are plenty of people who want the ASSURANCE that you will do it PERFECT (and bend over backward to make it right if you mess up) instead of paying some dude from Craigslist to do it who might murder their children.
All of this has been documented in an excellent book called Trading Up: Why Consumers Want New Luxury Goods—And How Companies Create Them.
Grab a copy of it on Amazon.
It came out about 10 years ago—but don’t worry, it’s not outdated. Not even a little.
To spare you from having to buy and read an entire book, I found this clip on Youtube of the author giving a speech in 2006—again, a bit dated, but the point is still as valid today as ever.
Watch starting at the 1:15 mark:
To get to $10MM in sales, you’re going to have to become part of the new luxury.
Sure, you can just sell more of the low-margin, copycat windows and reach that figure. Or try to land remodeling jobs by being “price competitive.”
But you won’t have the margins to sustain a great company and put a million dollars a year in your personal coffers.
Join me in Dallas on April 26 & 27 as I teach my new 2-day seminar, “Make The Jump To $10MM”. I’ll show you how to raise your prices, create huge value… and most importantly, how to do the marketing to make people want to buy from you.
Don’t stay stuck—only 1% of contractors ever make it to $10MM. If you’re already at $2 or $3MM, you just might have the right stuff to get there.
I look forward to you joining my class!
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Posted by Rich Harshaw on March 9, 2017.
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.
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Posted by Rich Harshaw on March 8, 2017.
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.
I already answered the reason WHY you would want to grow to $10MM in a previous post. The short recap is:
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?
Remember a few days ago, I told you about a company I helped take from $40MM in sales in 2011, to $130MM in sales last year?
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.
I’ll teach you how to do it in my new seminar, “Make The Jump To $10 Million” being held in Dallas on April 26 & 27.
To find out more, click here.
Happy marketing!
P.S. Don’t worry, I promise to show you how to raise your prices even though you’re probably CHICKEN to do it in my next post.
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Posted by Rich Harshaw on March 7, 2017.
Last Monday I took my wife to lunch at Panera Bread. I ordered half a sandwich and a bowl of soup; she got a salad and a Diet Coke.
The total bill: $24.95. For two people.
As we sat down to eat, I couldn’t shake the thought that I had just paid over twelve bucks per person. For lunch.
I’m not cheap, but still. $9.49 for a salad? $5.29 for a bowl of chicken noodle soup?
Wendy’s was only 100 yards away—we could have been in and out for around $10 total.
Oh, well. Happy wife, happy life, right?
Later that evening while half-watching the Texas Rangers game on TV while reading stuff on my phone, my wife suddenly and enthusiastically shouted, “Hey, I LOVE that salad! This is the commercial that made me want to go to Panera and get one!”
I looked up, and sure enough, there was the $9.49 Strawberry & Poppyseed salad that my wife had from Panera sitting on my TV, tempting women (and a few men) all over the Dallas-Fort Worth area to want one.
And in that stupid little story, my friends, is everything you need to know to grow your business to $10 million in sales. Or $20 million. Or $70 million. You name it.
Three crucial ingredients:
1. Sell awesome stuff that people genuinely love.
2. Charge high prices.
3. Use TV advertising.
In that order.
One of my clients started his kitchen and bath remodeling company in Kansas City in 2008—right as the recession was just getting started.
Despite that, in just four short years they had topped $10 million in sales (Year 1 – $1.5MM; Year 2 – $3.5MM; Year 3 – $6.8MM; Year 4 – $10.1MM). Now they’re edging toward $15MM, and possible national expansion.
They are the clear #1 kitchen and bathroom remodeler in KC—the next closest competitor only does something like $2MM.
Here is their formula for success:
1. Sell awesome stuff that people genuinely love.
2. Charge high prices.
3. Use TV advertising.
In that order.
I won’t go into detail about everything they do to build AWESOME kitchens and bathrooms that people genuinely love. That could be an entire book. And I’ll touch on it in a future post.
But I will tell you this: They have raised their prices by 15% an astounding FIVE times since starting the company.
That means a bathroom that used to be $10,000 is now something like $20,100.
Which is basically like charging $9.49 for a salad. Or $5.29 for a bowl of soup.
I’ll also tell you that they poured all of their profits for the first few years of the business into TV (and radio) advertising. All. Of. It.
They were spending $1 million a year on advertising long before they were doing $10MM in sales.
And now the owner, John, drives a Maserati. I’m not really into cars—but he drove me to the airport in it after shooting some TV ads last year and I have to admit, it’s a pretty sweet ride.
The formula is simple—but like anything else in life, there are details you need to know.
Which is why I’m offering my new 2-day seminar.
In the seminar, I will walk you through everything you need to know to break out of your current comfort zone and double, triple, quadruple your sales.
It’s not pie-in-the-sky BS. It’s what companies hire me to do.
John hired me because he wanted to go from $10MM to $20MM.
Also:
• I took an HVAC company from $40MM in 2011 to $130MM last year.
• I’m just now starting year 2 of a 5 year plan to grow a company in California from $30MM to $100MM.
• We’re about to start working with a $10MM company in MSP to get them to $30MM by 2020.
• A window and roofing company in the Midwest got stuck at $65MM and hired me to consult with them to get to $100MM.
• An east-coast window company has recently hired me to help get them from $80MM to $150MM.
It’s what I do. I’d like to show you how to do it.
To find out more about the Make The Jump seminar, head on over here.
P.S. In my next post, I’m going to tell you why you’re probably CHICKEN to raise your prices, and how to go ahead and do it anyway.
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