A Step-by-Step Guide for Maximizing Profit

I'm not interested in wasting a prospect's time or my time if we're not going to be a good fit. And that just comes from the practice of roleplay and we're talking about mistakes here. If you're not roleplaying, you're like the golfer not going to the range, and then you expect to just show up on game day and nail it, it's not going to happen. Welcome to Jobbers Masters of Home Service, a podcast for home service pros by home service pros. We are in sunny Las Vegas today.

We're talking about a step-by-step guide to maximizing your profit. I'm Adam Sylvester. Today's guest is Tom Reber. Many of Tom as the host of the Contractor Fight podcast. He's a business coach, business owner, author. Tom, thanks for being here. Adam, great to be here. How you doing? Look forward to this. Yeah, thanks for being here. Yeah, appreciate it.

Okay, so are there any specific kind of pricing methods or models that you recommend? There's a wide range here of people listening. I get that, but just give us some ideas for how to price things properly to maximize our profits. Keep it really simple. Whatever it costs you in the field to produce the thing you do, multiply that times at least two and start there as a sales

price. Forget the going rate. In fact, when I get hate mail, it's usually from contractors saying I'm full of crap with our 50% gross profit rule. We made it up. We didn't make up 50% gross profit. This is just like life's easier. You want to work on a project, maximize the profit, add an incredible amount of value, and you should get paid for that. And. Most contractors don't know their numbers and they make things harder on themselves. They complicate it.

Yeah. Now I'm curious about that. I mean, labor isn't 50%, so if you want 50% gross profit, then what is that 50% being made up of? Materials, cost, labor rates, anything else in there? Yeah, so imagine it this way. Whatever money you're spending to produce the project for Mrs. Smith, okay, I'm not talking like you're shop rent because that's overhead you got, you're paying your overhead whether you have a job or not. So to keep it simple,

direct job costs. So you got your field labor, you got the materials. If you had to put a dumpster or a porta-potty there, you got to get a permit. These are things that you're spending money on that you wouldn't spend money on if you didn't have the project. So whatever those amount to add 'em up, if you pay a guy 30 bucks an hour and with burden, say it's 40 bucks an hour, you should be charging at least 80 bucks an hour for him.

At. Least in my businesses, we would do a three x multiplier on our labor and then whatever the difference was on material and the blended would help get a 50% gross profit. Gotcha. If I am paying a guy 30, I'm charging 90, and then that money is going down to recover overhead.

What other mistakes are business owners making in pricing? There's a lot of mistakes. Yeah. Well, I touched on a minute ago, the going rate, I can't say that enough. You're stealing from your family. If you're pricing your work based on 90% of common contractors out there who don't know their numbers. And I'll give you an example. Many years ago I cared about the going rate.

I had a competitor painting company that we competed against. Really nice guy, and he was always so much cheaper than me and I'm like, I used to be like, this guy's a low baller, blah, blah, blah. Then we started going to the same church and I met the guy and we're having some conversations, and when I got the full context of his situation, his wife made four 50 a year as a surgeon. He didn't need to take a salary from the business as much as he would've.

So whatever profit, whatever he paid himself, he'd just put into their retirement fund. So the whole purpose of his half million dollar or so business a year was to fund their retirement. So he was able to be less expensive, even though he was still hitting the profit margins we're talking. About you were basically competing against a guy who was running a hobby. He didn't need to pay himself. And I've run into, you never know. You don't know what somebody's debt situation is.

You don't know what they pay their people. And that's why I think we give too much attention to, you jump into Facebook groups now and stuff and you're like, Hey, it's a 3,200 square foot house. What's the going rate to paint something like this? Who cares? Mind your business? That's number one.

Mistake number two is the whole money mindset thing. We typically sell in the manner in which we buy and most of us grow up. Me for sure with a very unhealthy money mindset and thinking like, oh, if somebody's wealthy, they had to rip somebody off to get there. They're an ogre, they don't care about people. All these different things, and that's couldn't be further from the truth. So just how you think about money is often going to affect what you charge for the value that you bring.

And myself and many other people that I've known through the years we've been offering or giving amazing value, everyone's getting what they want and you're left standing there with nothing to show for it. You were underpriced. I mean, how many contractors I know right now is crazy where they, and I'm related to some of them who've worked 15, 20, 40 years in an industry and have nothing to show for it except a sore back. We need to be able to have money in our retirement if we choose to retire.

We need to be able to build a business that's profitable so you could hire the best talent So you can offer a better experience and get yourself out of the field if that's your goal, and actually build something that can run without you for a week. Yeah, Tom, the topic is maximizing profit. For our listeners,

and I think some of our listeners are hearing, Tom, that sounds great, but if I raise my prices, I'm just not going to get any jobs approved. There might be some competitors out there that they're not really low, they're just lower than me. How do you help that person? What should they do? Well, I think it's a lot easier to raise your prices when your phone's ringing. Okay. So again, I think everything's connected in the business here.

So be fanatical about building your brand, be fanatical about the relationships you build, your marketing, your social media, these things, because the more leads that you have coming in, the more bold you can be in the sales process Instead. What was it Tommy? Boy, remember he had the bread and he was like, here's my sale and my little sale and I love it and I rip it apart. That's us when we only have one lead a week, right? We coddle it, right?

We coddle it, and we do stupid things like discount and all this, all in the name of getting the job. I really believe the two things. Number one, get the phone ring and be obsessive about that. Number two, train,

train, train to be an elite salesperson. We call it selling unafraid and it's achieving elite sales success through personal discipline. Take care of you, take care of the things you have control over. Don't be a little baby bird waiting for Google to give you a lead. You call your customers, you prospect. All these things combined are going to help you be more profitable. But sales is one of these things, man. It's a perishable skill.

It's like in the Marine Corps, we'd go to the rifle range, right? You stop going to the range, you don't shoot as well. That's why professional golfers, they hit the driving range. That's why Kobe would shoot a thousand shots a day and just to get in that rhythm. Sales is the same way. If you're not role playing, then you're missing out on hundreds of thousands of dollars of profit. Because remember, you don't need every customer, you just need the right ones for your business.

And when you have a lot of leads, you know how to communicate well and sell the right ones are going to fall through to you and let your competitors have all the cheap ones. Right?

All the. Scraps. Tom, this is a really good conversation. I do want to pause for a minute to talk about jobber. Why do you think it's important for all of your contractors and the listeners to use a software like Jobber? There's so much to keep track of. I remember the days where my CRM was the scrap of wood I found on the job site. I'd write something on it, throw it in my dashboard and drive,

and that's just not going to cut it. In our day and age, you got to have something that helps your efficiency, helps you keep things together. Things are in one place. You don't have that in place. You're swimming upstream and it's like friendly fire keeping you from being more successful.

Yeah, with jobber, you can text a quote to somebody and they can text you back and you can have a whole conversation within with them within the jobber app and then they approve after they ask you that one question. And so it makes it really easy to grow a business because of all the communication channels that Jobber offers. So if you want to try jobber a new user, get an exclusive discount at jobber.com/podcast deal and go try jobber.

If you've been trying to run your business and paper and the pen just aren't cutting it anymore, go get jobber. It'll make your whole business more enjoyable.

Let's talk about selling and upselling. And. Cross-selling because I genuinely think you agree with this that customers want to have really good buying experience. They love that it's a good thing. And so how do we make sure that it's one is good and compelling for them? And also how do we maximize our profit with upselling more services? First, stop telling yourself upselling is dirty. Okay. A lot of people think that. That's true. And again, this is from personal experience.

When we first started training our crew leaders how to upsell, we had to remember they had to work through their money mindset issues too, just like I did as the owner, okay? They're not typically the average employee isn't listening to a show like this where they're getting educated. The boss is right, the business owner is. So you got to go to your people where they're at. You got to be consistent with the training and talking about money.

And we would do things like we'd break things down on whiteboards to talk about, and this is early 2000, we were charging, call it 80 bucks a man hour or whatever. I put 80 bucks and I'm like, guys, I want to share with you where this goes. That's great. You know what I mean? And X percent goes to you guys. X percent goes to material, X percent is in the salaries and. Overhead.

And when you educate people and then you start, we would train them on the power of gross profit of finishing jobs on time, not just finished jobs on time, but why it's important and what's in it for you. And that's a big leadership issue we all have had at some point is we don't communicate what's in it for them to get on board with what we're trying to

do. And when you do that, you'll protect your profits. So with upsells, I am not interested in ever selling something that anybody that they don't want or need, 100%, it's unethical. It's a hundred percent unethical. However, we would train our, we're talking painters here. We would train our crew leaders to see things outside of the normal scope of work and we would role play word tracks with them and get them used to saying things.

We taught them how to estimate certain things. We gave them pricing guides. You got to put your reps in and you got to train your people in investing your people. And we started with a garage service door. That's where we started. We broke it down to the most ridiculous thing we could sell on a paint project.

So if we're painting the master bedroom and the master bathroom, usually we would set up a little shop area in the garage with some tarps and put our stuff there and we're in and out of going through the house or whatever it is. We are just out of the way. And so a word track might be like, Hey Adam, listen, I know we're not doing anything downstairs. We're upstairs, but it's only 11:00 AM and we've been in and out of this service door 75 times already and it's taken a beating man.

I can't imagine how many times your family comes in and out. Would it make sense to throw a couple coats on this thing before we leave? I got the paint. It'd only be about a hundred bucks done. It's been 15 years or more since I had exact math. We would sell each crew. We said sell one service door a day on average, Which is a hundred bucks. And the math had worked out where it ended up with the four or five crews that we had.

It was like another 90 grand of gross profit to the bottom line just on service doors. And that got them the reps of talking to customers. And then the next step might be either walking through the house and they see a piece, a wall that's cracked, some drywall tape that's popping or whatever it might be, and just simply going, Hey, listen, I know we're upstairs, but would it make sense for us to fix that thing while we're here? It wouldn't cost too much since we're here.

So it's just getting them used to talking about money. That money's not a bad thing. And then obviously we'd pay commission on these things if the job was brought in on time and there was a. Win for them. If they say, no, it's. Okay. It's totally cool. This whole think about it thing, A lot of sales trainers are like, you never let somebody think about it. I'm like, you think about it all you want, it's just going to be on my terms.

And that's why we do a phone prequalification thing and where we talk budget. If I'm on the phone with somebody talking about protecting profit here, we're not, if I tell you 10 grand over the phone and then you say, come out and I tell you 10 grand and you tell me you got to think about it. We just both wasted our time. And there's bracketing and different techniques.

We talk about money with people, but I'm not interested in wasting a prospect's time or my time if we're not going to be a good fit. And that just comes from the practice of roleplay. And one of we're talking about mistakes here. If you're not roleplaying, you're like the golfer not going to the range, and then you expect to just show up on game day and nail it. It's not going to happen. I am curious. Let's add some color to that a little bit.

So when you role play with your technicians, you infield staff, is that a daily thing during the morning meeting huddle? Is it quick? Is it one big day out of the month? How do you do it?

Yeah, so in our case, we had a weekly crew leader meeting. In that meeting we would go over and it was about a 45 minute to an hour meeting like clockwork. And it's not time for a bunch of chit chat and discussion. It's we go around and report on the jobs we finished in the last week. Each crew leader would be like, it was a Jones job, bid for a hundred, brought it in at 98 hours, we're paid. Money's in the bank. We're good.

We go around, then we go around again and talk about the jobs we're on right now. We're on the Reber job and it's bid for a hundred hours. We're slated. We're looking like we're going to finish on time. Everything's good. And then the third time we'd go around was upsells and I, and other than the other salespeople in the company would report on what they did that week. I had 63 leads. I had blah, blah, blah, blah, blah,

blah for X amount of dollars. Then it would go to the crew leaders going, I had no upsells this week or had 5,300 bucks and upsells it just to talk about it so many times is. What gets talked about, gets done. Bingo. What you focus on improves and all those other sayings. And it's true. So if you're, a lot of times we'll say we're going to start having meetings and talk about this, and then the first time it's inconvenient, you cancel the meeting and that just shows your people that this wasn't

important. And the contractor fight,

we have a unwritten rule. Is that what it is? Yeah. Unspoken, unspoken, unwritten, unspoken ain't written un spoken. It's un, it's unwritten. We ring the cash register every day of the year. It's non-negotiable going on three years where we have rung our cash register, ringed, ringed, I dunno, the cash register well over like 900 and something days. Now in revenue or in a. Row in sales. In sales, we ring the cash register, we collect money every day of the year.

That's just the standard. Now, I understand a lot of people listening to this. That's not a reality. If you're doing kitchen remodels for 200 grand, you're not selling one of those every day. But when you have that mentality around, I am going to avoid what we call mediocre sales days. A mediocre sales day is a day, not necessarily that you ink a contract, but it's did I control everything I have control over to ring the cash register

today to fill the pipeline to be profitable? It could be role-playing. It could be calling the mad customer back right away. It could be answering your phone. All these things combined, calling the past customers what we've talked about before, all these things combined will keep you from being that mediocre sales culture in your company. Now, if somebody is a full-time sales person in the company, I know a lot of people listening like they're the owner operator and blah, blah,

blah. But if you have a true sales person, I believe that that's all they do. They need to be roleplaying every day. Every day. Every day, start the day with it, and one in our main program in the contractor fight every weekday of the year, unless there's a holiday in the United States, we have a live sales training role play. We probably do about 2000 role plays within our group every month.

And so our members know that they can send their salespeople at noon eastern time every weekday to jump on, we call it the a gge, the training call. You're going to war, it's showtime. You got to be prepared, you got to keep, it's a perishable skill. We've given them a place where they can just have their sales guys get on and role play and practice. And then there's a lot outside of that as well.

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I actually want to keep drilling down on this because I actually think one of the easiest and my favorite ways to maximize profit is upselling more services at the day of the job. So you take a thousand job and make it 1500, just like that. Let's go 2.0 here. Let's go a little bit higher level. How else can you train people to do upselling?

You got to train 'em to see things. A lot of times, and I remember when I was a painter working for my uncle, I would just show up to the job with my head down and go do my thing, and I wasn't paying attention. So I think first you got to talk about it, you got to train them and because you're going to fall to the highest level of your training, and then I think you got to give 'em some tools.

You got to give 'em the word tracks the words to say, remember, the average person is insecure when it comes to money stuff. That's true. We have a very low money IQ in our society overall. They don't teach it in school, all this other garbage. So we as the leaders of our business, I take that as a responsibility. We need to coach our people up that this is a good thing and what's in it for them.

One of the ones that we were trained on many years ago by my first coach then we still used for many years was, Hey, I know Tom was out here looking at the job and it's day one. We would do this, we call it transfer the trust meeting. It's like a pre-job visit where our crew leader would go out, walk the project with the customer, Hey, was there anything else that you wish you would've asked Tom about? Right?

It's That's a good question. Putting the bait out there, and I think when you focus on it, you get more of what you focus on. So I did this whole interior house painting estimate once, they just wanted all the walls done. It was like 20 5K to do it, and I hold up my tablet and shows 25 grand. They look at each other and they're like, yeah, let's do it. All right, I made the cardinal mistake. You ready for this?

I talked myself out of the sale because I said, instead of shutting my mouth when I got a yes and getting a signature, I started going, well, when people paint the walls, the trim often looks ratty and they want to do the trim. Would it make sense for us to do the trim? So. You were trying to upsell. You just read the room wrong. Yeah, it was many years ago. And long story short, they're like, man, that's a great idea. Give us a price for that.

So then I went around to add the ceilings, the closets, the trim, the doors, the windows. Now it was like close to 50 grand. Now they had to think about it. So I took the sale. So a strategy for this is descope the original job, give them what they want. But once you get a yes, don't sell beyond that. Shut up, get the signature. And then in the job notes, you can share with the crew leader or your foreman like, Hey, some upsell opportunities might be some trim, might be some ceilings, closets,

whatever your trade is, right? The service package, if you're doing hardscapes for me and you have a service package, let your guys sell. That. They want to make some more money too. And I think understanding the motivators of your team through disc profiles and different tools like that, we will show you what their motivators are and how to communicate certain things to different personality, I think is helpful. All in the training.

Yeah, I would agree with that. Also, would you agree that once you get the signed contract and you're just doing formalities at the door, that's when you actually, you can plant the seed. Hey, when our guys are here to do the job, they're going to talk to you about maybe the trim and all that kind of stuff so they can be thinking about it. Because 50 grand doubling the approved rate is hard to do in that same day, but they can stew on.

It. So if I could go back in the way back machine to that incident, the first thing I would've done is shut my mouth and just done the walls. But let's pretend I was stupid and I opened my mouth and brought the trim up. If I could go back and do it over from that point, what I would do then is, Hey, you probably don't need to paint the trim in every room of the house. You know what I mean? You got the guest bedroom that's used once a year when grandma comes to town,

you don't need to do the baseboard in that room. Nobody ever touches it, right? So. Good point. What I would do is I'd say, I would've said, you probably don't need to do all the trim. That's a decision that you and whoever the crew leader is, can have a conversation on, kind of go room to room and figure it out together. And I guarantee I would've sold the job and then we would've probably upsold it to 40 something from the 25.

Tom, I want to ask you, A lot of our listeners think that in order to make more money or make more profits, they have to start going and do other services and not their core. Let's speak on that for a minute. Yeah. There's a reason they say the riches are in the niches. In my own experience for myself and the people that I've worked with, when I start here and I'm going to add another division, I'm going to add another service.

It means I'm not maximizing the current thing I'm doing and I'm thinking the grass is greener somewhere. Else. And every time I've ever done that, I'm not saying don't add another service, but it's got to support your core. If you're a house painter, you could add pressure washing, gutter cleaning because it supports the core. You're already up on the house and this and that. You can upsell those things.

But I see a lot of people take that energy that they should put into their core thing and they try to do the new shiny thing or the thing that they think there's a big demand on, when in reality they should be working harder on building their brand, educating their clients, why they're the rockstar for kitchens or plumbing or whatever it is, and getting to that 50% gross profit margin and beyond.

And once you're there and it's humming along and the processes are there, the sales process there, the leads are there, the efficiencies are nailed. You'll probably realize that you don't want to have another thing. You got to dominate. So I'm all for adding stuff, but not at the expense of damaging the core. Tom, this is a great conversation. I'm going to try to boil it down to three steps here. Number one is mind your own business When it comes to pricing.

Don't get distracted by the competitors who might not even be running a profitable business. Pay attention to your numbers and base your prices off your business and your needs, not your competition. Number two is train and role play with your salespeople over and over and over again. You cannot overtrain and over teach. They have to get better. The only way salespeople get better with sales is by doing it and saying the

words over and over and over again. And number three, educate your people on where the money goes. Once they understand why it costs so much, they'll be way more confident to sell at your prices. And they won't be like, boss, we're charging too much. That will go away once they understand why it's priced the way. It's Tom, thanks for being here. I really appreciate it. I appreciate you having me. Yeah, I think our listeners are better for it. How would you people find out more about you?

Yeah, head to the contractor fight.com and check out what we have going on there. And you can follow me at real Tom Reber on Instagram, and if you have a question, fire it my way. I'll do what I can to help you. Great. Well, I just think you're very inspiring and I think that you're really helping people. We keep doing it. Appreciate that. Yeah. Thanks again. I thank you for listening. I hope you heard something that will make your business more profitable and more

efficient. I'm your host, Adam Sylvester. You can find me@adamsylvester.com. Your team and your clients deserve your very best, so go give it to 'em.