A contractor's journey to self-mastery requires discipline, integrity, and respect. Welcome to Hammer and Grind. Welcome to Hammer and Grind, the podcast built for contractors. Real contractors, true stories, real solutions. My name is Brad Hebner and I will be your guide on your journey to mastery of your construction business. You can connect with us on social media at Hammer and Grind Podcast everywhere out there. You can also check us out on our free Facebook group called the Contractor Profit Group, where we have lots of free trainings and conversations in there to help your business. Go check that out for a free resource. Or if you're ready to get off the crazy cycle and learn a proven system for winning in your business, consider joining our coaching group called the Profit Club. You can find out more information about that at hammerandgrind. com forward slash. The Profit Club. So today's podcast, we're going to be talking about pricing and why you need to stop competing on price. This is a surefire way to lose the business. You got to stop competing on price. We're going to be covering lots of different things today. So buckle up, hold on tight because I might get a little fired up on this one. So this podcast is really about a mindset shift. It's really about changing your mindset around how you price your product and how you offer value to your customers. And so I want to start off with a quote from Warren Buffett. Okay, Warren Buffett says, price is what you pay, value is what you get. Price is what you pay, value is what you get. I don't think anybody on here would disagree with me that anytime we can get a deal on something that we want, we're going to take the deal, right? No one's going to say, no, I want to pay full price for this deal instead of paying the discounted price. Nobody's going to do that. So what you have to do in your business is raise the value. If I'm doing a project and I need to get $30,000 for this project for me to be profitable, then I have to raise the expectation of the customer, their value above $30,000. If I am selling in their mind a $25,000 value for $30,000, that's a really bad deal. And so when you compete on price, what you're doing is essentially you become a commodity, right? And a commodity is like anything out there. fruits and vegetables and toilet paper and anything like that. When you compete on price, you are now positioning your services as a commodity. And when you do that, price becomes the number one factor. Think about this for a second. How many of you, when you go get prescription medicine or even over-the-counter medicine, actually it would be more over-the-counter, not prescription, but if you're going to go get allergy medicine, Do you get the name brand stuff or do you get the generic stuff? When you go to CVS, do you get the CVS brand or do you get the name brand stuff? I would venture most of you will buy the generic stuff because you know it's literally the exact same product. Why would you pay for the name brand? Usually when you go to the store, all of the generic stuff is sold out. And so then you're kind of forced to buy the name brand. That is not a position you want to be in. That's what happens when you become a commodity. No one's ever going to pay you more money than your competition if they believe that the end product is going to be the exact same. I have a graphic that I made, and obviously I can't share it to you over the podcast. I am going to post it in the free Facebook group. So if you want to see this graphic, you can join the group and see it. But essentially, I have two pictures of a kitchen. right next to each other, and it's the exact same picture. I just took the picture, copied it, put it next to the other one. On the left is you. You're the contractor. And on the right is the competition. And in your mind, you know, or maybe you know for a fact that your product is better. The end product is going to be better than your competition. You've seen their work. You know what they do. Maybe they're shady. Maybe they cut corners, whatever. You know your end product is better than theirs. And you know your worth. And so you're going to sell this kitchen for $60,000. And that is what you need to get to be profitable in this kitchen. The right picture is your competition. And they're selling the exact same kitchen for $45,000. It's literally the exact same kitchen. And here's what you need to understand is that this is how your customers see your product whenever you compete on price. Why would anyone in their mind pay $15,000 more for the exact same product? And that's what happens whenever you compete on price. So the way you fix that is by raising your value. And it's not by tangible things. It's by intangibles. Now, it can include some tangibles, but the tangible is the actual kitchen itself. Now, let's assume for a second that... You and your competition are literally using the exact same materials. Everything is identical down to the screw, right? There's no difference. Again, why would anybody pay more money for the exact same thing? Now, you and I know that's not the case. Every single job is unique and every contractor does things differently. However, the end product is all they really care about, right? I don't want to go down the rabbit hole of comparing quality of prices. You're using custom-built cabinets. They're using store-built cabinets and all that stuff. Just throw that out the window for a second, and let's assume you're building the exact same product. You're using the exact same products on this kitchen. The only way you can raise the value is with the intangibles, and that's going to be the customer service, the professionalism. It could be time. I mean, it could be something as simple as, You can get this kitchen done in five weeks and they're telling you it's going to be eight weeks. That's value. Who would want to be in a remodel for an additional three weeks, right? So is that worth $15,000? I don't know. To some it might be, but that's an intangible product offering or a value increase. Okay. That's just one area. The experience. Maybe your guys are all vetted. None of them have felonies and nothing against people with felonies. But I'm just saying maybe that's you hold a high standard for the people you employ. That's something that was always important to me. You can't have felonies or at least you can't have violent felonies. I've realized sometimes people make mistakes. But you get the point of like maybe that's your value proposition is that all your employees have been background screened. No drugs, no alcohol, no history of any kind. They're very cordial. They're very friendly. They're very professional. And all of your customers love your employees. That's a value increase over maybe the other company who doesn't vet anybody and doesn't care. They just need warm bodies. Right? So that's a value increase to your business. Now, it's completely subjective. Let's be real here for a second. All of these things I'm talking about are completely subjective, right? So that's a whole other area of this. But let's stay focused on some of the more obvious things. How do you value, like put a number on whether or not your employees are vetted or not? Like you can't really put a value on that, but it does increase the value to some degree mentally in your customer's mind. Especially if your customer had a bad experience with another contractor in the past. where they had a guy who stole from them, right? If they hired somebody and their, I don't know, TV got stolen, whatever, and they come to find out that the person that worked for them, you know, was like a serial burglar or whatever, like that was just, that could have been avoided by the owner of the company. They're going to be gun shy to hire a contractor that hires people like that. And that's probably going to come up in their conversation. And it should be something that you find out about in the conversation when you're doing your discovery call. Like this information should come out. Have you hired contractors in the past? What kind of experience have you had with them? What did you really like about them? What did you not like about them? These are questions you should be asking in your qualification process during the discovery call. So let's say you got the people, you got the good people. So that's an added value to your offering, if you will. What else could you do to increase your value, right? Can you be professional looking? Do you have nice looking vehicles that are wrapped? That adds value versus a beat up truck with rusted holes in it and no wrapping on it. And listen, I'm not trying to pick on bad contractors. I mean, I'm not trying to pick on contractors that have like bad trucks or old trucks or stuff. I get it. Like when you're starting out or if you're not making enough money, you don't have the resources to invest in this. But some of you and some contractors have the money. or they just don't see any value in that and they don't care. Or they're just lazy and they're actually scam artists. They just rip people off, so they don't care. So I'm not dogging on anyone who's in a position where they can't afford to do this, but you need to get out of that position as quickly as you possibly can because it does matter. If I showed up to your house on a call for financial services, you found out I'm a really hot shot. investment banker and I've made customers lots of money and I come to your house to talk to you and I show up in a rusted out piece of crap car and I get out wearing a t-shirt and jeans. Are you going to think that I'm going to be the guy that's going to deliver that same level of quality to you that you've heard about from other people? You're probably going to think, wait a minute, is this the right guy? Did I call the right dude? Am I getting punked here? Like, what's going on? No, you're going to expect me to show up in a nice car, a BMW, a Lexus, maybe a Ferrari. I don't know. But you're going to expect me to show up and probably wearing a suit. And I'm going to walk the walk and talk the talk of someone who produces this level. Right? This is important. I think I've said this many times on the podcast. Your image and your professionalism and your brand is important. to the overall value of your business and your offering. It has to match. Everything has to match across the board. So you got the image down, you got professional, you wear uniforms, your truck's wrapped. What about like your website? Maybe your website looks like an eight-year-old designing. Well, and you're like, well, I don't ever, everybody that calls me, you're always complaining about my price. Well, that's because you're putting out the image of you don't care about your website because you're not a quality contractor. People that are going to buy a Ferrari, they don't go to the used car dealership down the street to buy a Ferrari. They go to the Ferrari dealership. And that's an experience in and of itself. So you're trying to sell Ferraris at the used car dealership down on the corner. And you're wondering why I don't get good leads. All I get is crappy leads. You know, people, they complain about my price. Well, that's because that's what you're putting out there in the world. You're putting out there, I don't care about my image because I have a crappy website. I've been in business for 11 years. I've changed my website four times. And the reason is, is because when I first started, I just, and by the way, I've designed three of the four myself. But when I first started, I had a really crappy generic website like you downloaded for free, like a template. And this was 11 years ago before WordPress or anything else. I mean, I even have experience designing websites with front page, Microsoft front page, if you know what that is. I'm dating myself here. So my first website was terrible. Like it really was. However, compared to all my competition that either A, didn't even have a website. or B was literally just a one-page picture of their business card, my crappy website was better than theirs. I was offering more value through my crappy website because it was a little less crappy than the other ones. So you have to continually improve your value as you build your business. If you can't afford a $5,000 vehicle wrap when you start, that's fine. I get it. I didn't do it either. But the second that you can afford it, you need to upgrade. If I had to choose between buying a vehicle wrap or putting an extra five grand in my pocket that I didn't need, like my bills and expenses are covered, I'm living a decent life, but I just want to make an extra five grand, I'm putting that into a vehicle wrap every time because that vehicle wrap is going to pay for itself 10 times over. you have to reinvest in your business. I mean, you have to obviously make money as well. But when you're first starting out, you should be paying yourself the bare minimum that you need to survive. And if you have a family and you're the sole breadwinner, I get it. Like you have to produce money. But if you can live on, you know, $40,000 a year and, you know, maybe you don't get to go out to dinner in the evenings, you got to eat at home or maybe you don't get to have cable, whatever. Like I'd be thinking seriously about, spending that money on myself before spending on the business. Because the business is an investment. The stuff you spend money on is just a consumable. Going back to that, right? It's a liability. So when you invest in your business, it's going to invest back in you. It's going to give you returns. So once you get your website dialed in, then, you know, and all the other stuff, you got the good team, you got the website, you got the wraps, you got the uniforms, everything's professional. Then you really got to, and this is not like in this order, by the way, I'm not saying you got to do these things in this order. These are all simultaneously. You should be working on each area of these as you're growing your business. If you've been in business for a long time and you haven't invested anything in this, you need to go and do it immediately to help increase your value proposition. So once you get all that, then you got to really work on like sales game of it. And this, I'm not, this isn't a pitch for the profit club, although it is. I don't care if you join or not. I'm just saying you have to increase your level of selling. That is a value in and of itself. If someone calls me and the conversation they have with me is super professional, by the time they get off the phone, they're like, wow, I really like this guy. He totally understands what we want. He nailed exactly what's important to us. It was a great conversation. I mean, honestly, it felt like I was talking to a friend of mine on the phone. That is a value. That's an intangible value that your competition isn't providing. They're going out there and doing an estimate and giving them a price and that's it. And there's no value there. They might like the guy. Maybe the guy's likable and is nice. That's a little bit of a value. But you just blew them away because you were so good on the phone. And then you go out there and you meet with them and you spend an hour with them or whatever. And you like pour into them and you tell them all these things and you help them out and you really try to give them the best piece of advice. You're not selling them anything. You're not trying to upsell them on this really fancy cabinet lighting because you know you got an 80% markup on it. No, you're not doing any of that stuff. You're going there to provide value and consult with them. And they're just like... completely blown away by the entire experience. And then you drop the price that's $15,000 more than the other contractor that they already talked to. And now they really have to make a decision. They're like, man, you know, $15,000 is a lot of money. You know, I know they can both deliver the exact same product, but Brad just, I mean, he just impressed me the entire way through the process. And I just, I really, I know it's a lot of money, dear, but I really feel like we're going to have a much better experience if we go with Brad. I know it's a lot more money, but, you know, I just feel really good about it. And then they buy from you. And what you've been able to do is increase the value to price. It's called the value to price discrepancy. So there is a, you know, whatever your price is versus your value. is a discrepancy. And so when those things meet, when those paths cross, that's whenever you have someone who's willing to spend the money. So if your value is really high and the price is actually a little bit lower, they're going to feel like they're getting a really good deal. If the price is really high and your value that you're delivering is really low, they're going to feel like they're getting screwed. And this begins with a mindset of understanding that You got to stop competing on price. Now, I will address there are some caveats here. So let's address what I'm already hearing you guys saying to yourself. Well, I own a lawn care company and everybody charges $40 for this size yard. I can't charge $45 for this size yard. Okay, that's fair. I'll give that to you. However, can you provide more value? in the service that you offer. Can you, you know, and I'm making stuff up here because I'm not a lawn care dude and I don't know what all the services are, but can you, you know, edge the driveway every single time, every week? Like we have a guy that cuts our grass. He just edges every other week, you know, and that's fine. We don't care, but could you do it every week? Could you go above and beyond and, you know, maybe you clean up their mulch bed? Maybe you do just a little bit extra. Maybe it only takes you an extra 10 minutes to offer this service, but you could charge $5 or $10 more per cut for that service. That's where you're adding more value to the services that you're providing. Maybe you offer them the ability to pay a year in advance so they don't have to worry about it, but you charge an extra... $100 for the year or an extra $200 for the year for that feature. Maybe you auto charge. Again, I'm making stuff up here, but there's ways to figure out how you can provide more value without necessarily increasing your cost, but increasing the perceived value of the service or product that you're offering. Right? So look into how you can improve your service. Customer service is dead in the world. If you have any, like, if you provide any level of decent customer service, you're already above everyone else. But if you can expand on that and go even further, then you can just, you can pretty much write checks for whatever you want. If you can provide value that nobody else in your space can provide the same level of value that you do, you can write checks for whatever you want to do. Like, seriously. It's... It's that simple to understand. It's a lot harder to execute, but it's a very simple strategy that works. Provide way more value than your competition is and you will get the jobs. I mean, this podcast is me providing value to you guys. I don't get anything from this podcast. I don't get paid for this podcast. There's no direct cost or benefit for me to do this podcast. There's indirect benefits or intangibles, which is if you listen to a bunch of these podcasts and you like what you hear, then you may be more likely to join our coaching program, which then I make money, right? But I'm giving you the value. You can listen to all of these podcasts and never pay me any money and receive value from that. I think you would all agree, although I know some podcasts aren't as good as others. If you listen to the podcast on a regular basis, I'm pretty sure you've gotten some level of value out of them. And so that's me providing more value to you guys. And I do live calls on TikTok and I did two calls this week for other groups. And I just go in those groups and talk about marketing and sales and just provide as much value as I possibly can so that you get to the point where it's like, This company is so freaking good. And I would be an idiot not to hire this company. I would be a complete idiot if I hired the cheaper guy to do my work. Because this company impresses the hell out of me so much, I would be a complete idiot. That's the level you want to get to. And you're not going to do it in one week. It's going to require time, effort, intention. If you listen to the first podcast of the year. Be intentional with everything you do. That's be intentional with your marketing. Be intentional with how you provide value. Be intentional with your website. Be intentional with all that stuff, guys. One of the things you have to understand about this is you have to provide the value first before you can increase your price. Now, some of you are way underpriced. Like you're just, you are the low baller. Like you're the one that's coming in. and you're offering the kitchen for $45,000 when you should be charging $60,000. And you can just go in there and look at your numbers, and you can just literally go in and change the line item from $45,000 to $50,000 on this, you know, like using this as an example. That's all you have to do is just, you could raise it $5,000 more, still get the jobs, and now you just put an extra five grand in your pocket on one job. And if you do it with all the other jobs, you're going to increase your gross profit across the board. Some of you, that's all you got to do. Others of you may be overpriced to begin with. Maybe you're at $60,000, but your value is terrible. You're just overpriced for the value that you provide. Maybe you were blessed with the ability to not care about overcharging people. For me, I lost sleep at night if I thought I overcharged someone because I had fixed mindsets around money and how things should be charged. And so maybe you're just like, I don't care. I'm going to charge as much as I can. And you might hit and miss here and there and make some money, but your value is not there at all. And so you need to increase your value level to be able to close more deals. But I would venture that for the majority of you guys, you probably excel in some areas of your business. Like maybe you're a professional looking, your image is professional, but maybe your customer service isn't the greatest. or vice versa. And so there's always room in your business to try and grow. And you want to try and grow these across the board simultaneously. It's not a, I'm going to get my image really good. And then once that's done, then I'll work on my customer service. And once that's done, then I'll work on my website. Like, no, you want to try and work on these together simultaneously. And it doesn't have to be you doing it. Like you can hire someone to build you a website. I mean, there's lots of things you can do. to sub it out and, you know, do it like you're not the one physically doing it. If you don't have the money and you have to do it, well, then, you know, don't watch a movie on Friday night. Spend two hours that you could have watched that movie and work on your website and make it better. Spend, you know, if you go like to go to the bar and get drunk on Saturday night, for one, that's stupid waste of time and money. But two, you could be using that time to work on your business. Guys, this isn't like you have to do this forever. I'm not telling you to give up your Friday and Saturday nights for the rest of your life. It's like, hit it hard, hit it intentional, go in there, take massive action. And for a month, every weekend for a month, you're spending all your time building the value of your business. And then once you have it there, then you can let off the gas and coast a little bit. Like you don't have to, this isn't you. having to give up everything forever. But you're going to have to give up something if you need to get to that level. There's so many ways you can provide value. It's really kind of silly to think of it in that perspective. But I bet you've never thought about, do I provide enough value for my customers? I really want you to sit down and think about this. And this is where it's helpful to have outside feedback. Have a friend or a neighbor or someone you know that isn't going to just tell you what you want to hear. But have your neighbor or somebody that you know and just say, hey, would you do me a favor? Would you go to my website and just take a look at it and tell me what you think about it? If you were going to buy my service, how would you feel about that? And then get the feedback. And obviously, more than one person. Don't just go to one person. They say, oh, I like it. It looks really good. And, you know, maybe they're very simple and very easy to please. But then you go to another person who's very hard to please and they're like, not sucks. I would never hire this company because of X. Or I would not feel comfortable using this company because of Y. Like, get as much feedback as you possibly can. I changed my website. I think it was last year. And it was just like a minor update. I updated the header. And I updated the little slogan on there. And I sent it to my friends, like 25 friends that I have in the group. Most of them are married, they're spouses and stuff. So I sent it to our group messenger and I said, hey guys, will you do me a favor? Just go to my website and look at the homepage and tell me what you think. And look at the slogan. Just tell me your first impression when you click on it. And they did. And several people gave me feedback. I like it. Really, it's nice. And then one of my friends, one of my good friends, his wife, who's also a friend of mine, she said, wow, when I read that slogan, it really moved me. I really felt something emotionally from that slogan. And that's when you know you've got something. When someone reads it and they actually feel an emotion, then you have something. And so this is like... I mean, this is just one tiny little aspect of providing value. But if you're providing value in 27 different areas of your business, people will feel stupid for not hiring you, no matter what the price is. I hope I'm driving this home. I know I'm repetitive and I'm saying this over and over again, but it's such an easy concept to understand, but it's very hard to execute on. But stop competing on pricing, guys. Stop trying to compete on pricing. Okay? Set yourself apart from everyone else. I'll give you one more tip on your website. Go audit your website and look at it and see everywhere that it says, we and I, we are the best contractors in the world. I am a... Better Business Bureau A++++++ Certified Contractor. I take pride in taking care of your house. I do this. I and we and we and I and us and we and us and we and I. That has nothing to do with the customer. That's about you. That's all about you. How does that benefit me as a customer? It doesn't. That's just your ego. Go back and listen to Ego Suppression. That's your ego. trying to say we're the best at what we do, so because we're the best, hire us. That does not sell anybody anything. What you need to do is go to your website and change all the we's and I's to you. This is how you benefit from this. This is what you can expect to receive. Instead of saying, we are professional contractors, you say, you'll get professional contractors. you know, to work for you or however you want to word that. But it's like you. You will receive the highest level of service that we offer. You will get an experience like no other. You will receive this. You will benefit like this. You will get this. You're explaining to the customer how they will receive value, not why you're valuable. It's a very subtle difference. Go in and audit your website. Remove all the we's and I's and change them to use. You have to change the wording around a little bit because obviously if you say we're a professional and you say you are a professional, that doesn't work. I think that's pretty obvious. It's not just your website. Audit your whole process. Audit your sales process. How can I make it better? Start asking your customers. When you get done with a job, when you're completely done and maybe even wait until after you're paid. I'm just joking. But when you're done with a job, Ask the customer, hey, Cindy, you know, you guys have been great customers. We're super thankful for letting us, you know, for trusting us with your project. I'm just curious, like, what was the reason why you decided to hire us? And they'll tell you, well, you guys were really good. You guys did this and this and this and this and this. And so now you know, right? And do that with all your customers. Maybe not the bad ones. Maybe the ones, maybe not the ones that you had a bad experience with. but the ones where you had good experience. Ask them, what did you really enjoy about working with us? How was the experience from start to finish? Is there anything that we could do better? Like ask them these questions and then take the information and act on it. Well, you guys were great. We really loved everything about the whole process from the first phone call until it was done. Everything was great, except... This. It would have been nice if you guys would have communicated a little bit better on when you were going to be here every day. Because we didn't know if you were coming at 8 or 9. Some days a subcontractor was coming and we weren't for sure if we needed to be here to let him in. And so it would have been a little bit nicer if there was a little more communication around that. Boom. That's gold. Duly noted. Take that information, change your process, make sure it's fixed, and then talk about it. You know, we've made a lot of mistakes over the years. And one of the things that we took advantage of, or took for granted rather, is that people just assumed that we were going to be there every day. And, you know, after working with a lot of customers, we discovered that we weren't doing a very good job with that. So we've put these processes in place to make sure it doesn't happen. or we've implemented this in our business because we know it's important to have open communication with you on scheduling. We've hired or we've purchased or whatever a scheduling software with messaging that allows us to automatically send a message every day so our customers know what time we're coming. I'm just making stuff up. But there's 10,000 ways that you can provide value to your customers in order to charge more money. You know, one of the reasons why so many contractors fail in business is because they're copying what others have done. And what they don't realize is that most contractors don't know what they're doing. And so, you know, the common thing is I work for a guy and I know that he, I find out he's charging $40 an hour for my time to do X. And so I'm ready to start my own business. And I'm going to go out and I'm going to start selling at $35 an hour because I'm just a one-man show. I don't have any overhead, really. I'm working out of my house. I already got a truck and tools. Really, I don't have any cost of doing business. So I'm going to work for $35 an hour. And though that works because I'm a little bit cheaper. And so I attract the cheaper people when they hire me and I make some money. And I want to remain competitive. I don't want to... I know that if I'm over $40 an hour, nobody's going to hire me because they'll hire my old boss if that's the case. And so that's the mantra of a lot of contractors. But what they don't realize is that the guy who was charging $40 an hour didn't know his number because he did the same thing with his boss that maybe was charging $45 an hour. And it's just this continuation of nobody really knows what they should charge. And so everyone's copying the wrong person. They're copying a failed. pricing structure. And that's why there's so many contractors that go out of business. 96% of you will be out of business in 10 years if you don't change your ways. That's a fact. That's from the Labor Bureau of Statistics. 96% of you listening to this podcast will be out of business in 10 years, in less than 10 years, unless you start making changes in your business, in your life, start investing in yourself and turn that around. I hope that the information that I passed today is helpful. I hope, I hope deeply that I have provided you way more value than the cost of admission, which is free. Because if I haven't done that, then I might as well just stop doing this. If I haven't at least provided you more value than free, then I am a terrible, terrible, terrible businessman. So with that, I will leave the podcast this time. Remember, Don't compete on price. Provide way more value than what you're asking for in price. And audit everything in your business. Ask your customers for information. Figure out how you can provide more value. And if you can do that, you will be able to make as much money as you can possibly think of. So with that, I appreciate you all for joining me today. Check out our social medias, Hammer and Grind podcast. Pretty hot on TikTok right now, doing two lives a week on TikTok to provide you as much value as possible. See how I did that? And leave a comment in the Instagram or anywhere you see us. Check out our free Facebook group, Contract Your Profit group. Find that infographic I made so you can see what I'm talking about. Guys, until next time, I want you guys to be the best version of you. All right? Be your best you.
