Price Right, Profit More: Mastering Your Margin

If you’ve experienced any of these issues, this is for you… 

• Not knowing where the money is going 
• Worrying about being able to pay bills or wages 
• Full schedule but empty bank account 
• Can’t afford to hire the best team members 
• No cash to invest back into the business 

While lots of things that cause those problems, the most common cause is pricing. 

Putting a price on a job is easy, but putting the RIGHT price on is hard. 

That’s because as a Plumbing, Electrical or similar business owner, you’ll get in your own way. 

• “That’s way too much to charge” 
• “No one’s ever going to pay that” 
• “I’ll never win the job if I charge that much” 

Those are some of the thoughts that lead you to talk yourself down before sending a quote or bid off. 

You don’t stop yourself because it’s easy to underestimate the damage lower pricing has on your business and the industry. 

It starts a race to the bottom that you’ll get caught in, each business prices lower than a competitor, thinking that’s the only way they’re going to win work. 

You end up eating into your own margin, devaluing yourself and the service you’ve put hours into refining so you could be proud to put your name on it. 

As a result, you run into problems caused by your margins being driven down, like a full schedule and working crazy hours all to be left with an empty bank account. 

Along with the other issues listed at the top of this post, plus a raft of other suffocating problems. 

So how do you fix it? 

The easiest way to fix your margin is to put your price up. 

Pricing is directly related to profitability, if you add $1 to your price, that goes straight to your bottom line as pure profit. 

Putting a higher number on your quote or bid is easy, it’s bringing yourself to send that higher price that’s difficult because you’re going to end up thinking you’ll lose work if you put your prices up… but that isn’t the case. 

How do we know? 

Because we’ve seen it time and time again with our members, they put their prices up and their customers accept it without batting an eye. 

It’s because they live in the same world as you, they see everything else getting more expensive so they’re expecting you to put your prices up. 

But let’s say you did lose work, you’d have to lose a fair amount before it affected your profit, the proof is in the calculation. 

Let’s say you’re pricing at 30% margin and want to increase your prices by 10%, you would have to lose 25% of your sales before your profit was affected. 

Still don’t believe it? 

Hayden, a member based in Texas, was suffocating his electrical business on an average margin of 20%, and despite making $250,000 in monthly revenue, was only making around $500 a month in profit. 

When Hayden put his margin up to 40%, sales revenue dropped from $250,000 to $150,000, he lost a lot of work, but because the margin was higher the business was now making $10,500 in profit each month. 

Not to mention the customers he lost were the ones who always complained, never paid on time, and were consistently unorganized, so he rid himself of a lot of stress. 

He also had a whole lot less pricing, scheduling, invoicing, marketing, and ordering to do because there were less jobs in the pipeline. 

Now this is an extreme example, but it shows the power of margin. 

Hopefully by this point you’re not still talking yourself out of putting your prices up, but if you are it could be because you’re thinking “I could just do more work” but let’s look at that. 

If you do an extra $100 of work that you can invoice, you don’t keep that whole hundred, you only keep part of that. 

Because you’ve got to pay wages, materials, and overheads on that $100 of work meaning you might only see 30 or 40 bucks as profit. Versus when you put the price up, you get to keep the whole hundred. 

The key is understanding your value and having the confidence to increase your prices because it will create all sorts of opportunities for you and your business. 

Remember you’ve got experience, knowledge, and a skillset that took years and years to get. Your customers don’t have that. They don’t even have the tools or time. 

All your skills, knowledge, time, and tools together make a service that is far more valuable than you think, so charge for it.

If you want a free copy of our Pricing Calculator that’ll help you work out the price of a job so you make your desired amount of Gross Profit, every time…

Grab the Pricing Calculator for free here