🌀Au Contraire: Double your income without any effort.

For some reason as business owners we always equate doubling our income with doubling our workload. It feels like the right thing to do. There is some kind of guilt we have that says in order to earn more we need to work more. And this is simply sheeple shit.

Yes, volume matters. It always matters. A lot of people that are scared to grow their business preach that those of us that run big businesses are working too cheap. They do have a point. Some big dumb companies do a lot of work too cheap. But. Without doing a lot of volume, you are never gonna make a lot of money. There is a balance there… or is there? Shouldn’t the size of your company allow you to charge more? Don’t you have more resources than the small guy? Don’t you have more money to do a better job?

The more I learn about pricing, the more I realize it is mostly a dumb head game. Can you charge whatever you want? No, probably not. Can you charge more than you are charging now? Yes, probably a lot more.

The slightest increase you make as an outsized effect on your profit margin. Once you do the math, it’s hard to unsee the massive income increase. It’s really, really hard to ignore.

Ok so you want to see some real numbers. This is all gobbly guke until you run your own numbers. So I will share with you my numbers and you can understand the monumental shift.

One of our smaller branches does about $90,000 a month. Yearly that is about $1,080,000. The net profit is about 19%, so it is $205,200 in net income a year. We perform about 14,400 services a year with an average service cost of $75.

What happens when I go up $10 per service? That is about a 13% increase. It is pretty fascinating. Again, it’s hard to unsee these numbers.

Our net profit goes up $144,400 per year. Instead of $205,200… it becomes $349,600. Almost doubling our profit by only going up 13%.

By going up 13% on our prices, our net income increases by 70%.

I can hear that little voice inside your head screaming, “but you are going to lose half you customers!”

But that little voice is wrong. It is very wrong. In fact, it needs to shut the hell up so you can make some more money.

With the last 4 increases we have done in the past few years, we have only lost 2% of our clients.

Ok let’s say that is gobbly guke again. I know that little voice inside your head is calling me a liar right now. So just how many clients can I afford to lose by going up 13%?

It’s just math so let’s do it. To make the same $205,200 with a 13% increase, how many clients can I afford to lose? Before the increase it took 1800 clients to net $205,200. After the increase it takes 1058 clients to make the same net profit.

I can afford to lose 41% of my client base to make the exact same money. I can 59% of the work and afford to lose 742 clients and make exactly the same money.

The reality is that you will never lose 41% of your clients… but you can afford to. It is a good way to tell that little nagging voice in your head to shut the hell up. You can work 59% of the amount of work and make the same money.

Another little secret we have learned along the way is that we don’t broadcast a price increase. We just do it. This keeps that cancel rate even lower. Some people are gonna be pissed off either way. Why notify them to be pissed off? They don’t really care about the $10, they just don’t want their price to go up. So we don’t tell them. Ignorance is bliss.

If you know someone this might help, please forward this email to them and make sure they sign up for more emails like this here.

~Blue

P.S. If you want to understand how an increase will affect your numbers, reply with your numbers and I will do the math for you.