Double Your Profit Day #7 The Profit First Pricing Mindset EVERY 7-Figure Owner Uses

Summary

Owned and Operated Podcast Summary

Episode: Double Your Profit Day #7: The Profit First Pricing Mindset EVERY 7-Figure Owner Uses
Release Date: August 7, 2025
Hosts: John Wilson and Jack Carr
Podcast Description: Hosted by John Wilson and Jack Carr, Owned and Operated delves into the growth strategies of electrical, HVAC, and plumbing businesses. Each week, the hosts provide actionable advice on advertising, lead generation, marketing strategies, and more, aiming to guide home service business owners toward entrepreneurial success.

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Introduction to Profit-First Pricing

In the seventh episode of the Double Your Profit series, hosts John Wilson and Jack Carr explore the Profit First Pricing Mindset, a strategy favored by seven-figure business owners. This approach shifts the traditional pricing model from a cost-first mentality to a profit-first focus, ensuring businesses prioritize profitability from the outset.

Key Points:

• Profit-First vs. Cost-First: Instead of calculating prices based solely on costs, the profit-first approach begins with the desired profit margin and builds the pricing structure around it.
• Financial Breakdown: To achieve a 25% net profit, the hosts outline the following allocations:
  • Materials: 20%
  • Field Labor: 20%
  • Gross Margin: 60%
  • Overhead: 35%
  • Net Profit: 25%

Notable Quotes:

• "Instead of starting with a cost first mentality on pricing or budgeting, we're going to start with a profit first mentality on pricing." — John Wilson [00:15]
• "If you have static costs that you just can't control much, what you can control is the price that you sell at." — John Wilson [00:45]

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Avoiding the Pitfalls of Discounting

One significant behavior that detracts from maintaining a profit-first mindset is discounting. The hosts emphasize that discounting often stems from a "lazy selling" approach, where businesses reduce prices to compete, thereby eroding profit margins.

Key Points:

• Lazy Selling: Lowering prices to make sales can lead to selling below cost, which is unsustainable.
• Competitive Pricing Examples: The hosts discuss an instance where a competitor priced their services 30-40% higher but won the bid by selling premium value rather than competing on price.

Notable Quotes:

• "Discounting is basically lazy selling. Any asshole in the world can sell something for less than what it costs." — John Wilson [01:30]
• "We were the cheap guy and we got beat by the premium guy." — John Wilson [02:10]

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Emphasizing Value Over Price

The episode highlights the importance of selling value instead of competing solely on price. By offering superior value, businesses can justify higher pricing and maintain healthier profit margins.

Key Points:

• Premium Offerings: Providing additional value through better warranties, enhanced services, or superior quality can differentiate a business from its competitors.
• Sales Strategy: Educating the sales team to focus on value propositions rather than defaulting to price cuts can lead to more profitable outcomes.

Notable Quotes:

• "Winners are going to drop for premium and explain the value of what it is that they're trying to sell." — John Wilson [03:00]
• "He probably had better warranties. He explained the value of what he was doing better than my team did, and he won." — John Wilson [03:20]

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The Importance of Knowing Your Margins

A crucial aspect of the profit-first pricing mindset is the deep understanding of your business's financials. Knowing the exact costs of materials, labor, and other expenses is essential to set prices that ensure desired profitability.

Key Points:

• Accurate Financials: Maintaining timely and precise financial records allows business owners to make informed pricing decisions.
• Margin Awareness: Being fully aware of your margins ensures that pricing strategies align with profit goals.

Notable Quotes:

• "You need to know your margins cold." — John Wilson [04:00]
• "That takes timely and accurate financials." — John Wilson [04:10]

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Engagement and Community Insights

Towards the end of the episode, the hosts encourage listeners to engage by sharing their own experiences with premium selling and avoiding price competition. This fosters a sense of community and continuous learning among home service business owners.

Call to Action:

• Listener Interaction: The hosts invite listeners to comment on times they successfully chose value over pricing, reinforcing the episode's key lessons.
• Sharing Knowledge: Encouraging listeners to like the episode, subscribe, and share with peers who may struggle with price competition.

Notable Quotes:

• "I'd love to hear in the comments below is a time that you beat out the low seller by presenting premium and value." — John Wilson [04:30]
• "Make sure you like and sub share with a friend that you know competes on price." — John Wilson [04:35]

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Conclusion

This episode of Owned and Operated serves as a comprehensive guide for home service business owners aiming to enhance profitability through strategic pricing. By adopting a profit-first mindset, avoiding the lure of discounting, emphasizing value, and maintaining a thorough understanding of financials, businesses can achieve sustained growth and success.

Key Takeaways:

• Implement a profit-first pricing strategy to ensure profitability.
• Avoid discounting as it undermines profit margins and positions your business unfavorably.
• Sell on value and premium offerings to differentiate from competitors.
• Maintain accurate financials to make informed pricing decisions.

For more insights and actionable advice, visit www.ownedandoperated.com.

Transcript

[A]

Welcome back to double your profit. Today we're talking about profit first pricing. Instead of starting with a cost first mentality on pricing or budgeting, we're going to start with a profit first mentality on pricing. So what that means is I want to drive 25% to my bottom line. And in order to do that, I need my materials to be 20%, I need my field labor to be 20%, I need to maintain that 60% gross margin, and my overhead will be 35% giving me that 25% net. The reason that matters instead of cost first is because some costs are sort of immut. So when you have static costs, after negotiating, after working hard, we're going to talk about that in a later video. But if you have static costs that you just can't control much, what you can control is the price that you sell at. There are a few behaviors that we tend to use that sort of take that control away from us. The first and easiest is discounting. Discounting is basically lazy selling. Any asshole in the world can sell something for less than what it costs. That's not complicated. You are giving way for less than it costs to perform that job. There's a company about 15 minutes north of me and they're funny because they price about 30 to 40% higher than I do. We just interviewed one of their salespeople the other day. He had just the previous day bid against us on a job. We bid $11,000 for that job. And I even think we gave a little bit of a discount, tried to sweeten the deal. This gentleman came in, he charged $3,000 more and he closed it on the spot. What he did was he sold premium, he sold on value and he sold on the package that he was bringing to the table. And he did not sell on price and discount like my team member was attempting to do. We were the cheap guy and we got beat by the premium guy. Not every sale is about price. He came in with a better offering. He probably had better warranties. He explained the value of what he was doing better than my team did, and he won. And you can do that every single day. So stop competing on price because that is just a loser's game. But winners are going to drop for premium and explain the value of what it is that they're trying to sell. My final comment here is you need to know your margins. Frickin cold. If I want that 25% net, I can't know that I'm going to price and get there. If I don't know the cost of my materials and if I don't know the cost of my labor. So you do need to know your margins cold and that takes timely and accurate financials. What I'd love to hear in the comments below is a time that you beat out the low seller by presenting premium and value. Make sure you like and sub share with a friend that you know competes on price.