DAY 8-PRICING [From an idea to replacing my full-time salary in 4 months and hitting $20 Million -27 Day Case Study]

[spiderkiller007]

DAY 8: PRICING- LAYER ON VALUE AND CHARGE WHAT YOU WANT.

Backstory: From Zero to $20 million in sales

Day 1- The Industries that Work

Day 2- Choosing Your City and Business Model

Day 3- How To Choose Your Domain

Day 4- Website and elements

Day 5- Logo and focus

Day 6- Copywriting

Day 7- Customer Service

If you’re new here, this is DAY 8 of a 27 DAY series where you peek over my shoulder and learn how to lay out a remote service business just like my company that just hit $20 million in sales.

Again our process for launching companies is the same every single time:

1. Create a dope looking brand
2. Set up ways for customers to pay us
3. Drive as much traffic as we can muster.

We're almost done with step 1 and today we start on step 2.

Phase 2 if you will...

So a few words on pricing:

A lot of new entrepreneurs think they should compete on price.

This works in some industries, but I think it's really difficult to sustain in service industries.

We're not selling widgets here.

Instead we’re going to compete on a bunch of other factors while having our price in the general ballpark.

Why we're not shooing to be the lowest priced?

In the client’s mind, the price you charge suggests the quality of service you offer.

I'll say that again: the price you charge suggests the quality of service you offer.

On perception alone, being the lowest priced offering can actually harm you more than it hurts.

Major Key ^

And another thing is this:

Fewer people base buying decisions on price than you would imagine.

Many would rather pay a premium price for peace of mind that comes with doing business with a reputable company.

So as a general rule for pricing I make my decision this way:

1. Figure out how much I needed to make per transaction (x)
2. Find out how much the teams need to make
3. Create value that in the client's mind justifies a price of (x+y).

While there's no magical margin, you’ll find that most people add 40% margins on top of what they pay service technicians to get to their final price.

So a $200 service would typically break down as $120 to the provider and $80 for us.

Get to 15 of these jobs per day and you’re already a million dollar per year company.

^Doable goal that is attainable in 24-36 months.

At the end of the day though be ready to try different price points, and don't be afraid to raise prices if you think the market can support it.

Your pricing is like the constitution, it’s a living breathing document, so don’t get obsessed with getting it perfect at the start.

And here's another little takeaway:

Employ as many value-added items as possible and you give yourself more pricing flexibility (i.e you can price more)

• Money Back Guarantees
• On time Service
• Credit card processing
• Online Chat
• Booking by Text message
• Online booking with real time scheduling
• Organic/green cleaning
• And just plain old premium branding, convenience, and peace of mind.

And that brings us to our main thesis:

If you position your offering as a premium service with enough value-added components for the client, you can charge damn near whatever you please.

Just be ready to adjust to what's happening and don't try to hang on to a price that isn't working.

At the end of the day the pricing decisions are in your hands and if you position yourself well, those decisions are largely independent of what the competition is doing.

Sweet, hope you enjoyed this.

Tomorrow, we’re going to set up pricing in our booking system and show you how that works.

One step closer to getting P.A.I.D!!!

Final thing:

You can hit me at rohangilkes.com or let me know if I can help with any of this. My Dms on here are diabolical!

Whenever you're ready, there are 5 ways I can help you:

1. Sweaty Startup Operating System: Join 2,000+ students in my flagship course: Learn to build a lean, profitable, local service business. This is the system I used to quit my job and grow from zero to $20 million in sales and has generated over $1 billion in sales for our community. Get 10 years of online business expertise, proven methods, and actionable strategies across in-depth lessons and includes live WEEKLY calls.

2. Live 27 Day Bootcamp: Join 30 other entrepreneurs every month in a live DAILY class as we walk you through how to build a business in real time. At the end of 27 days you're ready for launch. Build a profitable real-world business live. This comprehensive program will teach you the system I used to grow from 0 to 100K+ customers, be invited to the White House and earn $20M+ in sales.

3. https://www.justinwelsh.me/content-osBook a Call With Rohan: As an entrepreneur with over $20 million in online sales I've seen pretty much everything. I've built services companies, software companies (had 2 exits), subscription box companies, and more. Join me for a chat.

4. Join My Email List here for my weekly newsletter

1. The software we use to run your sweaty startup: Booking form, your website, hosting, domain, credit integration, email templates, the whole shebang.

Links to catch up with me:

#1 - DM me on instagram: www.instagram.com/rohangilkes

Facebook group: https://www.facebook.com/groups/remotecleaning

My Twitter threads: https://rohansthreads.co/

Day 9:

https://www.reddit.com/r/EntrepreneurRideAlong/comments/1b04jyx/day_9_online_booking_from_an_idea_to_replacing_my

 

[max_]

@spiderkiller007 Genuinely looking forward to these each day. Thanks for sharing mate!

 

[spiderkiller007]

@max_ Thanks so much fam!

 

[hiev]

@spiderkiller007 This content is amazing. Just chiming in to say thanks.

 

[spiderkiller007]

@hiev Appreciate it my G

 

[secretz]

@spiderkiller007 Loving the content so far! Had a quick question for OP, what is stopping the cleaners from cutting you out of the equation by establishing a relationship with the client directly and by offering a lower price? Has this ever happened to you? If so, what did you do to prevent this from happening again?

 

[sexyme1]

@secretz You prevent this by adding more value to the cleaners than you are taking. In other words: client acquisition and service, transaction administration - what you bring should make it a no-brainer to stay on with you.

 

[secretz]

@sexyme1 Thank you!

 

[joettastaysblessed]

@sexyme1 Good advice. I totally understand this from the perspective of the cleaners that are getting consistent work from me. But what's stopping clients from just going directly to Jane's Cleaning after the first 1-2 cleans and saving $80? I understand that I'm providing value to Jane by getting her jobs and leads, but I really don't understand how customers aren't going to just cut out the middle man eventually and save money by going directly with Jane.

 

[sexyme1]

@joettastaysblessed Because Jane doesn’t have the fantastic customer service and smooth infrastructure like YourCleaners.com. And Jane can’t always show up for a random extra clean - there are benefits for both sides!

 

[newton3005]

@spiderkiller007 Thanks for all you're sharing here, clearly lots of value to had by following your gameplan. Good on ya for sharing your insights so generously!

Quick question, you break down the numbers as "$120 to the provider and $80 to us" of that $80 how much is realized as net profit?

From reading other posts I realize there will be some costs for web-hosting, insurance, marketing and VAs eventually. Can you help me understand what that overhead looks like?

 

[spiderkiller007]

@newton3005 Appreciate it thanks and I feel like most people operate 25 to 30% in net profit because the overheads are very low we don’t own offices or cars or buy supplies or anything like that. Most of my entire overheads are laptop and my phone service.

 

[newton3005]

@spiderkiller007 Noted. Thank for the reply!

 

[zanna123]

@spiderkiller007 So I just got here and have read this far, I have an available domain picked (but not bought yet) and no businesses share my name, I made a logo for free, and as soon as I have the money I will be purchasing the domain and possibly the other website manager service, should I keep reading or wait until I'm done with those?

 

[spiderkiller007]

@zanna123 You can keep reading fam, but really up to you, might be good to wait and go at the pace of your work. Great question

 

[tresstylez]

@spiderkiller007 This is so important. Peoples' first instinct is to normally try to compete on price, but it's like that book "blue ocean strategy" suggests - superior services will always beat cheaper prices. And building more value (instead of slashing prices) will get better quality customers, and keep them for longer.

 

[joettastaysblessed]

@spiderkiller007 This is incredible, thank you so much for all that you offer, Rohan!

A quick question, the pricing is probably my only sticking point with this sort of business model. If I'm having to charge an extra $80 on top of Jane Cleaning's standard $120 rate, what's stopping clients from just going directly to Jane after the first 1-2 cleans and saving $80? I understand that I'm providing value to Jane by getting her jobs and leads, but I really don't understand how customers aren't going to just cut out the middle man eventually and save money by going directly with Jane. Especially with so many cleaning companies in major cities, how is it sustainable to be charging 65% more than the average market rate for a service when dozens of other reputable and competent companies will do it without that markup? Am I missing something?

 

[spiderkiller007]

@joettastaysblessed Appreciate it fam!

So people pay more for peace of mind and convenience, so that premiums is for things that the cleaner is unlikely to have on their own, these include insurance, online booking, credit card payments, text message reminders, actual customer service, service guarantees, and a bunch more stuff.

Also you're not charging 65% more than the average market rate. The market rate for individual cleaners is not the same as the market rate for established cleaners because of the items I mentioned above. Would be like the difference of hiring your neighbor's son to the do your lawn vs hiring a lawn company. Hope that makes sense.

 

[joettastaysblessed]

@spiderkiller007 Yes, that definitely makes sense, thank you. I'm assuming the differentiating stuff you mentioned (text messages, insurance, guarantees, etc.) are talked about later in the series of posts? I haven't seen them come up yet, but I've only read to Day 9.

 

[spiderkiller007]

Day 9: https://www.reddit.com/r/EntrepreneurRideAlong/comments/1b04jyx/day\_9\_online\_booking\_from\_an\_idea\_to\_replacing\_my/