Profit First Chat: Pricing Your Services (or Deals) So You Don't Leave Money on the Table | Solocast E26

In this solocast, the host breaks down one of the most overlooked financial mistakes real estate investors and entrepreneurs make: pricing deals and services without accounting for what they actually need to keep. Whether you're flipping houses, wholesaling contracts, or running a service-based business, most operators look at gross profit as the finish line and miss the real question entirely.

This episode walks through a practical, Profit First-based approach to working deals backward from what you actually need to pay yourself, cover taxes, fund operations, and build reserves. If you've ever made money on a deal and wondered where it went, this episode is for you.

Timeline Highlights

[0:26] Host opens with a blunt warning: wrong pricing can't be fixed by doing more deals

[0:52] Why "I just want to scale" is dangerous without knowing your real numbers

[1:31] The hidden trap of growing by doing more of the same or pivoting out of desperation

[1:57] Wholesaling context: you're selling a contract, not a property, and pricing must reflect that

[2:16] Fix and flip pricing pitfalls: over-improving a property and what it costs at closing

[2:55] How most investors use ARV formulas upfront but miss what they'll actually keep

[3:14] The standard formula explained and why stopping at "50K profit" is the wrong stopping point

[4:16] Profit First applied to deal pricing: splitting that 50K into owner pay, taxes, ops, and reserves

[5:08] Real breakdown example: how 50K can disappear fast when you map it to actual needs

[5:25] Why service businesses face the exact same pricing challenge as real estate deals

[6:02] What happens when clients finally see each deal through a Profit First lens

[6:39] The "100 deals or seven figures" goal and why it's built on air without a personal income target

[7:22] The real question every business owner should answer first: what do I actually need to take home?

[8:01] Final framework: price deals with the end in mind, broken into the buckets that keep you solvent

[8:28] CTA: visit profitrei.com to book a free discovery call

Key Takeaways

1. Pricing your deals wrong is a structural problem, not a sales problem. No amount of volume makes up for deals that don't actually generate the income you need to keep.
2. The ARV formula gets you to gross profit, but gross profit isn't your money. Once you know what the deal will make, you have to split it into owner pay, taxes, operations, and reserves before that number means anything.
3. The Profit First framework works on real estate deals, not just service businesses. Map the expected profit into buckets upfront, and you'll know immediately whether a deal is actually worth pursuing.
4. Most business owners set revenue goals based on round numbers, not real income needs. Before you decide how many deals you want to do, figure out exactly what you need to take home each month to support your life.
5. You can't scale profitably by feel. Knowing how much of each deal goes to each bucket tells you exactly how many deals you need to hit your income goal, which is a far more useful number than a top-line revenue target.

Links & Resources

• Simple CFO Solutions — https://www.simplecfo.com
• Schedule a free discovery call — https://www.profitrei.com

Closing

If this episode changed the way you think about what a deal is actually worth, pass it along to a fellow investor or business owner who's been scaling without really knowing their numbers. Subscribe, review, and share the show to help more entrepreneurs run their businesses with less stress and more clarity. To build your own path to financial clarity, visit profitrei.com.

Transcript

0:05

You're listening to the Profit First for Real Estate Investors podcast. This show is all about helping real estate investors and entrepreneurs bring clarity and structure to the financial side of their business. In these sole episodes, we focus on practical financial strategies that real estate investors and business owners can actually implement, whether it's profit, cash flow, forecasting or mindset. The goal is simple to help you run your business with more confidence and less financial stress. Enjoy the episode. If you price your deals or service is wrong, no amount of sales will save you. Oh man. This one hits a chord with me. There's a lot of times that we talk to business owners and they're constantly wanting to do more deals, and they're constantly wanting to say that they want to grow. I am not against that at all whatsoever. But if you don't know the numbers, in order to say, here's what I need to sell these deals for, or these are the exit tragedies that we are good at or digging into our numbers to say, are these really what we need to be going after in order to build the business we really want to? Are these the type of deals? Is this the type of numbers that we're comfortable with? Are these really the numbers that will get us to the next level? A lot of people do not know that as business owners, they just go out there and they're saying, I just want to scale, I want to grow. That means doing more of the same or trying to pivot hard like into something else, because this wasn't working. I want you to know those numbers so clear, so crystal clear that you can make the money and keep the money that you really want to. So if you don't know how to price a deal or how to price services, because we work with lots of different entrepreneurs, whether it be a service based business, and really even in real estate, there's some service based businesses that when you're actually dealing with real estate, maybe as a wholesaler, you're really just selling a contract. If you're assigning, you're not even selling a property, you're selling a piece of paper that says you have that interest in that property, and that's where you might be more of like, okay, what do I if it's not selling, what do I need to do? Fixing and flipping? This is probably the one that is the most common of like is your flip price to sell. Did you over improve and if you over improved, does that mean that you won't be able to get as much at the closing table because you're not able to price it where you really want to, because you need to price it at a realistic price to sell it. And a lot of people, they don't go into it knowing how to be able to even price it. How do you know what to price something on the end? You work the deal at the beginning with the numbers that, you know, a lot of people have formulas in order to acquire the deal, and they usually put in there what they think that they'll get at the back end. Like, what if you're in real estate? What that ARV is that after repair value or how much you want to make on that deal, which is great up front. But I also want you to realize, okay, how much am I really going to keep? Am I going to put some of this in my pocket? Am I going to be able to pay myself if we make 40,000 on this deal? I want you to look at pricing your deals in in a very different manner than you've ever looked at it before. Okay, here's something I want you to do instead of up front. Your typical formula. Maybe. Let's just take real estate. It's ARVN, you know, time, you know, minus the repairs times 0.65. Like, gives you what the profits going to be at the end. And most people say they want to make on a flip 30 to 50 K. Or they want to make at least a, you know, 30 to 40% gross profit margin, meaning you sell a property for, you know, a higher dollar amount. You make more at the very bottom. So what I want you to look at, it is a little bit different in order to price these houses on the back end. I want you to work it a little bit different on the front end. How do we do that? Instead of just saying your formula and spitting out a bottom line number, like, let's just make it very easy. 50,000 is what you want to make on this property. Once you run your numbers, instead of just looking at that 50,000 as the profit you want to make, take it one step further. If you've never implemented profit first, this is what I want you to be thinking. This is what Profit First is really about. Helping you to close more deals and be able to keep more of the money. Profit first says, I want to now split out that 50,000 that I make from this deal up front when I'm running these numbers, and then when I actually sell it, I'll make 50,000. Then I want you to look at that 50 and say by percentage, how much could I put of this 50 in my pocket? How much am I going to pay myself? How much am I going to pour back into the business in the operational expense account? How much do I need to save for taxes, especially if you're doing an active type of real estate or any active type of business where you don't have a lot of depreciation? The other thing I'd be thinking about too is what is some of the profit, just someone either in reserves or a profit account, so that we actually have some buffer in the business. So that 50,000 doesn't look like 50,000 anymore. Doesn't 50,000 might look like, well, I need 25,000 of it to go back into the business. And I need 10,000 of it to pay myself. And I need, you know, 5000 of it to go to profit. And the rest of that I need to go towards taxes, because I know my tax bill is going to be a hefty one. So I need, you know, a healthy percentage going into the tax bucket. This is where you look at things differently. So when you actually price that house to sell on the back end or how you price the contract if you're wholesaling it or whatever it might be, whatever business you're in, that might even be a service based business. Like what we do. We have a service based business where we help, you know, profit first implementation for business owners. So we have to make sure our services are priced on the our price right on the front end to make sure on the back end that there can be owners paying, there can be money for the taxes and everything, but it's the same across the board. I would look at all the money up front. If you're going to calculate by any formula what you're going to make on a property or what you're going to make in that profit from that, from that sale, not just looking at it as a lump sum anymore. Then you break it down into what are you paying yourself? What's for taxes? It will help you to calculate what you really need to sell those services, or those properties for which is usually an eye opening moment for our clients, because then they don't look at each deal individually as this lump sum. They're now looking at it as, okay, it's 50 K, but really it's x amount goes to the business, x amount goes towards me. So I really need to do how many deals a month to make sure we're supported. Do you see how you can even calculate now instead of just saying what most entrepreneurs do? When I ask this question, I ask, how much do you want to do next year? And they say, well, by deals or revenue. I said, I don't care either one. Well, I want to do 100 deals next year or I want to do seven figures in revenue. I'm like, where did you get that number? I don't know, it sounds good. That's the way that you go down as a business owner without scaling profitably, you might be able to get $100 a year, but you won't be keeping a lots of money from that, from doing those deals. What you need to do up front is to be able to say, okay, from these deals that I'm going to do, how many deals do I really need to do in order to pay myself what I need? That's where a lot of business owners do not know what they need from their business. Do you have you ever sat down to say, I need 10,000 a month, or 15,000 or 20,000 to support my current lifestyle and to support my family and to support the people I care about that your money depends on. I want you to be able to know very clearly this is what I need from the business. So when I sell these deals or I sell my services, depending on how much I'm able to pay myself on the back end from these deals, this is how many deals I need to do up front. So then you will start pricing your services. You'll start pricing your deals better. You'll start going into it with the end in mind and the end in mind. Now is not that warm. Some, like I keep saying, it's not just the 50 K from a deal, it's now how much do I get to pay myself? How much can I pay myself? Or put in the tax bucket, or put into a reserve account, or put into back into the business, back into the apex to keep the business growing. So in order to really scale how you want to, it's taking an extra step at the front to be able to say, if I am going to price my services, if I'm going to be able to price these deals right, I need to know how much am I really making from these deals and put them in the different categories that will make you a business owner that is truly savvy when it comes to their numbers, and not just a business owner who's trying to scale by their gut feelings anymore. Thanks for spending time with me today. If this episode gave you clarity or a new perspective. Be sure to like, subscribe, and comment below if you're ready to apply what we talked about today with real guidance and accountability, visit profit to schedule a free discovery, call with us to create your path to financial clarity and freedom.