What Happens When a Plumbing Owner Doubles Their Prices

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Every coach tells you to raise your prices. Almost none of them show you what actually happens when you do. Dennis tripled his prices, then raised them again over several years, and the thing he was most afraid of, losing every customer, almost never happened. What did happen changed the entire company.

In this episode, Dennis walks through what forced the first price increase, why he still struggled after tripling his rates, and the gut check it took to finally charge what the calculator said. He gets into how raising prices made his whole team level up, why a ripoff is a feeling and not a number, and the math mistake that quietly ate his profit as the company grew.

Topics discussed:

00:00 - Doubled the prices, then doubled them again
00:51 - The first sign he needed to raise prices
01:33 - Getting a mentor before touching the numbers
02:14 - The calculator said quadruple, he only tripled
02:51 - What actually happened: phones kept ringing
03:57 - Why he still struggled after tripling his rates
05:27 - Your customers are investors in your company
07:17 - When prices went up, so did the standards
08:46 - Raise the bar, then charge for it
11:27 - The math mistake that killed profit at scale

This episode was produced by Podcast Boutique

The Podcast that helps plumbing and heating service contractors stop working for free and actually turn a profit. 

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Transcript

SPEAKER_00 0:00

I doubled the prices in my plumbing company, then I doubled them again. Hi, I'm Dennis. Dennis the apprentice on most socials, and I've spent 25 years in the trades. I built a big, beautiful residential service plumbing company, $12 million a year in sales, and eventually sold it. This is Trade Traction. Every coach tells you to raise your prices, right? But almost none of them show you what happens when you do. You're picking numbers out of the air on every estimate, right? Or you're charging what everyone else is charging. So charging more sounds like the fastest way to lose every customer you've got, but you'll be surprised at what really happens. In the next few minutes, I'll tell you what really happened to my customers, what happened to my business, and why the thing you're most afraid of is almost never what goes wrong. But first, why did I need to raise my prices? The first sign I needed to raise prices was because I could barely meet payroll. And when I did, other bills were put off. My trucks needed to work or needed replacing, but I didn't have the money. In fact, one of my very first jobs at the company was to show up before everybody else. And two trucks needed starter fluid right in the morning to get them started. We needed new trucks. And maybe most importantly, my plumbers were getting really good. And if I didn't figure out how to pay them better, I was going to lose them. However, the truth is, I just didn't double my prices, right? I first got some coaching. I sought out a mentor, someone that knew about uh pricing, and I had a couple references, and they helped me figure out what it was really costing me to be in business. I mean, what it would cost me to put the kind of service on the road that I would be proud of, right? Like there's the business that you're doing right now, but is that really the way you want to run business? So I actually figured out what it would cost to put the kind of service on the road that I'd be proud of, right? And then I divided that by the number of hours I had to sell, but I still made a huge mistake. I didn't have the guts to charge the price the calculator said. It said I should at least quadruple them. I didn't do it, I just tripled them. But then something surprising happened. You know, the entire company leveled up. We wanted to be worth what we're going to charge. I think that's one of the cool things about the industry is no one wants to be a ripoff artist. And so that's part of the dilemma of, well, if I raise my prices, I don't want to, you know, I don't want to be a bad guy, right? We have these ethics in our in our guts. Most of us do anyway, right? But what's surprising about all this is the phones kept ringing and the customers kept buying, even when I tripled my prices. You see, the truth is the customer, they'd wanted an upfront price all along. See, when I'm talking about raising my prices, you know, I'm going back 25 years. And so when I raised my prices, it was from an hourly rate to going flat rate. And that was a big scary thing to do, right? But honestly, the customer wanted that. And if you think about it, when we do bid jobs, right, when we bid repipes and water lines and sewer repairs, we give them an estimate of a price up front. But somehow, so many of us did service hourly, but now we figured out the customer actually wants to know how much it is. Can they afford you or not? And so even though we had tripled our prices, we didn't tell them, hey, by the way, we just tripled our prices. We just gave them our price, and most of them bought, right? However, even though we tripled our prices, we still struggled. And you know why? Because we weren't charging the right price to cover the things we wanted to cover. I didn't have the guts to. And so unfortunately, it took us several years to get the guts to charge what the calculators said, right? And you know what happened? The phones continued to ring and the customers continued to buy. Now, why'd the phones continue to ring? Because I had the money to market, I could advertise. Before, like it was a struggle to advertise, I didn't have enough money to advertise. And so the phone rang a little bit, right? But but it was scary to raise prices. But when I raised prices, I was able to afford marketing. And so, like every company has marketing, but I was able to afford it now, and so the phone kept ringing. You see, the thing is, everything is going up in price. And if you're not raising your prices to at least match how expensive everything is getting, you're going to struggle, struggle, struggle. And if you're profitable, the profit will shrink and shrink and shrink until it's non-existent. If you're not profitable now, you know what that means? It simply means you're not charging more than it takes to run the business you're currently running. And if you're not profitable, you probably want things even different than they are now. Probably better, right? Are your trucks old and tired? Do you not have the right branding? Like, how do you afford a truck wrap? Those things are expensive. Well, you have to charge for it. See, here's the thing. Have you ever heard uh coach say that the customers are your investors, that they're investing in your company? That's true. And here's why. The customers give you the money to do the things that you want to do to put the service on the road that you want to put on. Does that make sense? And the reason I say it that way is because I remember this one day I got really beat up by a customer. You're still gonna get complaints. When I was super cheap, I got complaints. And when I was the most expensive in town, I got some complaints, but not as many because they knew the price up front and they just would choose not. It's like, hey, you're great, you're on time and nice, and I'm sure you're a professional, but we just can't afford that. And that's okay, right? Not everybody can afford. Like there's a price range for everything. Back to the customer that was beating me up. I I had a customer that really a complaint that really, really got to me. She really berated me and really got to me. You know what I mean? And so I actually went to coffee with my partner. We went to Starbucks and sat down and we were talking about it. Like, well, how do I charge less? And it was kind of she helped me with my partner's like, well, wait a second. We we don't want to be cheap. We know how to be cheap. We were cheap. Remember when our trucks were broke down? Remember when you came in to work with starter fluid in the morning early to get those two trucks started? Remember when we found the mushrooms growing in the back of one of the trucks? Remember when our guys didn't have background treks? Remember when we had a felon working for us and we hoped no one found out? Remember when we didn't have uniforms? Remember, remember on one of the first week I was at my company, we actually went to a callback and got solder out of the carpet. That's what happened. You know when I raised my prices? That never happened again. I never ever went to get solder out of the carpet of a customer's house. You know why? Because our when we raised our prices, so did our standards. We raised our own standards. If we're gonna charge more, we want to be worth it. And so we started being really careful about putting drop cloths down. We started wearing shoe covers, we started being careful. We started putting a little carpet down underneath our tools so we didn't scratch the washer or dryer or the counter. We started doing the little extra things that would help us be worth what we were charging because we didn't want to be a ripoff. You know, a ripoff, it's there's no definition in the dictionary. You know why? Because it's a feeling. Like if you think about a car, there's cars from a couple thousand bucks up to a couple hundred thousand dollars, right? Or more. And is it a ripoff? Is that couple hundred thousand dollar car a ripoff? No, but guess what? It reminds the driver and also everyone that sees it why it costs so much, right? The way the door opens, the the way it sounds when it closes, the way it sounds when it starts, the way it smells, the way it corners, like on rails, the way it accelerates, the way it breaks, how beautiful it looks, how easy it is to drive, all those things go into making it not feel like a ripoff. Like if you bought a hundred, if someone bought a hundred thousand dollar car and it was chincy and it's felt like a tin can and it the shocks bottomed out all the time, you'd be like, this is a ripoff, right? So here's the deal. You raise your prices to afford to put on the level of service that you desire to put out there. Like maybe, maybe you want to be cheap, and maybe you don't want to be on time to the customer's house, and maybe you want to handle those kind of complaints and stuff like that. But I would suggest let's raise the bar in the trades. Let's charge what it takes to put on the road good professional customer service, good quality work. Let's charge what it takes to be able to stand behind our work, to be trained so we actually know the options that are available to the customer. So, how do you afford to take the time to train, to send your guys to training? You have to charge the customer for it. Remember when I said the customer is an investor in your company? All the money, all the money comes from the customer. And here's the next thing. When I raised my prices, I didn't I didn't double them and double them again in in a month or two months. It actually took several years, right? Because I had to grow my own belief that I was worth it. And so I upped my own customer service standards. I upped my training so I knew what I was doing, so all my guys were well trained and felt confident in what they were doing. I upped I upped the standards of everything. And the way I did that was I charged for it and my customers gave me the money to do it. Do you think a customer wants uh a white panel truck to show up with no logo on it? No, they they want they want a nice professional truck to show up that doesn't leak grease. So raising your prices doesn't happen overnight, and it's scary, but it's easy to do if you understand that your customer wants quality service. And yes, it is expensive. Everything's expensive, everything's expensive, including you. If you're in the trades, you are getting more and more rare all the time. A good quality, well-rounded tradesperson is becoming worth more and more all the time because they're more and more rare. But the only way that they're going to get more money is to charge more money to the customer. So, how do you raise prices? Over time, logically, you have to figure out what the expenses are and divide it by the hours you have to sell, and then up your standards and then charge, and the customer will pay. They will, trust me. I've been doing it for 25 years. The last time we raised our prices, I think it was just over a hundred build hours. It was just over a hundred dollars a build hour. Here's the deal we we discovered a mistake in our calculations. You see, when you get big, see, remember I said you take your the cost and divide it by the hours you have to sell. Well, when you're small, when you have five trucks, like everybody shows up to work because they all want to, everybody knows that they're integral to the company working, right? So people don't miss work unless they really have to. That tends to be how it works in a smaller shop, if you've got decent guys. But as we got bigger, when we had 20 guys, there was almost always two guys off for one reason, one good reason after another. Someone was sick or someone was on vacation or someone had to go to their kids' concert, or someone was graduating. You know, so this stuff, life happens, right? But when we had 20 guys, what we discovered was we always had two guys gone for a good reason. So did we actually have 20 guys? No, we only had 18 guys. See, we were counting, we were taking the cost of our of putting our company on the road and dividing it by ours from 20 plumbers, but actually we only had 18 working at what any given time. Does that make sense? Once we figured that out, we recalculated and we were $100 off. And the reason we were looking is like, where's our profit? Like we're growing, but there's no profit. Like we'll like everything looks good, but there's nothing left after that there's not much left in the bank. So we had grown, we had matured as business owners to realize well, we have to charge what it costs to put this business on the road. And so we raised our prices, and it was just over $100 a build hour. It was kind of scary. It was really scary, but we just did it. And you know what happened? The phones continued to ring and the customers continue to buy. If you're getting serious about the business of Blue Collar, hey, you need to like and subscribe. I'm putting out content every single week, helping tradespeople make the transition from tradesperson to business person. It's a necessary transformation. I did it, I loved it. The trades are the great place to be if you know how to run the business properly. Let me help you make the transition from tradesman to businessman. It is a worthy transformation, and you'll be so glad you did. All right, see you next week.