Episode Transcript
[00:00:00] Speaker A: Foreign.
[00:00:05] Speaker B: Hey, everybody. Welcome to another episode of the Worst Advice I Ever Got. I'm your host Sean Taylor, along with my producer jb and today we're getting into a topic that all of you current and prospective business owners are going to really resonate with. Our guest is Tom Reber. He's the founder of the Contractor Fight, a coaching business that helps contractors stop undercharging, start making real money, and run their companies like pros. But before all that, he was a guy just trying to survive, barely paying himself, chasing bad clients, and getting crushed by quote unquote, the way things are done. If you've ever been afraid to raise your prices or felt like you had to match the competition just to stay in the game, this is the conversation for you. Let's get into it. Hey, Tom, I really appreciate you joining us today.
[00:00:58] Speaker A: Hey, great to be here. I appreciate you guys having me.
[00:01:01] Speaker B: Tom, let's jump right into the theme of the podcast and let's get right into it. What's the worst advice that you ever got?
[00:01:07] Speaker A: Oh, man. The worst advice I ever got was you got to charge the going rate if you want to succeed in business.
[00:01:15] Speaker B: Let's talk a little bit about who you are and what you do, and then maybe why charge going rate to such a big bad piece of advice?
[00:01:23] Speaker A: Yeah, no, great question. So, you know, I'm, I'm Tom Reber, the founder of the Contractor Fight and we help mainly residential home improvement contractors stop stealing from their families. Time, money, and memories. And we teach them how to run a business.
In doing so, bring respect and dignity back to the trades, man. Been doing it for a little over a decade now.
[00:01:47] Speaker B: What is the going rate? First of all, is it just fair market value? I mean, what. Talk a little bit about what you mean by the going rate.
[00:01:54] Speaker A: You know, we, we have a free Facebook group with almost 20,000 contractors in it. And you'll see, probably on a daily basis someone in there jumps in and says, hey, I'm building a 400 square foot deck. What's the going rate that I should charge?
You know, so they're trying to be competitive when instead of figuring out their own numbers, they're just trying to price their work off the going rate. And that's sadly, you know, not going to cut it. If you really want to make real money and, and have some, have a real business. You know, if you just want to have a job just over broke, then charge the going rate. Yeah. Why?
[00:02:31] Speaker C: So why do you think it's the going rate? Like, why is that answer popping up if that's not even a successful correct answer.
[00:02:38] Speaker A: Well, most, you know, most people are not a student of their own math in the business. Their own number. You know, when you charge based on the going rate or you're basically pricing your.
Your services or your product on what other people's numbers are and not your own.
[00:02:53] Speaker B: Let's get back to the advice and who gave you the advice and really why it became the worst advice for you. I think that's important.
[00:03:01] Speaker A: Yeah. Well, it was another contractor was a guy I knew from church and, and, you know, his intentions were good. I was starting my first business. It was a painting company back in the early 2000s. And I said, hey, what advice can you give me about growing a business? And he says, well, you got to make sure that you're priced within the going rate or you're not going to get any jobs. And so took that, ran with it, and I was actually pricing myself out of work because I was too high. So you could be too high or too low if you don't know what your true numbers are based on your goals and, you know, your overhead and expenses and, and things like that.
[00:03:34] Speaker C: So even not charging the going rate doesn't necessarily just fix the problem. It's not like, oh, just charge more than the going rate. That's not going to fix it either, because you're still not even looking at the problem.
[00:03:44] Speaker A: Yeah, I mean, every business you, you have back to what I said before, you got to become a student of being a bit what it means to be a business own. Part of that is knowing your math, knowing your numbers.
And, you know, like right now, you know, we have a painting company here in Colorado Springs. It's relatively new. We're under a year old. We, we started it a year ago. And we teach people to price their work at at least a 50% gross profit. So if labor materials call, you know, cost me 10 grand, I'm going to charge at least 20 grand. And that $10,000 difference is going to pay for overhead and your net profit? Well, at the point, in my company now, here in Colorado Springs, you know, we're new, we don't have a brand yet. I, I don't have a lot of overhead. I'm not paying myself from the business. So I can, you know, my, my prices might be lower than somebody else's prices, and they might be higher, but all I care about are my numbers.
[00:04:36] Speaker B: Tom, let's go back to when you were starting out your original business. You got the advice from a friend at church you're taking this advice, though, right? You're charging the going rate and you're maybe losing money on some jobs and not winning work. Was it just that you. With the opportunity cost, or did it turn into some real turmoil for you?
[00:04:56] Speaker A: You know, for me, in my case, it was several years of being on the hamster wheel where we were busy, but we were broke and, you know, we had a lot of work, had a lot of clients, but we were never moving the needle. You know, my net worth wasn't growing month after month or year after year.
And so that, you know, created a bunch of problems down the road and that were tough to recover from because I. I didn't. You don't know what you don't know. Right. And it's not a rip on people. You know, I'm not saying that people are out there, you know, intentionally undercharging. I just think there's ignorance around the fact, you know, a lot of time, a lot of times in the trades, guys will lose a job to somebody and like, yeah, all these low ballers, you know, like, I don't think anyone goes into this saying, I'm going to undercut everybody. I think it's more of an ignorance issue. So it's just being a student, looking at your numbers every day because what you focus on, improve.
[00:05:50] Speaker C: What happened to you before you had the realization of, I'm not charging enough. What else did you go through in trying to fix your business before you address the money?
[00:05:58] Speaker B: And it sounded like it went on for years.
[00:06:01] Speaker A: Yeah, it was probably the first three, three and a half years of my business. I. I was literally, I mean, bringing in 100 grand a month on average. And at the end of the month, and after all the bills were paid and stuff, you know, somebody here, the guy raising his hands with two thumbs right here, this one was left with, you know, like two grand in the bank. And. And so it was a, you know, put strain on the marriage. It led to eventually filing for bankruptcy, you know, which sucked, you know, so a lot of stress in the family, a lot of, you know, embarrassment. I remember, you know, my bookkeeper calling me one day, and it was a Wednesday. And I. I remember I was pulling in to get cash at an atm. I can remember it like it was yesterday. And she called and she said, hey, just want to let, you know, you know, there's. There's like 10 grand in the business bank account and payroll is Friday. And I'm like, all right, how much do we need to come up with? And it was just shy of 60 grand that I had to basically, in two days.
[00:07:01] Speaker B: Yeah.
[00:07:01] Speaker A: You know, and that was a common theme, you know, and then you're robbing Peter to pay Paul. You're dipping into your personal savings and, and, you know, investments and things like that just to fund the business. And that's not what we signed up for when we start a business. You know, we all start a business because we want the freedom, we want to make the money. And sadly, you get the freedom, but you don't have any money, which in turn puts you in shackles and you don't have any freedom. You know, for those first three years or so, I was, I was great at finding work.
I was, you know, great at selling, but I truly did not have a clue. And this is 95% of contractors right now, and it's probably 95% of business owners across the board. If you just go, what does it cost you a day to run your business? You know, they don't know. They don't know it. And the good news is it's fixable.
[00:07:51] Speaker C: Before we move on to that, I didn't like, you didn't necessarily answer the question. So I wanted one more thing, one more go at it. Go into the things that you're trying to fix before you were looking at the real problem, because that is going to show other people, oh, that's what I've been doing.
[00:08:03] Speaker A: I mean, it was everything from, oh, we're not making any money. So we, you know, we got to do higher quality work. So we would invest in more training, we would raise the standard of what we expected. You know, we were trying to put in processes and systems that would help us be more profitable. As an example. It's laughable now when I look back on it. But I was like, okay, we're not making enough money because our proposals don't look as. Look nice when that wasn't the real issue. The presentation of the proposal had very little to do with the fact that we weren't making money. We went to everything except the root of the problem. Can't tell you how much money we wasted on, on marketing, trying to fix the problem. That wasn't marketing because at the end of the day, we weren't properly priced. You know, so we were selling more jobs, our close rate went up, but we're selling unprofitable work.
[00:08:58] Speaker B: It's not hard to sell work that doesn't make any money. I mean, you know, that, that, that ain't really challenging.
But I want to go back to something you, you said before 95% of contractors are probably doing this. What's the number one common reason you believe that people are not charging enough for their value?
[00:09:18] Speaker A: They don't believe they can.
They, they have head trash around it. You know, it's. Head trash is a phrase I learned from my first coach probably 25 years ago or whatever it is now. The first time I ever heard the phrase and I was like, what's that? He's like, it's your limited beliefs. And you know, you're basically, you know, drilling holes in your own boat, you know, because you're, you're limited and scarcity minded. Mindset, you know, thinking, you know, my dad was a tile guy, my uncle was a painter. I watched, watched my dad, you know, bust his tail. And we never had any money. We literally grew up, I literally grew up here. And rebirth don't make money. Well, that's for other people. And so that mindset that so many people have carries into when they try to price and sell their services because they don't feel that their, their value is high enough for it. They don't think they're worth it. You know, the number one thing that we help people with when we start working with them is we, we start getting your mind where it needs to be and you know, challenging those beliefs if, if left unchecked, meaning if you're not working on, you know, what, what's going into your head, you know, you will sell your product or service in the manner in which you buy.
So If I think $500 is a lot of money to paint a room is an example, if I personally truly believe that that's a lot of money. And like in my mind I'm like, I wouldn't pay that, you know, or that's expensive or whatever, then I'm going to have a really hard time pricing my services and at the right amount and having the confidence to spit that number out of my mouth.
[00:10:59] Speaker B: Yeah.
[00:10:59] Speaker A: So a lot of guy, you know, a lot of guys think that, you know, well, I'll just get in cheap and I'll make it up on volume. Well, I tried. I played that game. For the first three years of business. I had all the volume in the world and I wasn't making any money because the root of it, yeah, I didn't know my numbers, but I didn't believe I was worth it. You know, there's an acronym we call T bar in the contractor fight. Your thoughts become your beliefs. Your beliefs become your actions. Your actions get you your results.
[00:11:23] Speaker B: That's very interesting. It was more than just a matter of raising what you charge.
[00:11:27] Speaker A: You got to believe you're worth it.
[00:11:29] Speaker B: Yeah. The underlying theme, jb, is fear. It just feels like people are afraid to go back to somebody and, and say, no, it costs more. And you know what, if this doesn't align, then I just won't do your work. I mean. Yeah.
Is that fair? Is fear the underlying problem?
[00:11:45] Speaker A: Yeah, you're, you're, you know, I'll speak to contractors. The contractors are afraid that if they charge what they're supposed to charge to make a profit, to stay in business, to honor their work and all those other things that we talk about, they're afraid that if they raise their prices, they're not going to get jobs and then they're not going to be able to pay their mortgage.
There's this, what do they call it, the reticular activating system in the brain, the RAs.
And its job is to protect you. And so whatever you tell, whatever you tell the RAs that is important, it will find evidence for that in your life.
So if I continue to tell myself nobody will pay my prices, then I'm just gonna, I'm literally going to attract people that don't want to pay my prices. But if I flip the script script and reframe it, and I'm like, hey, listen, you know, I live in a city of half a million people here in Colorado Springs. I know that there's at least a thousand people a year that would be happy to pay our prices for the value that we bring. You have to literally reprogram your br. Because again, your thoughts become your beliefs. So one of the reasons a lot of guys don't raise their prices is they're telling themselves the wrong story.
That becomes a belief. And then when it comes time to take action and raise the prices, they tap out because they haven't dealt with reframing those thoughts.
[00:13:01] Speaker B: There's a psychology I hear you talking about there, which is very interesting to me.
What's the, what's the first step or the secret to adopting a psychology of value?
[00:13:14] Speaker A: Well, for me, I, I, I just started writing things down in a journal every day. I'm literally brainwashing myself with good things.
[00:13:22] Speaker B: Yeah.
[00:13:23] Speaker A: We spend so much time focused on the things that we don't have. And when you focus on the things you don't have, like, nobody will pay my prices. I can't find good employees. You are literally conditioning your brain to find more evidence of those things.
[00:13:38] Speaker C: What was the turning point for you? When did you say, hey, I'm doing this wrong. Is there a moment?
[00:13:44] Speaker A: Yeah.
You know that the turning point for me was it was Christmas morning. At the time, my wife and I had one kid. He was 2 years old. My phone rang at 7am Christmas morning and it was a guy named Bill who was a client that I was doing this job for. Just pop quiz here. Do you know what's worse than a client calling you at 7am on Christmas morning?
[00:14:09] Speaker B: Nothing.
[00:14:10] Speaker A: Answering it.
So when the phone rang and I went, oh shit, it's Bill. And I looked up and she looked at me with that look like, don't you dare. Yeah, hey, Bill. He starts yelling at me about something.
The stain color on his staircases. He was general contracting his own house.
I answered the phone because of fear. I answered the phone because if I wasn't there for Bill when Bill needed me, I, I was like, he's not going to pay me because he was also a lawyer. And pretty much everything I teach our contractors is rooted in this job. By the way, this was my MBA. When I job costed Bill's project, I sold for 28 grand. It cost me 45.
I spent 45 grand painting Bill's house and he only threw in 28 grand.
Okay. And so that was a massive turning point for me.
[00:15:12] Speaker B: What role do your former highly satisfied ideal customers play in selling on your behalf?
[00:15:23] Speaker A: We have a concept that we're, we play the long game. It's one of our values here. With that being the goal, we reverse engineer like, well, what needs to happen for these people to feel like they weren't just a one night stand, but like we actually care about them.
[00:15:39] Speaker B: Yeah.
[00:15:39] Speaker A: We do what's called uite unexpected intentional touches.
All right. We found that 5% of the view 3 a day to your past clients, which is, you know, in its litter. It's, it's a text, it's not automated. It is the salesperson, the owner, whoever is responsible for the job. It could be the foreman. Doesn't matter. Depends on the size of the company.
Hey, Bob, it's Tom with Simplify Painting. It's been, you know, a few months since we painted your exterior. I just wanted to see how it's looking.
Okay. Just that one act. You do three of those a day? It's about 800 a year on the working days.
We found our data with all our clients that do this and stuff. It's about 5% annual return rate. So if you send 800, you're going to get about 40 more projects because what's Happening is you're showing them you care.
And that keeps you top of mind. So referrals go up or if they move, they think of you right away.
We'll hold client appreciation barbecues in the summer. You know, anything like that, to just tie people in, Literally, just if I tell our people all the time, like if you got 20 minutes with nothing to do between appointments, pick the phone up and call a couple past customers, just say, hey.
So I think it's really just showing that you give a crap. You have at least a million dollars sitting there in your database right now. If you would just show them that you care. What if loving your clients became your number one business growth strategy? What would happen then?
There's so many things we don't control, but there's a lot of things we do control. We control our mindset, we control our actions and our attitude. And when you control those things, you're winning the fight. You're going to differentiate and the money is going to flow. I can promise you that every time.
[00:17:25] Speaker B: How do you, how do you determine an ideal customer?
[00:17:29] Speaker A: Yeah, I have four criteria, and this certainly wasn't from day one. Day one, if you had a pulse and you lived in our service area, you were a great fit. That's morphed through the years to being four criteria now. Number one, you need or want what we have.
You're willing to find the money for the value we bring. You're a joy to work with and you respect us.
It's those four criteria for me. And if you don't meet those criteria. So for instance, our painting company here, Colorado, we teach a sales process that when the phone rings, we don't just run out and give you an estimate. We are not in the proposal writing business.
Okay. It starts with a 15 to 20 minute conversation on the phone where we're just discuss, we're getting your motive, what's important to you, you know, and the more you dig into those things, you really uncover what's important to them. Then we talk money about what it can cost on the high end and the low end. And so back to the respect thing. If somebody says, well, no, I don't have time for a 15 minute phone call. I just need you to come out and give me an estimate. We're not a good fit.
[00:18:31] Speaker B: Yeah, it's not just how you price a job. It's that you find the right alignment to a buyer of your services or your product that has the same values that sees the proposition as valuable. And if they don't, all the pricing, all this, all the, you know, whatever in the world is not going to matter. You're just going to end up expending a lot of energy for nothing. The contractor fight. Where can our listeners learn more about your offerings and how it could potentially benefit them?
[00:19:02] Speaker A: They literally just type the contractor fight into Google, but it's TheContractorFight.com. you know, we're all over the place. You know, we just released our thousand thousandth podcast.
You know, we got almost 2000 videos on YouTube.
So much free content out there to help. And we get a lot of people that aren't contractors that find value in it as well, you know, because, you know, business is business. The concepts are the same.
[00:19:27] Speaker B: Well, Tom, I, I can't thank you enough. Your. Your journey from some, from financial struggles to ultimately business success is really valuable for our listeners, especially those listeners who feel like they're stuck in this rut of undercharging and overworking. And you gave very clear, actionable strategies that can help people shift their mindset, you know, better understand their numbers and ultimately confidently charge what they're worth. So I can't thank you enough for coming on today and sharing more about yourself, more about the contractor fight, and more about how people can really achieve their value. I really appreciate it, Tom.
[00:20:06] Speaker A: I really appreciate you guys having me. It was an honor.
[00:20:09] Speaker B: All right, jb, I'm still thinking about that Christmas morning call from Bill.
[00:20:13] Speaker C: Yeah, for sure.
[00:20:14] Speaker A: Yeah.
[00:20:14] Speaker C: Nothing says holiday cheer like getting yelled at about stairs.
[00:20:18] Speaker A: Dane.
[00:20:19] Speaker B: Yeah, seriously, the fact that he answered the call, that's really, I guess, how deep his fear was at the time.
[00:20:25] Speaker C: Yeah, it's wild. He wasn't just undercharging in terms of money, you know, which talks about. He was actually undervaluing himself and his time and really every direction.
[00:20:34] Speaker B: Yeah, he was so crossed up. It's. He got into it with how he was trying to fix the wrong problems, better proposals, nicer paint jobs, discounts. But he never looked at the price.
[00:20:46] Speaker C: Tag because he didn't believe he was worth more. You know, that head trash idea that he went into, like, that really stuck with me.
[00:20:53] Speaker B: Yeah, yeah, that's the fight Tom was talking about. It. It's not just financial, it's. It's psychological. Right. You. You have to believe that you're worth it. Then just do the math. Math. Math is unemotional. And he said that. And I'm quite sure a few of our listeners, when they think about it, will fully agree with that statement.
[00:21:10] Speaker C: Oh, yeah. Even as a film school guy, I can tell you math is unemotional. It doesn't make it easy, but it's unemotional.
[00:21:16] Speaker B: Well, if it was easy, Tom wouldn't have been on our podcast talking about the worst advice he's ever got. So at least in our case, maybe it's good that it is hard. So a big thanks to Tom Reber for keeping it honest, raw and real today. If you're stuck in that quote unquote busy but broke cycle, maybe it's time to stop pricing like a follower and start leading with value.
We appreciate you spending the time with us today and hope you'll join us next week when we'll bring you an all new episode of the Worst Advice I Ever Got.
