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TCF1071: The Truth: You’re 20% Too Cheap (Raise Prices Today)

⏱️ 7:33 🎤 Tom Reber
AUDIO EPISODE
TCF1071: The Truth: You’re 20% Too Cheap (Raise Prices Today)
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Chapters

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  • 0:00
    Profit over Sales
    The episode starts by challenging the notion that more sales automatically lead to more profit, highlighting that many contractors have a 'profit problem' rather than a 'sales problem'.
  • 1:08
    Know Your Numbers
    It stresses the importance of understanding three key financial metrics: gross profit, overhead, and net profit, and advises tracking these regularly to avoid guessing.
  • 2:38
    Raise Gross Profit
    The speaker advises that the fastest way to increase net profit is by raising gross profit, primarily by charging more (at least 10-20% higher) and improving production efficiency.
  • 4:12
    Track Job Costs
    Emphasizing job costing, the host explains it's crucial to compare estimated costs with actual expenses to understand where profit is won or lost and tighten operations.
  • 4:40
    Cut the Fat
    This segment discusses auditing and reducing overhead expenses, comparing it to carrying a lighter backpack for climbing a mountain, to improve net profit.
  • 6:01
    Value Your Time
    The speaker urges contractors to protect their time by delegating low-value tasks, asserting that the owner's time is the most expensive overhead item.
  • 7:00
    Action Checklist
    The episode concludes with a checklist for contractors to implement: know your numbers, price for profit, eliminate waste, and protect your time.

Speakers

T
Tom Reber
Host

Key Takeaways

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Prioritize knowing your gross profit, overhead, and net profit; track these numbers consistently to make informed financial decisions.

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Raise your prices by at least 10-20% as most contractors are undercharging, which is the fastest way to increase gross and net profit.

✦

Improve operational efficiency by eliminating waste (e.g., extra trips, poor planning) to prevent profit from being eroded by inefficiencies.

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Regularly audit and cut unnecessary overhead expenses; if an expense doesn't add value or save time, eliminate it.

✦

Delegate low-value tasks that don't require your expertise as the owner; your time is a valuable resource that should be spent on high-impact activities like leading and strategic planning.

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