Take a look at the picture below…
Do you know what that is?
It's an avocado.
Why am I sending you a picture of an avocado?
Well let me tell you a story…
About how this little green friend can help turn your annual profit into your monthly profit.
(if you’re willing to have an open mind)
Let’s begin…
In 2017 the cost of avocados was $3.28 per kilogram.
Fast forward to 2023, they’re now $5.50.
That’s a 67.68% increase over the past 5 years.
Pretty significant spike if you ask me…
But when was the last time you increased your prices?
Would your rates have increased as high as 67% over the last 5 years?
Many owners I speak with hesitate to charge more out of fear they’ll lose too much business.
Which causes them to undercharge and their bank account to suffer.
But if that’s you, pay close attention...
Say a business does 1,000 jobs a year.
Each job is on average $2,000 dollars.
Costs $1,400 to deliver.
Which leaves $600 in gross profit.
Over 12 months that’s $2 million in sales.
$1.4 million in job costs.
Leaving $600,000 in gross profit (30% margin).
Say they spend 25% of sales to cover overheads…
(anywhere between 15-25% is a healthy amount)
That’s $500,000.
So $2M – $1.4M = $600,000 – $500,000…
Leaves $100,000 in net profit.
That’s a 5% bottom-line margin which is a little over the 4.8% industry average.
Now if they take a page out of the avocado playbook and raise their prices even just 10%.
i.e. an extra $200…
It still costs the same $1,400 to deliver each job.
But instead of making $600 in gross profit, they’re now making $800.
Assuming they still spend 25% of sales on overhead.
With 10% higher prices they could afford to do 400 jobs a year, not 1,000, and still earn the exact same $100k in net profit.
That’s 600 less jobs a year without losing any money.
Now, the chances of losing 60% of their customers over an extra $200?
In my experience, highly unlikely.
But here’s the crazy part… let’s say they did…
They’re bank account would look no different having just worked MUCH LESS.
So either way it’s a win win.
You can see what this looks like here:
So listen very carefully when I say this…
‘Price often has the greatest sensitivity to bottom line margin’
Sure you can increase leads, conversion, lower cost of goods sold, or cut down on overheads…
But increase your job value by even just 10% and you could very well double your net margin.
Which is why I want you to get your hands on this resource:
For every price increase, it will show you just how much work you’d have to lose before you made less gross profit.
You can click here to get a free copy.
(no personal details necessary)
In my experience, any clients lost will be the bottom 10-20% that create the most headaches and don’t value your service.
And if you're good at what you do, most people will still want your services.
Don’t believe me?
People buy MORE avocados at higher prices NOW.
Then they did 5 years ago at CHEAPER PRICES.
So update, change and evolve your pricing.
Because the most important part of pricing is winning the war between your ears.
Your mindset.
Instead of letting your pricing strategy turn old, grey, and outdated.
Don’t let the fear of losing clients hold you back from earning good money.
Trust the math.
And at a bare minimum raise your rates to match inflation.
To your success!
Bayley ‘Be An Avocado’ Peachey
P.S. If want help creating a highly profitable business that gives you more time, money, and freedom than any sane person could possible handle. Book a call with my team.
