The #1 Mistake Contractors Make When Booked Out

Mike, what if I'm at capacity and we're just trashing every property's budget hours? Like all the properties are meeting above expectations, do we still raise prices above inflation? Thanks. Yes. So basically the question is, if I'm at capacity, in other words, I cannot do any more, serve any more customers without buying more trucks or hiring more people. That's what capacity means. And you're crushing budgeted hours. Great. Do you still raise prices? I actually think these are two different questions. So first off, if you're just hitting up like just beating budget hours all the time, what you might actually want to do is increase your hourly rate. Now that does not mean increase your prices. Let me be clear. So for example, if I'm charging someone $70 per hour that I am calculating budget hours based upon and they are $140 mo mo or any sort of service, all right, they're $140. I'm calculating two budget hours based on a $70 per hour rate. So the alternative is raise your prices to a hundred dollars per hour. Don't raise the price to the customer. So it's still 140. But now instead of charging 70 per hour per budget hour, I'm going to charge a hundred. Well, now the budgeted hours on the job just went from 2 to 1.4. The price to the customer didn't change. So I do like the idea if you're just trying to level set budget hours because you want budget hours to be accurate. And so sometimes what you actually do is increase your rate but not change your price. So the price, the customer never changes, but your rate changes. And therefore the budget hours assigned to the job do change. And I do that to ensure that budget hours are accurate. I never want my crew just to think like, oh yeah, we just crushed budget hours, but like we beaten half the time all the time. No, like I need the budget hours to be somewhat accurate for scheduling purposes and so that I don't underschedule my, my crew or just start to be like, well, yeah, they complete like 12 or 14 budget hours and an eight hour day. That does not make any sense. Like one off times. That happens. Yes, but if you consistently every crew member is doing that, you're going to mess up your schedul. It'd be hard to. It doesn't make sense. So in scenario one where we are crushing budget hours and we do not need to raise prices to customers, I'm just going to change the rate. The second thing is, the second part of your question is if I'M at capacity and you know, we're doing, we're making good money. Like, I don't want to buy more trucks or hire more people. What do I do? Just raise your prices. Keep raising your prices. You're in profit mode. And so this is a good place to be. And that is like, hey, I don't need to.

Get more customers. I have plenty of leads coming in. So what do I do? I raise prices until I decrease my close ratio to the point that I am just simply replacing Churn. So if you're losing five customers a month, for example, I just need to get five new customers per month, which means if you're getting 50 leads, I only need a 10% close ratio, which means my price could be very, very high. So the advantage of being in profit mode when you're at capacity means that, yes, you raise prices whenever, whenever you hit capacity. Very good place to be. At what point do I make the decision to get a second truck? All right, Jason, this is back to capacity based growth. You are making the decision in this point to when you hit capacity, you're going to expand, you're staying in growth mode, which is you're going to extend capacity, that is buy another truck. So you might, your capacity right now with you and one employee might be 20, 25 thousand dollars a month. By buying a second truck, you. You extend that capacity to 40 or 50 thousand dollars per month and you're in growth mode. Right. So at what point do you do that? I would say when you have a full time employee in your truck with you all the time and you're still not able to get to all the jobs. You're booked out two weeks and leads are pouring in. Good idea to start thinking about growing to another truck if that aligns with the goals of your business. If you're trying to expand and get more trucks or maybe just raise your prices like we just talked about with Wonder. Next question is from Louis from Turf Green Lawn Care Services. Hey Mike, thanks for the value, for all the value providing your videos. I've learned a lot from you. I really appreciate if you could take a quick look at my website, let me know if any suggestions for improvement. I'm always looking to make things better and more effective for my lawn care business. Okay, let's give it a shot. So just for everyone watching that might not know I am fully biased because we run home service web design and lawn care web design. So I'm just fully biased. Just keep that in mind. Okay, so a few things. Let's get started.

So, okay, I'll get nitpicky because like overall site looks good. So I give a solid pass on this. First off, usually putting their email like all this text isn't necessary. Just put your email with a hyperlink to the and put this behind it. Just from a design perspective. There's your client hub that's going to copilot. Very good. Okay, this part is the part I would fix. So get your instant lawn care estimate. I see what you're doing. You're getting their email first. I would. Instead of saying, you know what an instant lawn care estimate is. They don't. I would rather say like either. Like get your pricing immediately. Potentially. Just be careful. This wording. Like the reason I'm saying this is we just nerded out about this forever with Augusta and we finally have added a banner similar to this. People are. When you just ask for their email address, they're a little weary sometimes. We have noticed sometimes when you like, for example, if I'm giving you an estimate for your lawn, let's just say because you're doing lawn care, do I need your email address to do that? No, I don't. I actually just need your address. And so we really, we really try to test this and like, what's the first thing customers are willing to give is the thing that they know is required to get the quote done. And so asking for their. Their. Their address. I'm not going to go through this workflow, but if I did, like, it just doesn't make a lot of sense to a customer when they look at this, like, get an instant longer quote. Why do I need to give my email address? People are also very defensive of any sort of contact information that you could then down the road, spam. So I would consider starting with their address just as a side note. And then yeah, like, instead of just saying these words are getting instant longer, it might be worth saying even like get a mowing estimate in two minutes or something like that. Just be careful with what using terminology makes sense to you, but not them. Yeah, this is. This looks really good. Really good site. I would say that you're. You're spreading yourself out pretty thin in terms of service area. Just like, this is not really so much of a. Okay, where did this go? Oh, just takes you back here.

Something's messed up with this banner. This banner here.

Simple design thing. I think be careful that banner. I really like the trucks. I like you showing the trucks in the videos. Like, you know, obviously I'm a big fan of Showing your trucks and your branding. So that's very good. You got. That's very good. Fantastic. Yeah, I give this a solid 9.9.2. Very good, very good. One thing I will say is I would make different pages for mowing and this one. So for example, you have turfgreenlawn.net instead of doing slash services, do slash mowing and do slash rub trimming and slash bed weeding for example. Because people are searching keywords like mowing, lawn and lawn services and you want a service page that matches that. So I would make a different page. Right now you have a one page website essentially. Let me just see here. Yeah, you have a one page website. So this is like an entry level website. How we look at it like home service web design is you have one, you have one domain, you have turfgreenlawn.net I would recommend making an about slash about us a slash mowing, a slash shrub trimming a slash bed like bedweeding. Each of your services should be a different page, a different service page from an SEO perspective. So all right, I have to reduce my. After seeing that, I have to reduce my, my thing down to an 8.2. Sorry. The reason is because I do want to see different pages for every single service page. It does help with SEO and keywords significantly. Also from a dot net perspective, I'd be trying to get your.com if at all possible, just from a general domain kind of prioritization perspective from google.com, generally outperform when we kind of split test the two of them. So I would recommend trying to find a.com if possible. All right, Cody McLeod, last question of the day from Proscape Lawn Care and Landscaping. When doing a price increase mid season, how do you contact the person and what do you tell them? We told them the prices would stay the same this season, but I feel like in a month or so we'll be way over capacity. We also don't have everyone's email. What is a good percentage to increase without losing too many clients? We have roughly 300 million clients. So few things. Number one, got to get everyone's email. So I really hope that you're collecting every person's email. You know, in my opinion, no one should be getting a, an account set up without an email, a phone number and then some sort of payment method on file, whether it be credit card or achieve. This is literally a toggle inside of copilot to make it where they cannot accept the estimate without putting a card on file. Like and it's seamless now, like the way they check out. So there's really not an excuse. I would recommend emails. At least get their phone numbers so you can text them. It'll double your, your response rate from customers because only 30 to 40% of people will open up an email. That's like the average open rate. 99% of text messages get opened up. So like you will increase your close ratio. You will increase them. How fast you get your, your invoices paid, you'll get all communication sped up massively with text messages. Like the response time on an email versus text message from customers is dramatic. Between an email and how long it takes, many times above 24 hours versus minutes on text message many times. So highly recommend using text messages. And what I would say in terms of price increases is you need to. I would recommend getting the point where let's say you have 300 million customers now. Let's say your capacity is 320. Get to 320 and then get a little bit above capacity. Like, we must lose customers. I have been to believe that if you need to lose 20 customers, you will care less about how you roll out this price increase. You'll be like, look, we have to raise the prices. Otherwise we will not be able to serve all these customers. We do not have capacity, we do not have the trucks, we do not have the employees to actually get the work done. And so is there a right way to do this? Yeah, like you explain to customers, this is the new price, here's why. And we're rocking and rolling. You don't know, don't need to contact us. You don't have fill out a form, you know, like, look, and if you want to be really nice, say something along the lines of, hey, if this is going to cause undue financial stress for you and your family, we don't want to lose you. Please contact us and then give them like an extension on their current pricing for a couple of months. That's cool. If you really are concerned about losing customers, do that. But the vast majority of people that I have seen raise their prices, if they do not raise it by at least 15%, regret it because they raise it like 6 or 7%. Like, oh, no one left. Or like a couple people left. Yeah, you could have raised price by 15 or 20% and probably very few more would have left. And usually it's the customers you don't want. So yeah, I would recommend raising by at least 15%. I would raise once you need to lose customers because then you like, actually are hoping some leave. And if you're you're really concerned about this raise on 100 of the 300, so do 100 and see what happens. Okay. Five people out of 100 left. Okay, great. We can kind of assume that if we do it on the other 200, about 10 people will leave again. They will probably be your customers that cause you the most pain, you already kind of want to get rid of, etc. So once you are above capacity, raising prices is not an option. And how you do it becomes less relevant because you need to lose customers to make way for new customers that are willing to pay a premium price. All right, everyone, I hope you have a fantastic rest of your weekend. We'll stay in touch, and we'll see you next weekend.