How to Build a Profitable Price book in 2026 [FREE CALCULATOR]

Hello, and welcome to our how to on building a profitable price book for your home service business in 2026. My name is Phil Risher, and we got Danielle Putnam with us and Matt Cope. Everyone that join in, if you. If you could. In the chat over here. I see there's some action already, but if you could drop where you're calling from and maybe your. Your business, what you do, it will help give some context to the conversation as well. So while you. While you're hitting the chat, Danielle, Matt, do you mind giving us a quick intro? Who you guys are, what you do?

Hey, Phil, thanks for having us.

Yeah, for sure.

We're gonna. We're gonna fight over the mics right here and the headset and the screen space. This is gonna be real fun.

I like it. Danielle and Matt are brother and sister. Y' all were saying before. Yeah, Pretty cool.

So. So this is easy for us to hide. Fight over the space. I'm just kidding. But thank you, Phil, for having us. I apologize that we're just a gummy. So I'll take it out, and we'll get down to business.

All right.

My name is Danielle Putnam, and we started, you know, Matt and I were both there at the beginning, back in 2011, this really awesome company called the New Flat Rate, because we were a family of contractors struggling with pricing. And so we were looking for a way to solve our company's problems. And when we realized that when we quit trying to sell and force customers into a position that they may or may not want to be in, but instead gave them choices, life got a whole lot better. And it got so much better that we thought, wait a minute, we might be able to share this with others. And so that's kind of who we are and how we got started. I ran my first marathon on Monday.

Nice.

So not like you guys were asking, but I'm limping a little bit today. I was really proud of that. But, Matt, would you like to introduce yourself?

Sure, sure. Well, hey, Phil and everybody. My name is Matt Cope, and I look like the little bitty guy here. I'll back up. So. But no. So I. I'm from the. The field side of the home service work area. So I was a service technician, ultimately became a service manager, general manager, helped the company exit at the end of 2012. And. But all that is really comes down to, really, the topic of today, which is what's changed in the home service space really, over the last 20 years is the key. And then why is it that sales isn't what it used to be. And what does it really mean to stop selling and to let people buy with options? And so when we got our pricing right and we learned how to let people buy with options, we learned that there was also this excitement and it sounds so weird and so against standards in our mind of, you know, how you think people buy. When I say that, we learned that people that spent more money with us were happier. It was a huge thing. Like, we got so many more referrals, so many more five star reviews, you know, so many more letters and just excitement. Thank yous. You saved my family's life. From the people that spent a lot of money. And so we learned that that charging too little can actually have a. Well, not can. Does have a much more damaging effect on your company and your reputation than charging too much.

Yeah.

And so I think that's really what. What brings us together today.

Yeah, I love it. Okay, so I want to get, like, right into the thing because I was at a home service business and it was always like, how do we make sure that as we're scaling our business that our price book is profitable and up to date? So a couple questions come top of mind. Like, should we be updating our price book every single year? So, like, going into a new year, how do we make sure that we have a profitable price book without knowing every single nut and bolt of what we need to do? So if you were sitting across from a business owner, how would you coach them on building a profitable price book?

You want to take it? You want me to?

Well, I definitely want to get into the nuts and bolts because that's something that we hear a lot, especially from, you know, the CFOs and the CPAs that they're tasked with, you know, oh, we've got to create this price book for the company. It's our job to make sure. And so they're looking at all of the tiny little screws and this and that. So I know we will get to that. I want to back up before we do so we can kind of build the scenario. And so, Matt, here we are. H Vac service company. How do we do we update our prices how often?

You know, the reason we exist here, Phil, to answer it directly is because we stopped worrying about what other home service companies were doing, and we started looking at the world of Fortune 500 retail. And so in retail, a question for you is, have you ever walked into a grocery store and all of a sudden today, milk or eggs was more expensive than it was last week?

Yeah.

Has it ever happened multiple times in a year.

Yeah.

See, that's the thing. In the world of retail, prices are fluid. They're changing every day. But yet contractors will go 1, 2, 3, 4, 5 years and not change our prices. And so I actually encourage at least quarterly changes to your pricing. And if you have a whole bunch of service technicians and salespeople on your team, I actually encourage you to have a pricing structure that you can change even more often than that. Weekly and even monthly sometimes, but not a lot think even pennies. If I'm changing pennies, nobody. Nobody complains. But yet, if every time your guys go and open your price book, if the price is different than it was last week, they never memorize the prices. And so since they never memorize the prices, they have to trust it. And so instead of a customer saying, well, Phil, how much is it to this? Them just spouting off what they knew because it' that for the last five years, they say, oh, well, let me go look it up. And so all of a sudden, you become more profitable, not only because your prices are right, but because your team's actually using it.

Yeah, that's a great point, Matt.

It's great. So it sounds like, if I'm hearing you right, you need to build this into your normal quarterly monthly routine of updating your price book and not just letting your technicians or salespeople default to, like, this is just the price and making this big old thing. It's just like, you got to check the price book because that's what the price is going to be. Okay, so how do you go through the exercise of figuring that. That stuff out? I think it makes sense. Like, you want to make sure that it's updated. But is there, like, a certain exercise that you take people through of, like, building this price book or what is that?

Yeah, and I also want to say, you know, we still see so many.

Actually.

Our, you know, some of our team members are talking to contractors all over the place, and they'll say, you know, a contractor could be having an average service ticket of 3, $350. And if they are the big fish in a. In a small town and they're the.

The.

The larger contractor in the area, and there's a bunch of smaller companies that are not, you know, that are. That are priceless, they're really happy. They're like, oh, my gosh, you know, I'm doing awesome. 350 average is awesome. But if the roles are reversed, if they're kind of the smaller company and they're looking at all these bigger guys and they're like, oh, you know, it's 350, but, you know, it could be more. And so they're just not happy with it. And, and so when we start working with people, of course we're still seeing there's a lot of companies that are doing time and material. There's a lot of companies that are doing flat rate pricing, which is great. If that's worked for you so far. We know. And what Matt's saying, with changing prices, to be more profitable, to have a team that you're building that actually follows process. We are very passionate about the power of a menu. And the power of a menu says, hey, let's give the customer the option to buy the service that they want. And so when we work with companies to start building, whether we're working with them or they're building their own, we want to start with that standard of, hey, can we begin a process to offer more than one option on every service call? I'll pause there.

I love it. As people are listening to this, if you have questions, drop them in the chat because I can pull them on the screen and we can ask questions. I think what's top of mind for me is, is how many options should we have in the menu and then how should we go about figuring out, like the bottom tier versus the top tier thing?

Great question.

Yeah.

So if I may here and Danielle, the. So this is one thing that we've studied very, very heavily is, you know, how far can we push the boundaries? In other words, you know, you know, should we, should we just walk in and add a zero on the end of everything that we do? You know, is that too much, too little? And I know that sounds extreme, but it's a real question, you know, like if, if you need $1,000 for something, then why is it not okay to get it? And so to answer that question about, hey, where do we start? So it really goes back to something Danielle just said. She said, a lot of companies are still time and material. Now, our home service company was time and material back in the 80s. So 1980, spend 40 years. We actually converted to flat rate pricing back in 1991. But in the 1980s, when we were time material, one thing we learned about time material is the problem was you could never charge enough to consistently be profitable. If you had one slow season, you were screwed. You were going to lose all your money because your margins were always so thin. There was just no forgiveness. But not only that, Phil, if your time Immaterial. It's really hard to tell a customer on the phone, well, we come out, we're 500 an hour, and we'll just gonna work until it's done because people are like, you're crazy. And so the world of time material started becoming profitable by focusing on, on materials. And they were focused on materials by improving material margin. And so they would increase the material markup, you know, from 10% to 20, 30, 40, 50, 60, sometimes 100% or more. And because they would hide the charge in the materials. And so then that let them continue to only charge, you know, 80 or 100 or $120 an hour. So the customer didn't flip out. Well, but then there was a problem. So we converted to flat rate back in 1991. And it kept our company out of bankruptcy. Because what it did then is it taught us how to take all the materials, all the markup, all the margin, all the labor, whatever we had in overhead, and smash it all into one price and start telling the customer, okay, well the job costs this. And so now we had one price point and the customer didn't break it out in time and material, so they didn't think it was wrong. But what you got to realize is back then, these contractors, we were the industry source of truth. So the customer didn't know if we were pricing good or bad. They didn't know if the parts were a lot or a little. They had to trust us because there wasn't anything else. Fast forward to around 2005 is when the Internet boom really started taking shape. Google became everywhere. It started becoming a household name and it went into people's cell phones about that era. Now we have things like Amazon, we got YouTube, we got eBay, all these things coming in. And so consumers have more, what do you call it, but resources, but not resources, information. They have more information at their disposal. But the issue is they don't really trust it. I mean, they're not trusting, they don't really understand it. So as a flat rate contractor, we learned that we consider flat rate pricing to have died around 2005, because about the time that all this information came out. Now when you would say things like if this was H vac, and you said, well, Mr. Customer, you need to contact her and it's $287, the customer would pull out their phone because they didn't understand what you were saying, not because they thought it was too much money, but they didn't know what a contactor was. So when they put in what's a contactor, Google pulled up YouTube and it showed the little part, showed them how to change it, pulled up Amazon, showed them that it was $7.95. And when they saw the price difference between what flat rate pricing and what the online trusted source said, it made them lose distrust. Matter of fact, one of the largest manufacturers in the world told me the other day that prior to that moment in time, less than 10% of consumers distrusted contractors. But today, over 90% of consumers distrust contractors, and it's because of that reason. So to answer your question, as we roll into the future, what we realize is when it comes to pricing, you gotta stop worrying about parts. You see, we were always focused in selling parts because that's where we always made our money, because we were hiding what we actually needed to be profitable contractor. And so what I encourage everybody and we've got a really simple spreadsheet that we're happy to take you through. If you ever need to see it, we'll take you through it. I think we're even sharing some stuff. Yeah, it's going to be a giveaway today. So it's a big deal, so everybody can have it. But what it does is it focuses on your labor, but not on the labor that you think you need to charge. It actually tells you what you need to charge based on the labor of what you're paying your people. And so like if I'm paying a home service technician X amount of dollars, it's going to run you through a quick calculation that's going to tell you how much you have to charge to be profitable. And then we always set that margin at 25%. So my goal is 25% net profit. And that's what I shoot for. And the reason being is in the home service space. Phil, have you ever seen anything go wrong?

Yes.

Yeah, so the thing is, I didn't set it at 25% because I'm a greedy jerk. Let's just get that out there. I said it there because something's going to go wrong. We're going to have a slow week, a slow month, a bad job, you know, have to fire somebody, whatever it is. And so, but if I can set, set my pricing to be shooting for 25%, then if we land at 15 to 20% by the end of the year, that's a pretty huge win. And so what we want to do is we want to take that, that hourly wage that it costs you to get a really good person, and we use it to calculate how much Revenue that service technician's truck needs to bring in on a daily basis. So then once you know what it is on a daily basis, then it's really easy to set that bottom line option. The bottom line option though isn't, you know, this takes me 15 seconds to change a part.

Exactly.

The bottom line option is the understanding of what's the minimum piece of the day that this entire job is going to take. And, and I don't believe Phil, that you can go to a customer's property, diagnose successfully, close, you know, get approval, get do the work and actually complete it and have a happy customer and be ready for another job with less than about two hours worth of time. And so that's going to tell you that generally speaking my minimum is going to include a quarter of the day plus materials and materials. I just want to cover my materials. I don't even have to worry about parts markup anymore because if I get how much money I need for the day, then parts are just something we use like tools. We just got to make sure we cover them and we don't have to do tons of fancy math and we can still be double digit profit.

Yeah, I love it. So the calculator, I, I put it in the chat for people that they can utilize. Alex had a question here. With fixed pricing, would I base all my pricing on the highest paid technician or variable on the tech that is working the call?

That is a perfect question. I know and the answer is the highest paid or even how much it would cost you to get the tech that you want if you don't have them. So like if you were going to hire a tech that had all the licenses, skills, talents and abilities you need, how much would you have to offer them on an hourly basis to come work for you, for them to consider taking interview. And so I even base it on that. But definitely your highest paid. And here's a simple reason. The reason is even your lower paid people, do you want them to be better? Of course we do. Right. And so picture I'm going to use a, a low number. Let's say that you're paying your, your, your newer guys about $20 an hour. And so but your top guy today might be making 50. Well, I want to be able to pay everybody 50, but they're not worth it because they need some time. So if I'm paying them $20 an hour, but I price everybody based on if I was paying them 50, that essentially allows us to bank $30 an hour as a company to go towards the training budget to get those people what they need to be worth $50, if that makes sense.

Yeah.

So we price for growth.

I love it. Okay, so it sounds like take that the highest paid person. Ish. And then use that or some variants of that. Okay, I like that. Now with, with. So that's kind of get your, your baseline pricing if you're going to be evaluating it quarterly. One of the questions that someone submitted when they registered was how do we account for changing or variable pricing? Make it bake in a percentage cost increase each quarter. And I, I think I have some context on this. Business is a remodeling type of business. So they probably have like bigger jobs that the pricing is changing. Any thoughts on how you would structure that?

Let me rephrase. So let me, let me ask that different. I don't know if I understood that you're saying that this is a job that could take a year and so the price could be go up during the job or is this just throughout the year?

Yeah, I think it's like maybe this job takes a couple months to do and you know, wood goes up the price over here or this thing goes up over here and then maybe that's just about how you present it. But any thoughts on how you would structure some type of a price book or what you would do for that?

Yeah, and so for me, what I always look at is we always look at the law of averages. So. And the last, you know, the last five, six years has been a crap show in that. Right? It's been all over the place. But historically speaking, what do we know? Well, we know in the home service space we're going to historically see about a 6% rise on materials. And so if I have, you know, something, I always price on the front end. So think of today. Let's say that today is, you know, well, we're the end of 25, but let's say it's the January 2026. Okay. Well, right now it may be the prices haven't went up, but by the end of 26, I know they're going to go up at least 6%. So my goal as we're raising prices quarterly is to just raise before we get the price. And so I could either go up 6% now to cover the whole year, but likely I'm going to go up one and a half percent a quarter. And so on January, the price hasn't went up yet. I'm going to go ahead and raise my prices one and a half percent because I know at the end of the year, it's going to be 6% higher. At the end of the quarter, prices still haven't went up. I'm going to raise them another one and a half percent. So what that means is I've been banking one and a half to 3% by the end of the first half of the year, so I'm already ahead. So then if during this job the prices go up a little bit, it doesn't really matter because I'm always proactively raising, not reactively. If you're waiting for the to get the price increase from your distributor, it's too late.

Yeah, perfect. That makes complete sense is be proactive and actually have a game plan for pricing. Don't just wait for prices to go up and then scramble. Trevor also asked a question here, which you alluded to about building this, but I'm just curious on this exact instance, how to price service calls so we are profitable, but also don't scare off future customers. And one of the things that I think y' all are good at is figuring out like how to be the authority in the space and be confident in your pricing and not just like, oh, we have this promo going on for this dispatch fee over here and that kind of stuff. So I want to hear like specifically on service calls and how do you do that so you don't scare people off, but also like make it so that it's good.

You know, I, I love that you looked at me. Thanks for I share sharing the mic here. I know that you're going to piggyback off this and add to it, but yes, that top option, building value. But Phil and everyone, we would like to make sure that we are still providing an option that they can afford. So it's not about being the most expensive and having, oh, we've got so much value. You know, it's gotta be this and we're charging all this. No, let's have a comparable and affordable. We call it the 99 cent hamburger. And it's just an easy example, right there's the 99 cent hamburger at McDonald's because it gets you in the door and then when you're there, you can see, wow, I actually do want more. I don't want to be inconvenienced like this again. I want to make sure that my family is safe. I want to make sure that I, you know, feel good about this, that I'm getting the value that I want and they 80% of the time buy more than that 99 cent hamburger. And so we're not trying to lose money on that 99 cent hamburger. The 99 cent hamburger, it still covers its costs. You can make that hamburger in 99 cents and less. And so you're not losing money. But 80% of the time they are choosing much more. But it does get you in the door. And so we do believe in, with your menu, when you're building your options, in having an affordable entry level to get you there to kind of. Sometimes, you know, even, even when they're calling around, right. They're trying to figure out, can I afford to do business with you? And they call you. I love. Matt says this all the time. And so he definitely deserves to be quoted here. They called you with the intent to buy. They called you because they had a problem. They have the intent to buy. So let's let them know, hey, you know what? You called the right place. I can help you with that. And we do have options for you and for your budget. Now we're going to do a thorough evaluation. We're going to train our team to follow a process, to follow a script, to utilize the system, to utilize the pricing system. So they're not just, oh, this customer doesn't have money. Let me just grab this price that I know. No, they're going to follow the process and give that customer the attention that they deserve. And 80% of the time that customer is going to choose more, higher options. Usually they actually choose in the middle, which is going to be. So, for example, if you have good, better, best, or if you have. With the new flat rate, we've got five options. The middle is actually usually the most profitable. And that's where the customers like to hang out and buy because it gives them the value and they actually can afford it. People love to lie about their budget, don't they?

Yeah. So if I'm hearing you right, Trevor's question, it looks like he's a roofing company, how to price service calls so we're profitable. But also don't scare off customers, is give them an option that makes sense for whatever their price range would be. But also they called you because they have an issue and you need to give them good service by giving them an option, then getting out there and then fixing the problem accordingly.

Yeah. And I can give them more direction if I've got a second.

Yeah, go for it.

So, so Danielle's right. We have to have options, but it's important to know why. And so there's a, there's a book that came out years ago a Long time ago by a guy named Michael Lozier. And it's called the law of connections. And in it, he talks some psychological laws that subconscious buyers use and their triggers that. That make them make decisions. Okay. And so there's. There's really two things going on here. But Trevor's question was about, well, how can I not price myself out of the market is the way I took it. Well, it starts with this is understanding that even with what Danielle said about, hey, let's be affordable, let's just say that you go into a job. I wrote a number on here, $350, I think probably everybody on the call can say, hey, that's really. Probably not that much money. Right? But, you know, to somebody, it is. But one of the biggest problems is that home service providers, whether it's a roofer, whether it's anything, you go into a job and you give somebody a price. It doesn't matter what price it is if you only give them one price. Like, here's the price. The human mind Michael Lozier talks about says it has to have contrast. So the law of contrast says that no matter what price you give them, they have to compare it in order to make a decision. So if you give them one price, then there's nothing to compare it to, right? Oh, no, there is. You see, some of you, you've given this price before, and something you thought was a great deal, you're like, man, I gave him a cheap price because we need the work. And I gave them my best price up front. I even told them I'm losing money on this job just to keep my guys busy. And they still told me I was crazy. Well, the reason is because if it's only one price, the subconscious mind compares to zero. And so the 350 becomes your top option. And compared to zero, that's a lot of money. They had to work for a while for that. Does that make sense? And so it's important to know that whether you think you're giving options or not, you are. It's just the customers creating them in their. In their mind, in their fictitious space. They're comparing you to Amazon, to YouTube, to zero, to anything else that maybe goes through their psychotic brain that doesn't understand what you have to go through. As a contractor. Yeah. So as a. As a trade professional, what I want to do is I want to give them options. And Danielle mentioned we give five. We've got a lot of studies on why that's the best. And so we can take you through that if you Ever want to know. But good, better, best was the original, hey, three options. And the simple fact is the subconscious mind immediately eliminates two when you give somebody three options. And so if you have three and their mind takes two out, that leaves zero options left, because one is not options. It's an ultimatum. And that makes people uncomfortable. So when you have five and they get rid of two, it's still good, better, best. And so just some ideas there.

I like it.

But if my top option for that same call was $1800 and then I had $350 on the bottom, we'll see. Now the contrast difference says, oh, $350 is a deal. But not only is it a deal, I don't want it to break again. I don't want to be cheap. Let's land somewhere in the middle. And so the direct answer to his question is, provide options to know that you're not going to price yourself out of the market. There's more to it than this. But I want to have a top option that's approximately. It can be a little bit more approximately 2.5 to 3.3times the price of your minimum. If you start going like five times the price of the minimum, it creates a problem. So about two and a half to three times the price of your minimum should always be your top option. And then you split everything in between, and you'll usually do really well.

Awesome. That was a very great answer to that. And I think that every single person can take away for their business, however it fits in with that. As you were talking about the five options versus the three options versus one option. Mike, put a question on here. I'm gonna pull it up. So when presenting the price to the homeowner, are there any best practices as to what to show or not when presenting what's included in each tier or bundles? I'll continue reading it here. Essentially, to avoid overwhelm or indecision, I assume it's not listing every individual item in each bundle. I know y' all have a thought on this. So what is it like, hey, here's our bottom price. And then you kind of, here's this. Or do you say, hey, here's the five options. What is it? What does it look like for this.

Of course I want you. That's why I invited Matt on the call today. I invited him today because it's not showing. But he, you know, I invited Matt because we were talking about going into 2026, and he's talking and he. He's our head trainer and is talking all the time with people about pricing. And so he's a wealth of knowledge and the expert to bring to the space. But I know he's going to expand on this and what he's going to say is the importance of building value on the top. So there is a method to the presentation. And that's why we do want a system that we can train our team to follow, is we want to build value to tell the customer the most we can do for them to really solve their problem. And when we build that value and let them know and paint the future and the picture of, wow, this safety and performance that you can have in the future for you and your family. And if that doesn't work, well, we can start to take away from there. But we do start by presenting at the top.

Matt, you know, I was just having a conversation literally 20 minutes ago before I came on this call with another member, and we were talking about, about big projects and on big project jobs, you know, what do we stay away from? Well, so many times we've been taught to teach data. And so, Phil, I don't know about you, but in my early days in sales training and stuff, I was always taught, hey, we have to educate the customer so they can make an informed decision. So to answer this question directly about the overwhelm, number one, stop educating customers. Like, that's the number one thing. We're in a world of information. They have a smartphone with you personally, when you're in a situation, you're going out looking to buy something and you're not an expert at it, you instinctively reach for your phone and you Google things. Don't say that you don't. We all do it. And so. But the thing is, is when you get in the world of trying to educate customers today, it comes across like you're thinking that they're stupid and that they can't make decisions themselves. They survive just fine. They have the information. So the Internet is people's reasons not to have to know things. They don't want to know your job or they would have done your job. And so once we understand that, then you say, well, how can we come across as the expert if we don't educate them? Being an expert, I like the way Tony Robbins says it the best. He says being an expert, coming across as the expert is not about vomiting words on people. It's about building professional trust. And so you build professional trust, number one, by becoming an excellent communicator. An excellent communicator controls things like your body Language, your voice, inflections, slowing down, giving the customer the ability to absorb what you're talking about, letting them think about it and ask questions if they have it, but not assuming that they're going to have them. And then about the overwhelm, I would say it's more about the words that you should stay away from. And so I encourage you to stay away from anything that you could say in the context of I took a look at it and you need this. So if you would say, hey, you need this specific individual think, then what happens is that thing takes all of your expertise and credibility and it throws it out the window. Because I don't need an incredible expert if I just need this. And so if it's all about this, then it's all about how much is that. But if we can get rid of this and instead just talk about their future, in other words, how can I communicate to a customer that paints a picture about after we do this job, not if we do it, not what option they take, but after we do this job, what's their life going to be like? And so we did this in the new flat rate by getting rid of part names and brand names and sizes, and we converted to talking about things in the context of systems. And so like that, you know, it doesn't have to be as complex as that sounds. It's simple. What does this thing we're talking about? What does it do? What's it connected to? So, like in the world of plumbing is a good example. I have, you know, a bathtub. Well, a bathtub has water coming into it and it has water going out of it. So the water going out of it is a part of the waste removal system. The water coming into it is a part of the water, the water delivery system. And so we'll literally talk to customers on that scale. And 90% of them think that you hung the moon. They're just like, I understand you. I didn't understand the other people. Now you always have that 10% margin, though, Phil. You have those, those people that are incredibly analytical and, and knowledgeable and they already read every single Google page before you got there. And so when you talk to them in systems, they'll just ask you some other questions. They're like, so exactly what are you talking about? I mean, you're talking about these parts. You know, what is it? And when you get that people that, that want the exacts, well, then we can give them the exacts, but we just know that, that the step number one is separating the 90% of consumers that they just want you to handle it and you to make the call. And from the 10% that want more data, because you can always give more data because you guys are experts. You have the data, but start with less. Now when it comes to the, the option delivery too, like Danielle said, we always start with your most expensive option first because then everything else provides a relief. Oh, okay. I don't have to spend that much if I don't want to, but I can, but I don't have to. Did that answer everything in there?

Yeah, that was perfect. So it sounds like you start with the top, work your way down, but then don't they ask you questions? Obviously you can educate them, but don't overwhelm them with questions and talk more high level systems. Makes a lot of sense. Alex has a question here that I'm going to get to and if anyone else has questions, please drop them over here. I do think it would be valuable, Danielle and Matt, if I pull up the calculator and just like kind of walk through some of those things to help people after using. Are you cool with that?

Yeah. Yeah.

All right, cool. And everyone, I'm gonna actually put it up here on the screen. So if you haven't got this yet, you can go here and you just make a copy of it. I'm gonna also pull this up because I, I think that it's very helpful. I would want to go through it if it was me. So when someone's thinking about their pricing, can you just walk through this? I know I also put a video on in the chat as well, but do you mind just going through this quickly with them?

Okay, yeah. So first of all, only edit things in green for best results so that the formulas don't get messed up. Okay. But the simple thing is we start with the beginning. So everything else should have been turned to zero there. So but the beginning is just, okay, well, what are you paying your highest paid tech or somebody you're going to want to get one day? What would it take to get them in your market? And so this is also, by the way, how we help companies set prices for their markets. Because this is the really, the number that changes materials change a little bit, but the labor is really what changes the most. And so for example, here we have a technician, we're saying, hey, our top tech makes $40 an hour. So you just put that in. And so then the next one there, the next column is. All right, well, does your company offer benefits now? Standard benefits. There's some Ledgers down lower that tells you what this is. But standard benefits says that, hey, if we're just talking about payroll taxes, that number's 15% on average. So you just leave it at 15%. If your company wants to have four, you know, 401ks, full paid health insurance by the company, all of that, that percentage could go up to about 35%. But most companies in the small business, home service spaces, construction bases are going to be 15 to 20, 25% in that column. So you can kind of pick according to how much you give. One second, we have something coming up on our screen. There we go, that one. That doesn't matter. That's just a recalc. So it's just telling you that once we add the percentage, there it is, then we end up to the hours paid. So this is just, hey, do you work 8 hours a day? Do you work 12 hours a day? You know, what's a, what's a standard day for you? And the reason I've got this here, though, is because I believe that overhead plus profit has to be paid inside 40 hours a week. There's a lot of companies that, you know, in the old school thinking, you go back to the, to the 60s and 70s, you know, you got my dad starting in the, in the home service space, and you know, hell, they worked 100 hours a week at 15 an hour, and then they still ended up at 3% profit. Well, because that's what you do, you just work around the clock. And I'm not saying anything wrong against that. It's just getting harder and harder to get people to do that. And so at which case, I believe that we've got to focus on closing out inside 40 hours so that any of the overtime we do is profit and not required. So there's the difference there. So we put in our eight hours and then you're in column number E there. And what we do here is like, you'll see There it says 8 hours and it says 100 efficient next to it. This is what's the realistic, what's the realistic of how many billable hours a day does the average technician in your trade, in your market, in your area, in your company actually collect? And the real number, if you're a home service company that's running like service and repair calls or even estimates, the number is usually 42 to about 58% efficiency. And so like on that top one there where it says eight hours on column six, go ahead and change that one to five for me for a second. The top one. Now the one on the one line up. Sorry. Yeah, right there. Change that one to five. Okay. That's 63. We can work with that. Change the other one to three, the one below it there to three. There you go. So change it to four. Let's just find where we're around the 40. That's good enough for the show. But generally speaking, I'll adjust that into a decimal. It's usually closer to say three and a half on the bottom one and about 4.5, 4.0 on the top one. But it's going to give you that 42 to 58% range is what we're looking for. But your company could do better than that and that's okay. Use your numbers. A lot of this is about are you in a market where you're having lots of traffic or a big service area? I literally had a plumber at my house yesterday that he told me that him personally has a service area that has over a three hour drive radius.

Yeah. And if you only have two routes, you know you're going to be all over the place.

If you don't have all over the place, that's a big problem. So yeah, we, we got a price for that. So that's what we do here. So then that's just going to do the math for you. So you move past that, it adjusts, shows your efficiency rates, shows what we got to charge. But then this next one. So in column H, it's not in green, it's in pink. You can look at column H, it talks about 2 6, 60, 260 is the average weekdays in a year. Okay. But the issue is, is most home service companies make a huge mistake here. They price their billable hour based on how many days a year that they're supposed to work. But in reality, I've got a friend that's been tracking the average hours worked per employee for the last five years very, very strongly. And he says, Matt, he says for the last five years. And he's got a great company, by the way, profitable company, great company, incredible with numbers. And he says he sees that the Average employee works 16 to 17 days a month, that they're actually productive. He says, because if you factor in I gotta go pick up my kid from school cause they're sick or I had to take a day off work, I don't feel good, or we're just slow. He says we're not billing every day. We think we are. He's like, we're not. And he says it's really only about 16 to 17 days a year. And I mean a month. And so that actually drops the available work days to create capital by 60. Now you can drop as many as you want there. You could say, well, Matt, we don't do that here. You know, we only have 20. But you're probably lying to yourself. And the reason being is you're realizing that we do have trucks on the road for 260 days a year. But you're not taking into account that you're only averaging 80% of them.

Makes sense.

And so that's where that's at. So that's what that 60 means. So then it says, hey, we really only have 200 revenue generators a year, days a year. That puts us at about a 77% actually effective working potential as a company. From there we can adjust out that labor. And so that $40 an hour just because that we started with, before we make any money, before we do anything, it's now costing us between 96 and $120 an hour to pay our people. And most companies don't know this. And so they, they're out there trying to charge $120 an hour. And I was just talking to one the other day, great guy, one of the best plumbers in our town that's making no money. And he's charging like $125 an hour. And he's like, I just don't know why. He's like, I'm bigger than I've ever been. I have the most trucks, I have all this stuff. He's like, I don't have any money. I said, well, that's because you're charging the same amount it cost you to pay them. You know, there's, there's nothing left. Yeah. So I like this term is one of my new favorite terms. Phil, you can only split $100 bill so many ways before you have to have another hundred dollar bill.

That's good. It's very true.

So now we say, okay, well, if that's true, how much do we need to charge? So these next four columns, These next four columns are, if I was going to start a company today from scratch, with no overhead, anything, and I was going to do it right with the focus of being profitable. And I wanted to be very simple at it and not have to be a business major, what would I need to focus on? And I realized that the four columns that need to stay in balance in your business all the time are labor, overhead, materials, and profit. We have to be direct about profit. There's A book called Profit first by Michael McCallowicz. Great book. You should read it. All right, but, so my target, what we're looking for here is really 25% profit, but 25 in all these categories. So if that's the case, and I'm going to shoot for this, this would tell us that our recommendation to have a $40 an hour service technician is that your pricing program should be built at about 380 to, if you're in a high traffic market, $478 an hour. So that's your range. But the amount of money you're looking for each and every day, 200 days a year is 1930, $13 per day, plus materials for that truck. So that's that daily rate. Now here's the thing, though. Some of you, you look at that and scroll down for a second, you'll see how it puts those in a range for you right there. So that it says, hey, you should be priced in this range. And some of you say, well, Matt, but I want the exact number, Phil, it doesn't exist. And that's the first thing you got to let go is control with this. Because I learned we used to have a huge billable hour calculator. You would put every single expense into it. And I finally realized that about 40% of you setting your prices is a guess based on what's going to happen tomorrow. And there's a problem with that. We don't know what's going to happen tomorrow. Right. And so we've got to lean on that high side. So if that, that, that range of like that 300 to 478, if that looks extreme to you, that's okay. So what you can do is you can actually go back into that billable hour calculator. You don't have to now. Yeah. And you can just adjust the labor percentage. And so at the labor column, that's at 25%. Just raise it to 35%. And what it's going to show you is profit's going to drop to 15%. All right. But when as profit drops and the labor percentage goes up, your billable hour goes down. And so you just, you can keep raising that labor percentage until the billable hour gets to where you're comfortable. Comfortable. But it's going to show you that you're at about 3% profit.

Yeah, that. Juan, he put a question in here. Are those percentage good? Rule of thumbs.

Yes. And. And a good friend of mine, that's just incredible. Business guy makes money at everything. That's where I got him is he told me, he said, matt, if you're going to make a business and you're going to start a business that you know is going to succeed, he says these are the four columns. They got to be in balance and they would be at 25%.

Perfect. All right, so if you got that link, I had it out there. If you have any other questions about this, drop them in the chat. There was a question here by Alex, which I think this was perfect timing for, to show this question, which is, can a multi specialty company use flat rate pricing? If we handle service calls with one or two trucks, a tech and a helper, but also run three trucks or bigger jobs that take two days or more, like remodels and new home builds. To me this sounds the same thing as like H Vac, you got your service calls and you have your installs kind of thing as well. What are your thoughts on this? Is you can write, run flat pricing on this. If you run service calls and do.

Large jobs, yes, you, you can absolutely do a flat rate. So we have an equipment pricing system. And so for those larger jobs you can. Matt, help me out here.

So the, the simple answer is, is a thousand percent, but it's all about your daily rate. And so when you're, when you're bidding these big jobs, you still have to be getting your daily rate right? Now the big difference though is, is technically their efficiency does change. Because if I've got a day, a job that takes two or three days, my techs are on it all day long, right. And so we're not driving from job to job. I'm not having to buy additional leads and things like that. And, and so how much money you have per person might go down. Excuse me, but normally you have more people on that job. And so like in, in my company, we had daily requirements for service, so your truck had to bring in this much money every day, but then we had daily install rates. And so as an install crew, it didn't matter if you were the same install crew, but if we were going to bid a job that would tie crews up for the day, what you got to realize is those crews also aren't out there selling other jobs. So we might actually lose opportunity because you're tied up on remodels and eventually you run into that and you realize you have to departmentalize and have full time remodelers and full time service so that you stop losing calls. But in the meantime, it's what's your daily install rate? And so in my company, an install crew included two people, so that might be tying up two trucks. And so we had. This was a while ago. So this was back, you know, we sold out in 2012. And so back then, our crew rates were 3, $900 a day. And so we had to have 3, 900 a day for an install crew. But my Service techs required $2,500 a day at the time. And so technically, it was cheaper for an install crew when you added all the people up versus just the service guys. And so that's the way that I would do it is I would just price it on a. On a daily rate of what is your install crew day. And we would allow install crews to sell out a requirement of a full day minimum. But then we could do half days after that. Like, you could sell one and a half install crew days, but you couldn't sell just half of an install crew day. That makes sense.

Yeah, it makes sense. And this is the question asking, which is basically two crew team members, $4,000. And that's how you can account for the days, which is what you're saying.

Yeah. And it could be a little bit less than 4,000 because your efficiency goes up. So if you went back to the mobile, our calculator, and you adjusted your efficiency, which is the hours sold for the day, if you adjusted that back to a maximum of about seven, well out of eight, a maximum of about six, six and a half. So you're even in the installation crew is never going to be more than 80% efficient because there's always somebody standing around holding the shovel.

Yeah. Launch drive time.

Exactly.

Gas runs. All right, JG asked a really good question here. What do you recommend for pricing maintenance agreements and maximizing revenue on those calls? Because this is a loss leader sticky. I'm sure you all hear these things, but what would you say to JG about pricing this and making sure that it makes sense?

Danielle, I'll let you help with this, but I'll give a piece of it. The piece here is you got to decide what selling a maintenance agreement means to your company and what your objective is. So we've proven you don't actually have to lose money on them if you're selling them to your customers. So, like, if I've already done work for you as a customer and then I bring my maintenance agreement to you, you're not going to go price shop it because you're signing up because you already love us. And so I have companies that do that after they create the Relationship, that price, you know, as low as if we're talking about like residential service work, even, you know, as low as say $200 a year for a once a year visit. But I have some that do up to, up to like $1,000 a year for a once a year visit. And you're like, do people actually buy that? The answer is yes, because they're not out there, you know, price shopping it. They're buying it because it's important to you. I like somewhere in the middle. I don't want to lose money. So I'm saying, but I don't have to make a lot of money on it either because it's going to keep my trucks busy, it's going to create opportunity, it's going to maintain that relationship. I was just showing somebody the math earlier that if I have a comp a customer on a maintenance agreement for 15 years, the guaranteed revenue, the guaranteed revenue is over $30,000. So if I can keep a customer over the course of 15 years, we're gonna make $30,000. So that can play a difference in how much you charge. So for me, I want to make sure that, that I'm, I'm limiting the amount of visits and that's going to get a lot of slack from a lot of guys who like, oh, go 14 times a year. We, we've proven at this point we have the data to prove that the fewer annual visits literally increase the amount of revenue we get from the customer because they don't feel nickeled and dimed. And so the highest average ticket in the maintenance agreement world comes with a once year visit. But you might have to change what you do for it. So I would say consider adjusting what you're doing on your visit and then price it of what it takes to put a truck in the driveway for the visit. And don't worry about a bunch of extra profit. Get that by being there for the customer to pick up the 30 grand.

Yeah, we have a saying, you can't get lifetime value without a lifetime relationship. And it's like you gotta make it all work and build a relationship and go from there. But I completely agree with you. Someone asked here and maybe, maybe they misunderstood what was being explained. But how do you account for office staff with flat rate since the calculator is based on a test tech? From what I understood was that the overhead is built in for the staff. Is that correct?

That's correct. So your office staff is your overhead. But now keep in mind best practices. Phil, you might have some, some feedback on this, what's your field to office ratio that you recommend? Do you have one?

Yeah, well, when I was at a home service business, we had six office staff to 40, 30 team, 30 field team members.

Oh, that's, that's great.

Yeah, that's great.

Yeah, so that's, that's my preferred is one in the office to five in the field. Yeah, but I don't want to go lower than one to three. So one, one person in the office for every three people in the field is a growing company. But if you had 40 in the field, then you definitely should have been able to maintain with technology and software and things like that, that 6 to 40, that means that's up profitable company for sure. But 1 to 5 is the goal. 1 to 3 would be my minimum. And if you're, if you're in that range, then overhead accounts for them.

Yeah, perfect. And that's why those percentages are built out there. But obviously, you know, you can adjust them accordingly if you trying to scale and you need more salespeople or something like that, I guess. Okay, so that is the questions that have been in the chat. If you have any other questions, please drop them in there. I have a couple other questions here that I just wanted to ask you while we have a couple more minutes. So, so from what I'm gathering, you get your, your, your rate from this calculator. But then how do you attribute it to like a new install, like your equipment stuff and like other bigger price book things? Once you know this number, then you just build it into your price book from there. Does that, does that make sense what that question is like, you know, your burden? Yeah. Okay. I'm curious of how, how someone takes that and then applies it to their business for selling stuff.

Yeah, great, great question. So, for example, when we help people set up their pricing, we're looking for a couple key things. And one is that billable hour. And so that's why we use the calculator to get that starting point, that billable hour. And then from there we want to know where they're located, where are the taxes in their area, what are the tax rates, and after that, is there a service charge or a dispatch, you know, show up charge is there if it's going. If we're talking about larger charge, larger, you know, equipment installs, more commercial jobs and things like that. Is there anything else in there? Is there any kind of an estimating, you know, cost or. We work with indoor air quality a lot too. And so sometimes there's a Discovery cost.

Exactly.

Right, right. Hey, we're going to do discovery for seven days. And so during this, this discovery time, there's a charge there. And so once we've identified those few little pieces, then we can go and we can build in the pricing. And so you're going to take that paired with the material for the job and how you want to mark it up for large equipment. There's a little bit more in there, right? What kind of equipment do you like to use? What's the box costs? How do you mark up that equipment? And so yes, there is some thinking and some strategy, but it starts with the building blocks of what we need per day. What we need is the billable hour, what we need our efficiency to be. And then we begin to build it out from there.

And on the, the short of it too, the again, it's all about as a company, let's, let's take a big number. A lot of companies on here probably aren't this big, but let's take a company that's, that's an easy number. It's like $10 million. So if you take a 10 million dollar a year company, that's $50,000 a day is what they have to generate. And that's a lot of money. Right. And so all of these projects have to be a piece that makes up that. But then you know, you can say okay, well do I just take the 200 working days and that by the amount of money we want to do and then that how many jobs a day are we completing? And let's divide that out. Theoretically you could. But we also know that most companies do about 70 to 80% of their high margin work in a specific given amount of time. Like we have our busy seasons and our, and our slower seasons. Right. We just do. And so we got to take that into account. So we really do that with margin and so on big project jobs, on, on your H Vac, installs, your roof replacements, all, all that stuff. What's the margin you're shooting for on those? And with margin, I shoot for probably a lot more than most companies get. I like to see 65%. And, and the reason being is because as a company, you know, homeowners and stuff, they'll be like, well how can you charge so much money? You know, I mean, you were only here for this amount of time. And what, but what I've learned in business is we're not charging for the amount of time we're on a job. We're charging for the amount of time we're not on the job because, you know, corporate America, they go in and they get their salary and they get to work all day every day, but we don't. And if we're gonna be there for the, for the public when they need us, we have to price so that we can pay our people all year long. And so, like in my home service company, that's something else we did is we guaranteed that we would maintain at least 30 hours a week to all of our employees, even through slow seasons. But then the exchange was they had to be willing to work a little bit extra when we were busy. Right. And so we'd say, well, you got to be willing to work 55 hours when we're busy. And so I think the simple answer to that is there's an exercise that you can do that I could help you find some resources for if you needed them. But, but it looks at your historical data of going backwards and isolating what percentage of your revenue is every month in your company, like historically. And then we can increase the growth of where you're going and do the math to find out how much you have to have. And ultimately, I would kind of price in the median of, hey, if I'm going to, if I'm going to make the revenue that we mean need, including profit, then even when we're only 75% busy, how much revenue would we have to collect? And I'm always going to be based on that for my bigger projects. And I'm going to say, hey, yes, we're overpriced for peak season maybe, but we're underpriced for slow season. And we just have to kind of maintain that, that median margin.

Yeah, I love it. Well, there'd be questions for days coming in, but if we're at time. So if someone wants to reach out to, I'll put the website thenewflatrate.com in the chat. Is that a good starting point for people who's a good fit for this? Where should they go?

Yes, absolutely. Thank you for putting that in there. And then they can email us. Danielle athenuflatrate.com matt@thenew flat rate.com you know, we love to help people. Specifically today our price book serves heating and air electrical, plumbing, chimney, indoor air quality contractors specifically for service and repair and also equipment replacement. But we are working on upgraded platforms right now that would go into any vertical. And so if you would like to be a beta participant and bring your trade into this and be on the new platform, shoot us an email Let us know and we'd love to work with you to set up a price book specifically for you. This new platform we've been working on for all year actually and it's just rolling out in beta right now. And so that's going to allow us to really serve everybody with all the stuff that, that we've been learning and so awesome.

We also, Phil, we do quarterly leadership growth summits. We actually go out and and tour business owner facilities and help these contractors get their pricing right and get their systems and processes in order for growth. And so if anybody is interested in seeing more about what we do and would like the ability to go and tour some of those, we got one of them coming up at the end of January. Just reach out. You can even click on that new flat rate.com and click get demo and you can select some times and stuff to talk to people. But in there there's a place for notes. Just throw in the notes there that you would like to attend a growth summit and they'll get you in touch with our department. They can get you information to that.

Awesome. Thanks so much guys. Thanks everyone in the chat. I appreciate everyone being engaged and excited about this and look forward to crushing it in 2026. Happy to be a resource. Thank you everyone.

Thanks guys. Appreciate you, Phil.

Yeah, you got it.