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Low Prices = Bloody Waters: Ken Goodrich Shares His Experience

From episode: TGMS Ep: 133 Words of Wisdom from the Industry Titan - Goodrich! Part 2

often talk about the low price. You're in the, um, you're in the bloody water with sharks and there's too many in with you. And when you get into that clear water of the higher price, there's less competition. You know, people expect a good company to be higher. Anyway, we hear that often. We just expected you to be higher, uh, because they're seeing value and they're seeing quality and service as you know. And, uh, so it just, it just, it's called freedom. It gave us freedom. When I took your advice and we raised our price, it's freedom. It took us out of the bloody water, put us in the blue water where all the yachts are, and we're enjoying it now. Yeah. You don't let me tell you how I got there. I'll tell you a quick story. The day I got my driver's license, 16 years old, my dad hands me three service calls. She says, now you go run them, get in the van and run them. Cause I could repair an air conditioner by then. Right. So I got my buddy, Bob. I pick him up. I don't tell my dad. I said, I'd pick up my buddy so he can ride along with me. And so the first air conditioner, this is a spring time we get, we go up on the roof and it was, uh, it was one of those, uh, pillow block bearing blowers. And the, it, the shaft that he threw the bearing, all that stuff, the whole blower compartment had disintegrated and it was an old unit. And I said, Bob, you got to go down and tell the customer they need a new unit. Cause I was afraid too. Right. He goes, no, no, you do it. I go, Bob, this is why you're here. You got to go talk to him. You're better talking to me. So it's okay. We're 16 years old. He goes down the ladder. He says, you know, tells the customer that, you know, the condition of the unit and, you know, Ken says he doesn't recommend you put investing more money in this thing. It's too old. You should consider a new unit. And, uh, Bob comes back up in the ladder and goes, Hey, she says she wants it, but how much? I forgot to tell him how much. Well, I didn't know. So I said $4 ,800. So Bob goes back down the ladder, tells the customer, he comes back up with a check. He said, he says, okay, I told her we'd be back tomorrow to put it in. I said, okay, great. So we pack up. We go, we go to the second job, compressor short and old unit. Hey, Bob, go talk to the customer. Next thing I know, Bob comes back up with another $4 ,800 check. Then we go to the third job and the customer says, Hey, I was thinking about replacing this thing before you put any money in it, blah, blah, blah. How much does the new one cost? I said, $4 ,800. So he said, okay, let's just do that. So I sell three jobs on my 16th birthday. You know, the day I got my license, I never sold air disrupt for $4 ,800 each. Right. And so I go back to the shop and tell my dad and he kind of blows toughness. Where did you get that price? I said, well, that's what I heard you charge Mr. Henderson, you know, last week he goes, that was for a whole house and all the duct and it was a bigger system and blah, blah, blah. I said, Oh, you want me to give the money back? He said, hell no. You just learned the first lesson that customers will pay for value and they value us and they value you and they're going to pay for that. And so that was my lesson back way back then that has kind of kept me down that path. And I'm not afraid to, to make a profit. And by the way, let me throw this at you. Think about it this way. And this is why I tell some customers, let's say that your target is 20 % in net income, right? 20 % profit you're going to pay taxes on. Then you pay your typical, whatever, close to 40%, pay some state tax, whatever. So you're, you know, at the end of the day, you're at 10, 12 points, really net net. I mean, we only make 10 cents on the dollar. It's not like we're, you know, making 80 cents on the dollar. We're making 10 cents on the dollar, even by charging correctly. So when a customer comes at me and starts talking, I go, well, look, we make 10 cents on the dollar. Can I make my 10 cents? Like, do you want me to invest in your home by giving you 20 % back? Because if I give you 20 % back, I'm giving 10 more percent than I actually made. And I'm investing in your home for some reason. I'm not that Kirk, but you get the point.

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