EPISODE 84 – Why Free Is Expensive

EPISODE 84 – Why Free Is Expensive

By mick | February 2, 2022

EPISODE 84 – Why Free Is Expensive |

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Hi folks, welcome to another episode, episode 84. If you're looking for the missing episode, don't bother. We just put the wrong numbers on a previous episode. So one of them is missing, it doesn't matter. This is episode 84 and it's all about why free is expensive.

So this is the Builders Business Success podcast. It's the construction business podcast, I'm Mick Hawes your construction business coach, or you could call me your builders coach, whatever you would like. And the purpose of this podcast is to cover some common and often costly problems that are throughout most building businesses. And the one that we're talking about today is why free is expensive.

And why believing that free is the way to go is going to cost you significantly more than money. It costs you way, way, way more than money when it's bad enough that it cost you money, but it costs you way more than money.

For instance, it costs you quality clients, this free mentality, and I'm gonna explain why in this podcast, this free mentality, costs you quality clients, and instead of quality clients, you get high maintenance clients that are always focused on price and they're problem clients.

They end up being problem clients. It ends up being friction, takes longer than it needs to. They don't get a great experience. It's frustrating for you. It also costs you time and there's a double whammy here because it costs you time to do this stuff that you're doing for free. And not only aren't you getting paid for that time, you aren't using that time for other things that you could be doing that are generating revenue for you and your business.

So that's what we're gonna be unpacking today. We've also got the Q and A session and it's related to the topic obviously. And someone's asked, you know, when I've been asking to be paid for my quotes, why am I getting rejected? Why am I getting told to bugger off?

So we'll be giving you the reason and our process to remedy that. And also the idea of the week and this idea of the week is going to ensure that your business will improve week on week on week on week, it's a really simple idea, but it can be very, very powerful.

*Transcription of the show*

So let's get on with it, before we do, of course, if you are watching live, love to know that you're watching, if you can just put a hashtag live into the comments, and if you end up watching the replay, it doesn't matter because a replay is a replay, but if you're watching live, it'd be great. We've only just started going live into the app. We need to be making people aware what time we do it.

So it's at 10 o'clock Tuesday, every Tuesday morning, Eastern daylight savings time or Sydney time is the simplest whatever time it is in Sydney, when it's 10:00 a.m. that's why we're doing it, even though we're in Hobart. And if you've got any questions like to make any comments, you can jump in the chat. We can see them and we can respond during the live podcast. And of course the podcast will have a replay.

And because you're in the app, you can just simply go to the navigation section, which is on the left if you're on a computer, it's on the left if you're on a phone as well, and you can scroll down and go to the podcast area, and that's got all of the past episodes there, so you can go back and check out a whole bunch of other content, which is awesome.

So let's get into this. It is all about why free is expensive. And we'll just talk about the why, as I mentioned first, because you know free is comfortable.

The challenge is free is comfortable. And what that means is that we're kind of used to it. It's how it's been forever. We think that the consumer expects things to be free. And for the most part, yes, they do. But that's just because they're used to it, but we've found when you give them another pathway, another option, they prefer it.

So, you know, let's not get stuck in this. This is how we've been doing it. So this is how we have to do it. That's why they expected it just because that's how it's been happening.

But when you put a new pathway in front of them, where they see more value, they love it. Absolutely love it. So we've got to understand that free is comfortable, and it's just what builders have known. Free also seems, I'm using air quotes for those that are just listening to the audio version. It seems to be easy.

It, yeah, it does take away a little bit of friction or tension or challenge for the builder also you know, all of our members, when they first present their first opportunity to their prospect for a paid proposal, they get a bit tense, you know because they're not used to it, but it just seems easier to do the free, but in the long run, it's far, far from easy.

And as I said before, you know, we wrongly believe that this is what people want. They actually want value. They want guidance from you. They want support from you.

They want to be understood, like understand that that being understood is a very, very powerful human need. And it is one of the reasons why people want so much information and want to think about things and want to take control, and manage you managing the project is because there's low levels of trust. They don't feel like they've been understood.

So they have to try and protect themselves. If you can just do this at the beginning and have them feel like you totally get them, and they can see that you're an authority with experience and knowledge and you can build a high level of trust.

All of a sudden everything changes and they don't try and hang onto all of the decisions they ask you for guidance, ask you for your opinion. What's the best way of doing this? And the focus comes off money completely.

So they want value. They want guidance. They want support. They want understanding, and they want someone to trust. That's what they want. Does your current process give them that? I suspect not.

Free also detracts from the perception of value. Like, if you believe, what I'm saying is people want value that I want cheap. They want value and free detracts from the perception of value. They want value over price I've said that.

There's tons of examples of this, but the classic example is that there's been tests done in supermarkets all over the place where they'll put a crate of fruit, apples, or oranges or whatever it is. They'll put two crates of fruit next to each other. They're exactly the same. And the only difference is the price tag.

And they'll test this, and they'll put a more expensive price tag on one crate of fruit than the other. Guess which one gets sold out first? Every time, the more expensive one. And I know in your brain, you're going, that's crazy, that's crazy.

Why would you pay the same? Because our perceptions are weird. We perceive that there is more value in something that is more expensive. That is what happens for most people, particularly when it's a big item. When it's a big item, that really means something, the hunt for value is on. And if you can deliver it, it takes the focus off price.

Another issue that needs to be addressed is that many builders don't believe that they're worth it. I mean, I can't tell you how many times that we've done the exercise, you know, quickly type in the chat. What you think an hour of your time is worth?

The majority of time builders come back and they'll put in the, you know, what I call their nail bag rate. Which is what, you know, the hourly rate that they charge you for banging nails in the timber, but they've been hypnotized into believing that that's their worth simply because that seems to be the hourly rate within the industry.

And so that's what I'm worth, but life doesn't pay you for your hourly rate. Like life pays you for the value that you bring, value you bring others.

So if you want to be paid more, all you need to do is be worth more, be perceived as significantly more valuable, and people will pay you more for the value that they perceive. But the problem is that your own personal worth is between your ears. You know, and you've been hypnotized into believing some very, very untrue, destructive beliefs.

And what we've found since we're been doing this, and we've been doing it a long time now, that every single time there is a gap between where the builder starts to feel uncomfortable charging and where your customer starts to feel uncomfortable paying. There's a gap there.

So you can literally increase your prices, start charging for quotes, if you do the quote thing the right way, but you can definitely increase your prices and an eyelid isn't blinked because all you're doing is stepping into that gap between where you start to feel uncomfortable, and they start to feel uncomfortable, and there's a gap there. Step into it, see what happens.

Tell me I'm wrong. Another thing that, you know, with this belief system, and we have conversations about this with new members in particular, all of the time until the penny drops, that they don't see the value that they are contributing to a project within that project management time.

There's tons of time that you put in in the office, talking to clients, talking to subbies, arranging the choreography of trades and the delivery of materials and all of these things that makes a project run smoothly and avoids problems.

A good builder is amazing at that, yet, what do you charge your client for that? And that can save them thousands, tens of thousands in a project, a project management done right. Many builders don't charge for that time in project management.

And guess what folks doing, putting the proposal together doing the quote, that's part of the project management, and you're doing it for free. That's crazy. And it's setting up the wrong relationship dynamic in the first place anyway.

Another mindset shift that needs to happen with this whole, to fix this free thing, to stop doing things for free is that, and you just need to listen to builders language.

They think the project is the prize of being awarded the project. We won the project. We won the job like that language indicates that you think that the prize is the project, the job, it's not. You need to have that mindset shift and finally realize that you are the prize.

You're actually what your prospect is looking for. They need guidance. They need help. They need support. They need somebody to trust, and they can't find it anywhere. It's amazing. And it pains me when I hear this, but our Blackbelt members get customers. You know, customers want them to do their project simply because they are the one that showed up.

They were the one that returned the call. It's, you know, and I say to our guys, please don't let that be the standard that we're aspiring to. Doing what's right. And just doing what people expect.

Let's see if we can exceed that, but people, customers of our members have gone crazy and have been so grateful because they called back, because they turned up when they said they were going to be. I mean, this is how bad things are, that's the standard.

And you can be amazing if you just do, what's expected, like let's lift our game. And so you need to understand that you are the prize, but you need to become the prize.

You need to become valuable from the perspective of your client or your prospect. And that takes a little bit of effort and a little bit of change, particularly in the mindset, developing some skills, but you are the prize. And you've got to develop the confidence.

And there was a fantastic video one of our members in Western Australia put together last week and he just did a video with a white board and all of that and showed to his prospects and all of the people in his Facebook group, what goes into a project, what the costs are for a build, what the responsibilities are for a building business and all of the things that go on in the back end. And he put profit in there and he was proud of it.

And he said, we've got to make a profit guys, because if we don't make a profit, we're not around tomorrow.

We're not around to look, you know, maintain and look after the job and maybe do another project for you or your family or your, you know, our circle of friends in the future. Builders have to be profitable so they can be sustainable. And he was wearing that proudly, put it up front.

And, you know, I was just so pumped to see that because he had gone from being timid and worried about charging and all that sort of stuff, to being so confident and putting that stuff up front and saying, I am the prize. And if I allow you into my business and I manage your project, if I choose to manage your project for you, you are going to be a winner. That was his level of confidence.

That was his perception. That's what I want you to start to build that you are the prize. You're not a lackey. Of course, to do all of the paid proposal and have your customers absolutely love the experience, you've got to present them with an irresistible process. You need to become very, very attractive and irresistible. And as I said, you know what prospects want is understanding and someone to trust.

And if you can put a process together, and the process that we teach in at blueprint is, is called the quality client pathway. And it gives you all of the steps, all of the scripts, you have opportunity to practice all of the skills necessary to be able to put in front of your prospects, an irresistible process. It's very, very different to what they expect.

And I love it. And they're more than happy to pay for it. More than happy. They love it, they think it's the best thing. And they go, why don't other builders do this? That's the feedback we're getting all of the time with this process.

You obviously need to learn some skills within that I've said, and one of the biggest skills is the skill of listening, the skill of really understanding where the people are coming from, not just listening to what they say, but listen to the emotion with which they're delivering the message to you and having the skill to be able to feed that back to them. So they go, I feel understood. You'll see it, you'll hear that sigh.

When that happens to people, they will feel understood. And that sigh is a sound of many, many barriers coming down. And the building of trust. Things can, things will get significantly better after that. You need to believe that you're worth it and you're delivering major value from the prospect's point of view.

And I always, always say from the prospect's point of view when I'm talking about value, because there's a ton of value that you guys deliver your customers and your prospects, but they don't see it. They don't get it, they don't understand it. So there's no point you knowing that, hey, I'm delivering a lot of value here. There's no point that with that there's no value in the value.

If it doesn't seem valuable from their perspective and I keep harping on, what are they looking for? They're looking to feel like you understand. To know that you understand.

They're looking to find somebody to trust. Like, that's just the hardest thing. That's why they ask so many questions and they hold the cards close to the chest. And they won't give you the real budget and all that sort of stuff because there's low trust.

And if you've got an amazing process and irresistible process, that delivers understanding, that delivers trust. All the barriers come down and now we can play properly. They're going to become a quality client.

Do this they'll start to become a quality client. And this why this process is so valuable is that you can get a good person and put them through the standard garden variety building process. And they become a high maintenance, price focused pain in the ass client.

You can get a potentially average prospect at the start put them through this process and they will transform, and they will become a loyal open team member of this project. And they will want to tell other people about how you made them feel. They become part of your attract strategy. They become part of your marketing team by doing this properly.

So hope this made sense. I hope it's got the cogs ticking over. What do I need to do in my business? And as I say, look we're here to help. If you want to get more information about this, if you want to ask some questions, there's a bunch of ways you can do it. Over on the left in the app. There's a part in the nav section that says, get personal.

Open it and just click on that takes you to a form, fills out a, you can fill it out and give us a bit of information about your business. Or you can just simply reach out to me in the chat, like just go into the chat section, find my name, type, type, type. We get into a conversation, more than happy to help in that way.

So please jump into it. Notice there's a couple of people watching live. I don't know who you are, but please make yourself known. Jump into the chat, say hi. And if you've got any questions or comments, love to hear them. While you guys are doing that, say hi, please let us know who's watching. It looks like Matt Old is typing. So Matt's there. That's one of our Builders Business Blackbelt members. And he's here watching the live podcast. Good on you Matt.

Q & A

The question was asked, you know, I liked the idea of getting paid for my quotes and all that sort of stuff.

Why do I get knocked back? Like when I say hey, you know, we've got a fee for our quote, why do I get knocked back? Well, let me try and unpack this for you because it's not as simple as just saying, here's something that we used to do for free that we're now charging for. People won't like that too much.

But you need to understand that in, I always say that people aren't price focused, they want value, but in the absence of value, from their perception, in the absence of value, people will default to price. If there's no discernible difference, they'll just go with price. Okay? It's a little different to the apples, right?

Because they can't ask the apples questions, but they can ask the builders questions. And, you know, they're basically just gonna go with the one that they trust more. And if they don't trust either of you, they'll probably default to price. So in the absence of value, perceived value, people will default to price.

So what you've got to do is change the menu. And I use this, have used this analogy many, many times, 'cause I like, I like it. It's a good analogy. And if you go to your favorite restaurant and you show up one day and the prices have gone up by 20% and nothing's changed, you're not too happy about that. You may stop going.

You probably will at least look for somewhere else, but that's what many builders are doing. They get this whole idea of the getting paid for the quote. And they just, they don't change the menu. They just put the price up. Before it was zero, now we want to get paid for it.

But if you went to your favorite restaurant and you were met at the door and they said, you know, Matt, or Hugh, we're so glad you're here tonight. I'm excited, we've got some new stuff that we want you to experience. And we want you to tell us what you think at the end.

Basically we've searched high and low for some better ingredients, some really nice organic, super tasty stuff. The chef has changed. The menu, we're matching the wine with what you're eating. We've changed the environment. We got some nice music. We got all of this going on and we understand that you're just not here to eat.

We understand that you want a fantastic experience. And that's what we're trying to build here. We'd love your feedback at the end. And so Matt and Hugh are having dinner together.

They go in and they experience this, they don't even notice the prices. Hugh would probably notice Matt maybe not, but you just don't notice the prices because you're focused on the difference of this experience and the quality of it and how it tastes good and how it feels good. And it takes the focus off the price.

The price isn't even noticed. And that's what we need to do with the building business. We need to implement this quality client pathway because it is significantly different from the prospect's point of view. Their experience is very, very different.

So you've got to have a process. And then there are some skills to be able to manage this process that you need to practice and refine. And that's why these two guys are on this podcast.

Like they've got total access to all of the Blackbelt resources and so on yet, they're watching this podcast live. You know, the penny has dropped with them, that the secret to this is continual learning, continual expanding your brain and practicing your skills. It's far, far more important for this 20, 30 minutes than banging nails into timber.

So you've got to practice those skills and keep your mind lubricated with the right sort of stuff. And as I said, you know, if you want a hand to implement this quality client pathway, all in you need to do is reach out. And I've told you the ways to do that.

You can get personal help in the menu, or you can just reach out to me and in the chat. No trouble at all. So hope that answered that question from that Tool Shed member.

Idea of the Week

Idea of the week. We have an idea of the week because we've got a floating light bulb and we like to get a shot of it, but then I thought we might see if we can deliver something that's a value of well, not just give you a shot of the floating light bulb. So here's the idea of the week. And we're doing this.

We started to do this at the start of the year in a very formal way in Blackbelt, is have a focus and start the week with at least one activity that contributes to a major goal for your business. In Blackbelt we call it the wildly important goal, the WIG, and it all comes from a book called The Four Disciplines of Execution.

This activity every week doesn't have to be huge, but you must give it priority, okay? What priority means is you do it first. And the thing about that is it contributes to forming the right habit. That's really why I want you to do this because not doing this contributes to forming the bad habit, contributes to forming the habit of always giving priority to the in the business stuff, the work work.

And if you continue to do the technical stuff like they talk about in The E Myth. If you haven't got a copy of The E Myth Revisited by Michael Gerber, get it. What he's talking about is why most small businesses fail is that we get sucked into doing the technical work.

So the electrician does the electrical work, doesn't do how to build the business work. The builder does the building work and they don't do the building of the business work. The mindset shift, the skill shifts, the processes and procedures. That's what builds the business and gives you more money and more freedom, more choice. You just get sucked into that technical work. Doing this, just this one idea.

What is one thing that contributes to a wildly important goal to my business? What's one thing that I will commit to getting done this week and I will do it first? And it might be a 10 minute activity. It might be a 20 minute activity, but if you do it first, it's done. And you build that bit of progress on the next bit of progress next week, and the next bit of progress next week.

And you'll find, you know, after a quarter after 90 days, 12 weeks or whatever, you have made some pretty bloody incredible progress toward your wildly important goals. And you still got all of the other crap done. In the four D's book, The Four Disciplines of Execution they call what's going on in the day to day, the whirlwind. Like it sucks you in and makes a lot of noise.

It gets your attention and you need to, you kind of get sucked into it. Well, this is just one way to just step out of the whirlwind, just for a little bit. Get something that's gonna make a difference done.

And then you can get sucked back into the whirlwind for the rest of the week, if you like. I wouldn't recommend it, but you know, you could do this every day, you could.

You could have something every day that you do first that contributes to your wildly important goal. But I'm just suggesting let's start with it weekly. Just do one thing a week. Start to see that you still get all of the other stuff done, but you also, in addition, make progress towards your wildly important objective or goal.

We’re here to help

So I hope today, I hope this episode was valuable.

I hope it got the cogs clicking over. Hope it got you to start to think about some questions.

If it did, jump into the comment section, you can go watch the replay. If you're watching the replay, you can still ask questions in the comment section in the replay. You can put posts in the Tool Shed. You can reach out to me on the chat.

There's all sorts of ways that you can get your questions answered, all you need to do is ask them. We're here to help ask the questions. We'll point you in the right direction. Post, engage, ask questions, share. There's a suggestion box.

If there's things you'd like to see in the Tool Shed or things you'd like us to talk about or unpack in the podcast, jump into the suggestion box. Just go up to the search bar type in suggestion.

You'll find the suggestion box, put it in there. I'm gonna say right up front that not all suggestions will be implemented. You know there's just some stuff that I'm not gonna do. I'm just not, but have a go anyway. Put the suggestions in and we'll see what we can do. And as I said, you know, if you need some personal help, there's a link on the nav section over there, click on it. And it says, get personal help. Click on that. And we'll organize a time to have a chat.

Also in the chat section here, and I'm gonna put it in the replay. In the comment section, there is a link, the Tool Shed or the Builders Tool Shed. I'd love you to share that link. If you've got people that would benefit in getting this information in the podcast, being able to ask questions in the Tool Shed, invite them in. I would encourage you to invite your subbies in.

I encourage you to invite other builders in and help us on our mission to change the building industry, to get rid of these destructive norms like free and you know, sailing by the seat of your pants and all that sort of stuff. Let's become more professional. Let's become the servants of great experiences for our clients. So we've got more time, more choice, more money to be able to do better things with the building business.

Hope this has been beneficial. I'm looking forward to next week already. Please ask your questions, get in touch with us through the chat or however you want to in the Tool Shed.

I'm Mick Hawes, Builders Business Blackbelt. Talk to you all again next week. Bye for now.