How to Raise Margins with a Simple Pricing Strategy

Greetings Operators!

Well, its been about a month since the last update. I ended up having some serious health issues, resulting in being rushed to the hospital to keep my breathing going. I am on the mend now and feeling better than before.

In the downtime, I had a LOT of time to process how the SMB Blueprint can be even more helpful to small business owners.

I even had a few small biz visitors while down that hashed out some interesting concepts. I realized there is so much more that is part of the “the system” that have never formally written about (just in talks, speeches, and coaching I do).

I am going to try to write about all of these over the next few weeks and layout a more structure approach to scaling your operation!

ps. Thank you to all who reached out while I was down for the count. The rest and thinking time was productive and I am excited to be back and build businesses with ya’ll!

Read | Watch | Listen
Level Up

• 📖 Most of my twitter posts and articles are written in much more detail at joshuaschultz.com - don’t forget to check it out!

• 📺️ A great, short video on writing procedures that actually work!

• 🎙️ Any pod that focuses on Cost Control is a favorite, and this one does not disappoint. The Fastenal Story!

THIS WEEK
A Few Things You May Have Missed

Trust reduces complexity… where you can build it and keep it.

Secure systems require a bit of chaos and change. Think about this for your business systems.

How to source deals in a competitive market, and the power of simple 5S in controlling a workspace!

What simple visuals can do for your workplace!

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Coaching Sessions

I currently work with CEOs and COOs to help them build a scalable operation. If you want to see if this arrangement is right for you, book a quick call and we can talk about

• The SMB Blueprint

• How it helps scale

• If the coaching or consulting engagement is right for you

• How I might help you besides any of this!!

I only take on 5 at a time given the actual businesses I am building, but these tend to be great and high leverage 3-12 month engagements for my clients!

MAIN ISSUE
Why Every Business Needs a Good-Better-Best Strategy

Are you leaving money on the table by not offering premium options? This week, we're diving into a simple yet powerful pricing strategy that can boost your revenue without requiring any new customers.

🎯 The Big Idea

Stop guessing what customers will pay. Instead, let them choose their investment level by always offering three distinct options: good, better, and best. The reality is, many customers will pay more, for more value, if given the choice. Most never give them the opportunity!

This works in

• Industrial B2B

• Manufacturing

• Home Service

• Retail

• Restaurants

• Healthcare

• etc

I’ve used it everywhere successfully. Its not always pitched as Good, Better, Best… sometimes its

• Add ons

• Value Add Services

• Alternative Distribution Channels

• Alternative Brands

But its all the same… alternative ways of packaging a core product for more value to the customer and more margin to the supplier.

Example: I used to sell fasteners. You could either

• Buy the fasteners bulk in boxes of 10,000. OR

• Buy them bagged in bags of 100 (the line use for the day), lot tagged with all material certs traced to the bag, APQP docs delivered via email on each delivery.

• Additionally, you could get them by VMI/Consignment

A perfect example of good, better best, with a mix of services and distribution method!

Get creative with this and you can really start to raise your margins by doing better for the customer. Listen to what they want, take work from them and pull it back to you, and make their lives easier… said another way: ADD VALUE!

💪 Why It Works

Think about buying a TV at Best Buy. You can get:

* The basic model ($500)

* The same TV + sound bar ($800)

* The premium package with installation ($1,500)

Key Insight: You never know who wants the premium package unless you offer it.

The Breakdown

The reality is, there are a few groups of buyers of any product or service

1. There are those who want a quick, cheap fix to get buy. This is the bandaid the option

2. There are those who want the problem fixed, right, and to not have to worry about it again

3. There are those who want premium attention, premium solutions, and full solution (this is usually related to how they see themselves).

👉️ Here is the key fact: Margins increase as you move up that ladder

If you assume everyone is cheap, you’ll miss your highest margin segments.

If you assume everyone only wants what they asked for you, you’ll miss

• getting new customers (cheap side) that may become more later (think LTV)

• getting higher margin business because you didn’t ask

You need to always present all the options, to everyone. Then, you give them what they want, happily, with no guilt on what they chose!

🚫 Common Mistake to Avoid

Many salespeople pre-judge customers' budgets. 

I recently needed electrical work done, and I happily paid extra for wiring across the attic, directly from the main box. It added quick a bit, but I wanted it done right. The previous electrician only quoted from a nearby outlet.

Don't make this mistake!

📊 Quick Implementation Guide

1. Basic Package (Good)

• Solves the immediate problem

• Attracts price-sensitive customers

• Gets foot in the door

2. Standard Package (Better)

• Your current core offering

• Most customers land here

• Solid value proposition

3. Premium Package (Best)

• All the bells and whistles

• Highest profit margin

• Peace of mind guarantee

👉️ Tip: For the premium package, add items and services that have little to no marginal cost for you, but add immense value to the customer.

🛠️ Tool of the Week

The Package Builder Worksheet

• List your current offering

• Add 2 premium features for the "Better" tier

• Add 3 premium features for the "Best" tier

• Set price points with 20-30% jumps between tiers

💡 Quick Tips

• Present all three options every time

• Make the differences clear and valuable

• Include future benefits in premium tiers

• Document which options customers choose (This becomes extremely powerful for dialing in your process, modifying your offer, and further optimizing your margins and volume!

⚡ Real-World Example

HVAC Service Calls:

1. Good: Basic repair ($200)

2. Better: New Unit/Component + 1yr Membership ($600)

3. Best: New system + 10-year warranty ($3,000)

🎯 Action Item for This Week

Audit your current offerings and create three clear tiers. Test them with your next 5 customers and track the results.

📈 Success Metric

Look for 15-25% of customers choosing your premium option. If it's lower, your premium tier might not offer enough value. If it's higher, consider adding an even more premium tier!

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Quick Win: Start offering your premium option tomorrow. You might be surprised how many customers choose it.

💡 Forward this to a friend who needs to stop leaving money on the table!

AI IN BUSINESS
Writing Quick & Perfect Guidelines For Our Documentation

I have been working with 3 new companies as Operating Partner recently, and find myself quickly scaling out their documentation. One of the key docs I keep creating is the “Guideline” doc.

Its not quite procedure, its more a reference on how we do things. Its more policy, than procedure, but its niche to an area, rather than the whole company (like a parking, overtime, or holiday policy might be).

• How do we manage tasks on Asana?

• How do we think about Dispatching Technicians?

• How should we vet new deals in the Sales Pipeline?

To do these with AI on the fly, I’ve been taking explanations in emails and slack and just pasting them in with this prompt:

Your task is to write short policy or writeup about a niche topic for my business.

I am going to give you my thoughts, and I need you to construct a writeup that clearly delineates the following:

1. the scope - what its related to
2. the directive and/or policy
3. the specifics - this should include specifics related to the thought, instructions for most common questions or concerns, clarity on ambiguity, and instructions for edge cases.

Be sure to fill in any gaps I may have missed so its a complete policy.

Its been fantastic!

1. Grab the quick explanation

2. Add the Prompt

3. Add to Documentation

4. Link back to the key Procedures or Processes!

Done!

MACRO WATCH
Liquidity

For the last 10 years, liquidity has lead the business cycle… for better or worse. By watching liquidity closely, we can get hints at ISM and other key business cycle indicators.

As rates are being cut globally, liquidity is on a secular rise again.. this means expansion. Not instantly, not consistently.. but secularly.

You can see this flowing into the credit markets as many of the stress factors are getting better. Consumers (credit and mortgage), as well as businesses (bankruptcies and rates) improve in underlying condition.

So what does this mean for business owners? When ISM turns up, and credit markets are healthy, you see an early business cycle start to develop. So, a few things:

1. Stabilize Process: As I stated months ago, the time to find great workers as they were searching for work is in the last quarter. You want to stabilze and train your team well now. Coming up is the time to collect cash, not change process, not do massive investment, not turnover your workforce and spend time/money training

2. Inventory Planning: Prices are still falling right now. Prices dropping along side healthier credit markets allow better terms to stockpile a little heavier on inventory. This will allow slight margin expansion in the ocming months years as liquidity → investment → inflation.

3. Corporate and Resource M&A: Valuations will start going up as this becomes more pronounced, so closing on assets, companies, acquisitions, and other resources is key right now. Don’t overpay, but focus more on timeline to keep things from getting inflated. You can also ride the valuation raise of the acquired resource easier during liquidity expansions than on contractions, so acquiring early in the phase is key, beneficial, and forgiving.

Every part of the business cycle affords massive opportunities to prepared business owners.

• Recessions allow a slowdown to rebuild process and strength operations, to grab marketshare, to find people who can help at a later time, and assets available at better prices

• Expansions allow a company to profit from its increased customer base, its stronger operations, and to maximize its assets. It allows a business to build a cash buffer which it can then deploy in the next recession to repeat the process.

For this reason, its important to monitor a few key aspects so you know when to hire and when to cut poor performers, when to lean out inventory, when to invest and when to stockpile.