From Third Generation Plumber to $471K in Debt

I asked Joe about his background and how he initially got into the trades.

Joe's dad was a plumber and his dad was a plumber and his grandfather was a plumber. It goes back a whole lot of generations of people in the plumbing industry. They were in Melrose Park, Illinois.

His dad got him started and he became a journeyman plumber and eventually got his license. Then he got involved with HVAC. His dad said you should do something different that's gonna be more like the future. He didn't think plumbing was a good future.

He got Joe involved with HVAC. "He said it'll be a little easier on your knees and stuff like that and he was right. It's not easier in the attic or any part of it there."

No matter what trade you're in, it's one of the hardest things that people grind out every single day just so all of us can live a normal life.

Joe married a woman that was urging him to start his own business back in the early 80s. He honestly would have just been happy being an employee, but she pushed him into it. He really didn't know how to run a business.

It seemed like a simple concept. He was all gung-ho about 1985.

He wound up driving himself about $471,000 in debt by 1991. "Back then, $471,000 when my average ticket was about $92 or my average sale for equipment, like a water heater was like $350 I was charging and furnace and AC was like $1,542."

There's just no way he would have got out of debt until he met one of his clients who kind of took pity on him. He was in Gurnee, Illinois and his name was Dave. Dave was a pharmaceutical salesperson.

Dave said, Joe, let me go over how you should offer your solutions.

The core thing that Dave taught him when he was 1991, by December of 1994, he was debt free.

When he went to go pay off all his suppliers with the money, they were all telling him you should go help my other clients get out of debt.

He started single-handedly at the suggestion of his suppliers. They would give him the names and they would give him starting money. They'd give him like $1,500 to go help this guy get out of debt and it turned into a business of its own.

He sold his service business, which had been very successful now at this point, with over 25% net profit after taxes by the time 1994 came around. He sold it in 2001 to ABC Plumbing, one of the biggest companies now in Illinois.

They went on to now be a huge company. They got investment money and they still use the system or part of the system that they brought when they bought him.

He's been around to a lot of big companies, small companies that turn to big ones. He's working with a single person company in Alabama. The guy doesn't even read books.

"I just try to help people with whatever their level of skill is or what the way they like to learn."

How He Got Into Debt: The Fear of Asking for Money

I asked Joe how he got into $500K worth of debt.

"Dysfunctional situations like that, it loves secrecy and privacy. Publicly, you never would have known I was in debt."

But one of his clients could see it. He knew the earmarks. When somebody has been through it before, you can see the earmarks.

He could see the guys' uniform pants got holes in them. Their trucks don't have signage, they've got magnets. The parking lot's not even paved.

"You can see things that are just hidden in plain sight."

He got into debt because he was too afraid to collect the money. He had a couple really big jobs. One was an $87,000 job in Lake Bluff, Illinois. Another in Highland Park over $100,000.

He thought he would get paid. He did all the work, got all the equipment. The builder went bankrupt and claimed he couldn't pay him.

Just those two jobs alone were almost $200,000. But he had a lot of receivables because he did not understand that clients would be happy to pay if you just requested the payment before you began the work.

"I now have a new payment program for all contractors. It's 100% down, nothing left to pay when you're finished."

As opposed to doing the work first and then people try to negotiate the payment later. You can't sustain that.

"Because of my fear that I would lose the job if I tried to collect the money up front, that's how I got into debt. I didn't understand how the science of pricing and the science of collection."

The Science of Pricing: Premium, Mid-Range, Economy

I asked Joe about the science of pricing and what you should shoot for in terms of profit margins.

The first step is to make the menu of your pricing.

If somebody says, hey, we need to get that stain out of the entryway carpet. If you cleaned only that carpet, the rest of the house would have dirty carpet. You don't realize if I clean this spot, the rest of the house will look awful compared to this clean carpet.

The premium option would be, let me clean every room in the house. The next option would be, let me do the living room, dining room, and the entryway. Then let's do the living room and the entryway and then just the entryway.

If you were doing pest control, it's like, yeah, we could get rid of that ant infestation, the bottom option. But we also could take care of the wasps. Then we do a perimeter thing, not just the spot problem, but a continuation of the solution.

"So the premium option would be a permanent solution for everything. The mid-range solution would be a professional solution that expands beyond what you asked me for. And the bottom option is just the thing you asked me for."

If you only asked me to fix a faucet, that's the fix the faucet. Then we could replace the faucet would be better. Replace the faucet with a better faucet and do the risers and shutoff valves. Then we could do faucets in the laundry room and the powder room. Then the faucets in the kitchen, laundry room, powder room and master bathroom.

All the faucets would get replaced with the risers and shutoffs on the premium option. The bottom option just put a cartridge in the old faucet like you want me to.

"Let customers choose for themselves with the famous question at the end of it. Well, here's all the prices. What should we do?"

That's what they have trademarked and wrote a book with that title. What should we do is the question they ask to close the deal.

If somebody says well, that's a lot of money, you say yeah, it is a high investment. So what should we do? I got to think about it. We'll take all the time you want. I'll stay right here. What should we do?

The Distribution: 15% Top, 74% Middle, 11% Bottom

Joe explained the science behind the distribution.

"15% would choose the top options, 74% would choose the middle options, and only 11% would choose the bottom."

You'd wind up upgrading about 80 to 89% of the time if you did that without having to sell it, without having to push it or recommend it.

You just say, here's the premium way where it's permanent and it's done the right way. Here's the professional way, we take care of most of everything, we expand a little bit more than you asked us for. And here's the bottom option where you just do it the way you want to do it.

The bottom option has less warranty, less coverage. We stand behind it more on the middle option and we stand behind it permanently on the top option.

"There's just more permanency in the top. It's permanent, it's high quality, it's safer, it's healthier."

When he mentioned all that stuff, he didn't even bring up money. Getting the pricing right isn't as important as putting the price in the right order. Premium, mid-range, and economy prices.

Stacking up the current prices you already have into a more premium solution to do more of your service would be what you need to do first.

Secondly, once you do sell more, you'll come in touch with the fact that we don't charge enough. "Like I can't say that's permanent for that kind of money. Well, then charge more."

If Joe said charge enough for the SEO, the website and stuff like that, would be a 10 year guarantee that I'll come back and update this thing for 10 years. Could I do that for $5,000?

"Hell no, I'd have to charge like $50,000 for all that or $100,000 for all that if it was a 10 year warranty on it."

If he said you got to stand behind that website, the SEO, the social media and everything for 10 years, come up with a number you're comfortable with. It probably wouldn't be $5,000. That'd be $150,000, Joe.

"Well, that's your price for that kind of an option."

No matter what kind of business it is, any service that you do. Every business is like that.

"Get the pricing structure right, premium, mid-range, economy, and then you'll start to realize that I can't make it permanent for that price."

That kind of makes you understand that I need to raise the price to be able to cover it for a longer warranty.

Service Is the Knife That Cuts Through the Fog

I asked Joe about the top problems he sees when stepping into the average home service business.

The biggest problems are the same problems he had when he was losing money. He would go out there and give people advice about how to do something, literally teach them how to do his job. And then the value decreases.

"I think the average service provider talks too much about how to do their work. And then in a way you're giving the client like, yeah, I could do this myself."

Whenever the plumber or air conditioning guy or pest control guy starts talking to the client and they literally talk their way out of a job. They're giving too much detail on their service and that decreases the value of the service.

Now the client's like, well, I think I could probably do that. Let me go on Amazon, see if I can find some of that stuff.

"That's the number one thing I think they do wrong. So I would advise shut up when you're diagnosing the situation. Just talk about the family or the people who live in the home."

Don't talk about your solution yet. Just say, let me take a look at things and as you're looking, shut up when you're looking. Don't give people an education while you're looking.

After you found the problems, shut up about it and then write it down. Write down the problems and write down the solutions, the premium, mid-range, economy solutions.

The second mistake is that people always give the cheapest option thinking that they have to compete on price with competitors. "But you don't have to compete on price. You have to compete on service."

Then Joe dropped this incredible line:

"Service is the knife that cuts through the fog of uncertain value."

When people are looking at prices, but they see somebody who's got a much better service, then all of a sudden they understand the price is to be higher.

It's like when you walk into a hotel. Motel 6, you're not even inside, there's not even a lobby. You're like, this can't be very much for this place.

Walk into the Courtyard by Marriott, it's like, look at the lobby and little gift store over here. It's gonna be a little bit more money.

Then walk into the Westin Hotel downtown Chicago or the Swiss Hotel around River North. "Holy shit, look at this lobby. This is gonna be..."

The service provider has already done more service by making a bigger lobby, making a bigger gift store, a coffee shop. You got a barista, they have a Starbucks inside the lobby.

That's going to be more money than people who don't have a Starbucks in the lobby or don't even have a coffee machine sitting outside the Motel 6.

When Joe was at the Swiss Hotel, one of the best hotels in Chicago, you look across the river, you can literally see the Motel 6 right on the other side of the river.

"It's interesting, those two things, they're both on the river, but I do know that this room costs about $900. And that room, I saw the sign that says $69."

Same location, same service. One could be $900 and the other one says $69.

The cheaper things usually have a higher capacity. They could do more of it. They're for the bigger crowd. The more premium options are for fewer people, but they are more profitable because you don't have to serve 1,000 people.

"You get to serve 200 people and you'd be making more money on less effort."

Character, Competence, and Communication

I asked Joe about his three keys to sales: character, competence, and communication.

Character means when you say you're gonna do something, you're gonna do it.

"This world is filled with people who say they're gonna do something but never actually do it and that's bad character."

Character means do what you say you're going to do.

Two, competence is learning it and understanding the science behind it and practicing it. Joe says five, five and five. Competence is gained by reading something five times, trying it five times by yourself, then trying it five times with the public.

"Competence is repetition, and then you got to commit to that repetition."

Finally, communication. Harvard University did a study that said for every person who loses their job because they're not good at the work they do, there's eight people who lose their job because they can't communicate value.

"If you can't communicate value in your job, you're going to wind up getting fired or you're going to wind up not getting work."

People who seem like they just never can find a job are just not good at creating value. They're not good at seeing the value they provide.

"I really feel that it's not just a key to service, but I think it's a key to a life that's well lived."

How to Close High Ticket Deals

I asked Joe how you close these high ticket deals for someone that's never closed a big deal before over 10K.

"Ironically you have to say to yourself, money's not my master. I'm not going to focus on the money. Only focus on the solution and let the money take care of itself."

Salespeople who focus on how much money something is are the ones who are going to lose the job. You're focused on the wrong thing.

"You have to focus on the consumer or the client. You have to know everything about them so you can make a more customized, relevant solution that serves their exact needs."

If you do that, that's customer service. If you don't, you just have a commodity.

Stop focusing on the parts or materials. Focus on the service you offer and who in the family is the most afraid of these kinds of insects. How does this impact your life?

Maybe grandmother comes over and she's afraid of whatever insect.

"We got to put extra attention on the back patio so your grandmother isn't afraid when she comes to visit you."

The average people who sell furnaces and ACs with their system is about $28,000 to $32,000. The average person in general sells at about $8,000.

The difference is there's more stuff they take care of. They do the duct work, the AC, the heating, the air quality, the control system.

"But every one of those things have to be more personalized and customized to the people, because if you're only doing it to stack up the bill higher, nobody's going to buy it."

Anything where you sell premium solutions have to be more personalized solutions.

"So the more personal you make the problem and the more personalized you make the solution, the higher people will pay."

This way you're not focusing on money. You're focusing on the problem and how it's impacting them personally.

"The money just is a byproduct of getting the job done."

Most customers say, what's it going to cost?

"Let's go into the problems and the solutions, then we can see what it's going to cost later. Don't talk about money in the front end. Talk about problems and solutions in the front end, and then show the money at the end."

Don't Sell to Make Money, Sell to Liberate Your Customer

I asked Joe to expand on something he's said repeatedly: "Don't sell to make money, sell to liberate your customer."

Service providers put their customers in a prison when they've decided for you. Here is a solution that I'm going to give you only.

As opposed to give people the freedom to choose premium, mid-range or economy solutions of your own.

Even if somebody asked Joe which one would you recommend that I purchase, he would say, "Well, John, my job is to find the problems and how they affect your family and find the solutions and how those affect your family. And then your job is to pick the one that's right for you."

He can only make the more permanent, premium, high quality and best service solution, the mid-range one which is very professional, and then the bottom one which is what you asked me for.

"So you're free to choose the one that's right for your family."

Every country in the entire world has the belief that they are free. Even people in countries we don't think are free. There's a question as to whether people feel like the United States of America still has freedom.

Losing freedom is something nobody wants in any culture of any kind. Having more freedom to choose or liberating people to have freedom.

"I gotta give my customer the freedom to choose what's right for them. Even if it's not me, you can always choose the one that's right for you. I'll still be your friend if you choose somebody else beside me."

If you say I don't care if I get the job, I want to make sure I give you freedom to choose instead, "They ironically will choose you about 95% of the time."

The optionality part of it is at the heart of freedom. If you don't give that, which one are you choosing? The premium one where you just oversell everybody? The economy one where you don't make enough money, you can't stay in business?

"You have to give people all the choices. I believe that the universe rewards people who give freedom to other people."

Joe's Message: Embrace AI or Get Left Behind

I asked Joe for his message to the average home service local business owner.

"Don't stop learning and don't stop moving because things are changing. The only thing that is true is that nothing will stay the same."

Whatever you are doing now, you need to be already studying what the future is going to be, especially with AI.

They have the Option Builder for giving those price options. They have an AI solution now for $99 per person. You put all the services you do into it and the prices and boom, it will make those premium, mid-range and economy choices in 20 seconds.

Where it would have taken half an hour to 45 minutes. Now you're gonna get done in 20 seconds.

"The good news for anybody who's in business now is that there's never been a time in history where it will be more automatically automated."

There's going to be tools that are very low cost. You'd have to do it all manually five years ago.

"Because of AI solutions, I really feel like this is the best time in human history to be alive."

He can't promise AI won't kill us all. But at this point, use the tools that are here.

"Don't be in denial with AI. It's here and it's here to stay. It's not going to go back in the bottle. So you better use it while you can use it."

AI represents your future right now. "You better embrace it because it will either consume you or elevate your business."

My Main Takeaway

This conversation with Joe completely changed how I think about pricing and service. The biggest insight is that service is the knife that cuts through the fog of uncertain value. Most contractors are competing on price when they should be competing on service.

The premium, mid-range, economy structure isn't a sales tactic. It's giving customers freedom to choose what's right for them. And the statistics are proven: 15% choose the top, 74% choose the middle, 11% choose the bottom. You upgrade 80-89% of the time without pushing.

But what resonated most was the focus on problems and solutions, not money. When you personalize the problem and personalize the solution, the money becomes a byproduct. You're not selling chemicals or parts. You're selling freedom from pests, comfort in their home, peace of mind.

And the character, competence, communication framework applies beyond sales. For every person who loses their job because they're not good at the work, eight people lose their job because they can't communicate value.

Thanks for reading, and if you found this valuable, make sure to check out the full podcast episode. Joe drops even more sales gold that I couldn't fit into this recap.

You can find Joe at servicemvp.com where you can get the free audio book if you scroll down. For $99 a month you can join the MVP Book Club and get free training from Joe for 90 minutes every Wednesday. Follow him on Facebook, X, Instagram, and TikTok to get his micro-content and profound insights.