Why Your Mindset About Money Is Holding Back Your Construction Business

 Are you stuck in a “cost” mindset, always worrying about hourly rates and the cheapest price? In this episode, we dive deep into why focusing on value—not just cost—can transform your construction business and your life. Join us as we explore: The pitfalls of chasing hourly rates How a value-driven mindset leads to better clients, higher profits, and less burnout Real-world examples from the building industry The importance of educating clients about quality and long-term value How to break free from old-school thinking and unlock new opportunities Whether you’re a builder, tradie, or anyone in the construction industry, this episode will challenge the way you think about money, work, and success. 

Chapters

• 0:00 Setting The Scene: Cost And Rates
• 4:42 Money Mindset Shift And Value
• 10:07 Quick Hits Vs Long-Term Value
• 14:17 Prices Always Rise: Stop Whinging
• 17:52 The 3x Rule For Hiring And Pay
• 23:08 Hourly Rates Cap Your Earning
• 28:28 Conflict Risks With Hourly Billing
• 33:38 When Hourly Makes Sense Briefly
• 37:48 Chasing Day Rates Loses The Year

Transcript

SPEAKER_00: 2:50

G'day guys, welcome back to another episode of Level Up. We are back in the shed this afternoon for another cracking episode. Uh, look, today's episode is about a topic that I've seen coming up a lot um on not only on my social media but also in the Builders Breakfast group that I run. And this is about uh the cost of things and probably uh to the point hourly rates of what people are charging. And so there's a there's a lot of there's a lot going on when you uh questioning uh I guess rates of what people are charging. So I wanted to unpack it, put it out there for the universe, and yeah, let's see what you think and uh what your opinion is of it. I'd love to know. So uh shoot me the questions, shoot me some comments, and uh we'll come back to you. But um I think this is a is a really interesting topic because I'm hearing a lot of talk at the moment, or probably over the last actually, probably since COVID, over the last sort of three or four years. This has been a hot topic about the like how high the LE rates are um that people are charging, um, how high the cost of materials are. Um and I just think back to I I I used to be in that mindset that it like it can't they can't charge that, that's too high, they're ripping me off, or they they're not worth that, or I can't afford that, and all these types of things. I spent 10 to 15 years running my business with that old school 2x mentality. Um, and if you're in a 10x, your life and your business, you really need to change the way that you think about money and about how you can add value to people. So um, I've spoken about it before on the podcast. A massive shift in my mindset around money uh and value uh was after I read or listened to the audible book, The Creature from Jekyll Island. Uh, it was recommended by uh Robert Kayosaki. Uh I always get his last name wrong, but that's how I say it. Um incredible book, and I've since recommended the book to a lot of people, and uh they've ranked they've literally messaged or called me and say, Fuck mate, I've I've listened to two hours, three hours, four hours. That book's shit. So like everything, you can either take it or leave it. If you um if you be open-minded and you listen to things and you take it in and you you sort of implement what things what people are saying, um you may have some changes. If you if you don't, if you ignore it, if you are too stubborn that you think it's all rubbish, then you're not gonna have change in your life with anything. So um, but look, back to what I see value in. If someone like seeing value in everything in life has really changed the way that I do business. Um I'm got I've got a I've got a situation going on at the moment in my life where I see a certain value and someone else sees a completely different value. Um, my value is based on like my time and what I will get out of it if I follow through with it. Their value is all on trying to get the highest dollar value with as little work as possible. So I'm not I can't go into too many details on that, but anyway, it's um what I'm getting at is everybody sees different levels of value in everything, and it's funny because the more I'm aware of this now and and more open-minded and and how I've changed my mindset around this, I see how this really holds people back. Like money is a is a funny thing, eh? Like, we're just we're not taught enough about it at school. Um, and because of that, it's it's really interesting seeing how different people value uh money. I know this this podcast might seem like it's going around in a circle a little bit, but I think it's important to talk about all this stuff because it's it's really, really interesting. And so I I I've got so many opinions on this and views on this and all types of things, but like when I say people see different values in things, like I I've got a very high I'm not even sure on the wording for it, but I guess to go backwards, I I see so many people that see value in quick hits. So they whinge and bitch all the time that they've got no money, they can't afford to pay their bills, living's too expensive, they're not getting paid enough, all these types of things, and yet they'll buy a carton of a booze, they'll buy a packet of smokes, or they'll vape. They think vaping's okay because it's cheaper than smoking. Like um, they'll go to the shop every morning and buy bloody icebreaks or Vs or any of those high-energy drinks or coke, and so they they see a lot of value in that shit. Like, I call that shit. Like, I don't um to me that they see what they see value in is affecting the value of their entire life. So because they see value in those shitty things, they're spending their money on it instead of keeping that money and investing that money in in better things, I would rather like go without and never drink, never buy a drink from a shop at all. Like we drink we get water out of the tap for free. So um well, you pay water rates, obviously, but um that I'm just using that as an example. Like, I don't see value in buying, well, number one, buying drinks to start with, but number two, I definitely don't see value in buying shit and filling my body with shit. So, and so because of that, I see value in looking after myself and being healthy so that I can do more with my life. Um, like a lot of that stuff, it's the same with with social media and stuff. Like a lot of people see value in just flicking and flicking and flicking and spending like before they know it, wasting hours on shit. Whereas I see value in my time. Like, I don't want to waste time on social media because I value my time and I want to spend that time with my with my kids, with my wife, with my with my dog. Like um again, it's just another it's another different opinion on value. Um but what I'm getting at with this is like coming back to hourly rates and things, uh there's a lot of like everyone's the cost of building is getting expensive. That that's it's as simple as that. And reality is the cost of construction has increased in cost since the since Noah's Ark was built. Since Noah built the Ark, construction and and it can it will continue to increase until as long as there is any construction work being done. That is just reality. Um, everything in life goes up in cost. That you you you will never it will never come backwards, you will never slow it down, you'll never change it. That's just life. As the world grows, as the population grows, things have to increase in price to stimulate the economy and all those types of things. So um, but all I'm like I'm literally sick and tired of just hearing everybody whinging and bitching about it. And so part of that conversation is people are talking about hourly rates, and um, I've got to pay my carpenters$50 an hour, I've got to pay my carpenters$70 an hour, I've got to pay my plumber$120 an hour. Like, and look, I I know there's gonna be some of my mates and builders I know listening to this, and look, it's no offense to you, but if you're in the the mindset that I'm talking about today, you've got to shift because I used to be in the mindset that whinged and bitched and complained about everything, and I've talked about it a lot on the podcast. Like I I live my life now, I I pay for what I see value in. So let's talk about employees, for example. If if a carpenter comes to me and wants to pay, like I'll I'd say I'd make it very clear to my carpenters, like I will pay, and and this isn't just carpenters, this is trades as well. I will pay you whatever you want if you're adding me three times that in value. Because that's how business works. If if I've got to pay someone$100, I need to, they need to add$300 worth of value to my business for my business to be sustainable. Um, by the time you cover all your overheads, running costs, and just how business works, taxes and those types of things. It's three, it's generally three X. That's a basic rule. So if you want to get paid$100 an hour, do you add$300 an hour value to my business? And look, in a lot of instances, that the answer is going to be no. But in some instances, there that the answer will be yes. Like there is people out there that would 3x the value to my business. And if that's the case and they add that amount of value, and my business can be sustainable, profitable, and operate long term, then I'll pay them that because that's how the world works. The reason that people whinge and bitch and complain about what people are charging is because those people aren't adding that value to them or their business. It's as simple as that. So the other side of this is you shouldn't be operating on hourly rates in business. Early rates is a 2x mindset. If you have if you want to 10x your life, your business, if you need a 10x mindset. You need to you need to price things up correctly. Um I truly believe that people that are operating on hourly rates have a 2x mindset. They they they see value in their time instead of value in what they put out and what they add. Um and this is this is really, really important stuff. Like, if you can get your head around this, it will change your life because it did mine. I was I was that person. Like, to give you a few examples, like I was a guy when I finished my apprenticeship. So to go back a bit, um, I finished my apprenticeship, I went and worked for my old boy doing some painting for about 12 months, 18 months maybe. Uh, and then I got offered a role to do some subcontracting work for a large developer here in Brisbane. And at the time, so I was on$25 an hour. I finished my time, had a trawler full of tools, planks, trestles. I I had a lot of gear, and I was on$25 an hour. And people complain to me now that they they can't have all the tools, they can't afford all the tools, and they're on$50 and 60 bucks an hour. Um, and I thought it was fantastic. Like, I I think before that I'd been on$21 an hour, and so in my head, I I saw the value in my the hours that I did, and so I used to do the maths. I was like, man, like$25 an hour. If I do four hours, that's a hundred dollars. Like every day, if I do eight hours, I'm gonna get two hundred dollars. And and then I was like, shit, like if I do 10 hours, if I do two extra hours a day, that's an extra 50 bucks. Like, so I was always doing the math, thinking about the numbers, but it was all just based on the hours that I could work. And look, reality is it doesn't matter, it does not matter what your hourly rate is. When whether it's$25 or$2,500 an hour, you are capping yourself. You can never earn more than the hours you can work. And this is how people burn out because everything is about the hours they work instead of the value that they add. And this is why I'm a massive believer now that all employees should be on agreed salaries or wages, because a wage and a salary is a lot easier to earn more money because it can all be but it's all based on the value that you add to a business. Anyway, that's another story. But when you are basing everything on the hours that you work, like I said, it's the reason a lot of people in the industry burn out because they want to earn more money. The only way they can earn more money is by doing more hours, and that's not sustainable. You you can't operate like that. And yes, look, you might be able to earn a hundred bucks an hour, and through that and the hours you do, you might be able to earn a hundred, hundred and fifty grand a year, and that's that's good money. Like if you're sensible with your money, you don't live beyond your means, like that is fucking awesome money. But if you want to 10x your life and your business and everything around you, the only way you can do that is by adding more value and charging for your value, not charging for your time. And again, the reason I wanted to talk about this today on the podcast is I think this is something that we're like, we're not taught this shit at school. I've been saying a lot on my podcast lately, like we are not sure taught what we need to be taught at school because if you were taught this, everyone would get on board with this and everyone would figure out how they can add value to people. So um, look, for all tradies, builders, anybody in the construction industry that's out there, if you're focused on what you can charge per hour, you're stuck in a 2x mindset. You need to you need to move on away from that. Um the other thing with hourly rates is hourly rates, you open yourself up for a lot of conflict um and a lot of questioning by people. Because, especially builders, like I know so many builders that um operate their businesses with cost plus contracts. Uh, I know a lot of tradies that operate their businesses by just charging for the hours they charge. If if you are charging work through hours, you're really leaving yourself completely open for a lot of problems, a lot of arguments, and a lot of conflict because it's very easy for people to question the hours you've done, especially if you're doing work on a on a site where the client lives or um is aware of when you start and finish and those types of things because they'll be tracking your hours. Like um, believe me, like you might not think they are, but people will be taking notice. They'll be they'll glance over when they see you walk onto site, they'll glance over when they see you leave, like in they'll have it in their mind, oh, that was around 3.30 or whatever. Um, but it's just a horrible way to do things, and it and it, like I said, it opens yourself up for a lot of um a lot of conflict, but it really restricts what you can earn. So, like in in my building business, we avoid hourly rate at all cost. Um yes, I am very big on understanding the true costs of all my employees and myself, and in our contract documents, we do have all the hourly rates listed out for uh admin time, accounting time, project management time, supervision time, my time, carpenter's time, apprentices time. That's there in case the very rare occasion that there is some form of work that we have to do on early rate. And um, we make it very clear to our clients that if something comes up that we can't price for whatever reason, there may be a very small amount of that work that will get done on early rate. Once we have the information we need, we'll provide you a quote to finish that work. And um, as an example, where we would use that, if we're doing earthworks on a project and we come across uh a buried grease trap or asbestos buried in the ground or unlike ground conditions that weren't predicted, we will charge an hourly rate to resolve or get to the bottom of the problem, or get enough, like I said, get enough information, or or get another consultant out to side, or an engineer, or someone that can give us more information so that then we can put a price on the rest of the rectification work. Um as I said, we'll we avoid hourly rate at all costs because it's it's too open-ended, uh, it opens you you up for, like I said, conflict and argument. And look, let's be honest, people you don't make money at hourly rate. Like it's as simple as that. Like I know some people that charge big hourly rates, like they're very professional, they're very good at their job, and they have two, two and a half, three thousand dollar hourly rates. Because the task and the work that they do quite often only takes an hour or sometimes two. And that sounds fantastic, but nine times out of ten, it they could they might get one job a week or one job a fortnight or one job a month. So even though it sounds really good, it's actually fucking shit because when you add it up over a financial year, they've earned fuck all money. So um, but when you talk to them, they come, they think it's really powerful, they think it's great, like they're they're on$3,000 an hour. And I pull them up all the time. Like I find this. Um there's a few trades out there that I um I'll pick on for this one. Like, I uh over my time on the tools, um concreters used to be the worst for this, like they were always chasing a high early rate or a higher day rate, and they would like I I I had mates that would would do work for me, and they would drop me at the like as at the flick of a switch because someone else had offered them more a higher day rate or early rate or whatever. Um, and in the end, I got the shits with it, and I just I completely avoided them. I'd I stopped using them, I even stopped talking to them because again, they put so much value, they saw so much value on the hourly rate or the day rate they were getting instead of seeing value in what they earn over a financial year. So, and I found from that, and it still stands true to this day, people that chase higher hourly rates, higher day rates, or are always chasing an extra dollar will always be less better off because they spend more time out of work than they do actually earning money, yet they can't see through it, and so they think, oh fuck yeah, I'm getting like a carpenter, yeah, I'm getting 80 bucks an hour. Like that's fucking awesome. Like, I'm not working for you because you're only paying$60 an hour. They go and do the$80 an hour, but they only get the eight, like over a 12-month period, they get four months work, and they spend the other eight months doing a day here and there or a bit here and there, and over a financial year they only earn$60,000. Whereas if they had gone on the$60 an hour, had full-time work over a financial year with overtime and things, they probably would earn$100,$120,000 a year. So I hope this is sinking in, I hope this is getting across to you, but it's it's really important to understand what you see value in because if you see value in an hourly rate or a day rate, you're definitely stuck in that 2x mindset, and you're not gonna have growth, you're not gonna excel in life until you get out of that 2x mindset and you get into a 10x mindset where you see value in what you deliver. And this is what I want to finish, I'll finish this podcast up talking about this because people want value. And so the whole building industry is focused on price and being the cheapest. Whether that's the cheapest builder, whether it's um the cheapest contractor, whether it's the cheapest supplier, everything is focused on being the cheapest, which is leading to very poor, or delivering very poor products, very poor building, finished buildings to clients. Uh, it's resulting in very low standards, uh, very low quality of work. Uh it's even leading to, I believe, a big reason why there's a lot of depression and suicide and and anxiety in our industry. Because when you're working like that and you're racing to the bottom, it is putting you under enormous pressure. Because the only way that you can make money is to cut corners or to run around like a headless chalk and try and get it done as quickly as you fucking possibly can, which is wearing you out. And that is not a good way to operate. And look, there is always going to be clients out there, people out there, that are quite happy to accept a very poor quality, low standard home because that's all they can afford. But I do believe if we all put more time and energy into educating our clients, if you're a trade, educating the builders you work for, um, if you're a builder educating your clients, uh, if suppliers educating people that are buying your products, if we spent more time educating and understanding the importance of education and adding value to people, we will lift the standard of buildings getting built in Australia, in the world. We will lift the quality of product that is getting delivered to our clients, but most importantly, we will deliver better quality or healthier homes and healthier buildings for people to live in, will increase the value in people's life, um, will it will increase the value in our homes. Um, like there is so much that will come out of this. And I guess to give you an example, how I think, how my how my brain thinks, and how I operate, if my Tyler, this is this is pure example, this has never happened. But if my Tyler was to go to his supplier this afternoon and pick up some materials for his work, and the guy at the tile shop said, Hey mate, like we've got these fantastic new products in, like um, we've got this new waterproofing product, it is great for the environment, it's flexible, it's gonna solve this, this, and this problem. Um, it's like it's awesome. Uh, but it does cost an extra$20 a drum. My toilet knows the type of person I am, so um he might reach out to me and go, hey Duane, I was at my tile shop yesterday, and I uh my supplier's like told me about this new product, he's given me a drum. We're gonna we're I'm I'm really keen to try it out. Would you be happy to use it on your project? Um, it does this, this, and this, and it's gonna make things more durable, it's gonna make things last longer. Um like I would go, I would say, oh mate, have you have you got the material safety data sheet on it? Can I have a look into it? Um do possibly can I go and talk to the supplier? Like, I'd run through it. But for me, if it's gonna increase the durability of my projects, if it's gonna increase the quality of what I'm delivering to my clients, then I will consider it and I'll look into it. And if it does everything that's that it says it's going to do, I will say to my toile, oh mate, like that new product that you suggested, let's let's go for it, let's start making that our standard on all of our projects. So then when I'm doing my PAC process, paid as a consultant with all my clients, and I'm talking them through every part of the project. When it comes to tiling, I'm gonna have a conversation with them and I'm gonna explain to them, hey, look, um, look, we've been using these other waterproofing products for years, and um over time we we have had these couple of issues with this, and we had this situation, and we had to fix that, and we did this, and but um look, we've we've got this new product, I've done all my homework on it, I've looked into it, I've spoken to the supplier, I've spoken to some people that that use it, I've I've run through it with my Tyler. Um look, it is a little bit more expensive, but I believe if we use it, it's going to do this, this, and this. Um, then I've I've added value to my client. And I say this all the time: if if you've got clients that are questioning what you're charging, whether you're a tradier or a builder, there's no questions about it, you're attracting the wrong clients. So if you're a trade working for a builder and the builder's constantly questioning your pricing, you're either working for the wrong builder or you're not educating the builder enough on how you do things and the products you use. If you're a builder that is working for clients that are or constantly getting clients that are questioning your pricing because they're getting pricing from other builders and they they think you're too expensive, you're what you're attracting the wrong types of clients. You're either attracting the wrong types of clients or, and this is the more common one, you're not spending enough time educating them on why you cost what you cost. Like you're so focused on the dollar value, instead of educating your clients on what's in your proposal and why it is better. Um, and so in that back to that situation with the Tyler, I do that for every single aspect, every single material, every single part of our builds. Uh, we have very high standards in my building business. We have there is products that we will, if a client chooses or says to us, hey, we we don't want to pay for that or we don't want to use it, we will walk away from the job because we're not willing to lower our standards on things that we know will either cause the business or myself problems, financial problems, or some sort of problems in the future. Um or even higher priority than that, that will lower the durability and the lifespan of the buildings that we're building. Because for me, that is the ultimate sustainability that we're building buildings that are going to last the test of times because we're doing things that are more durable. So um, yeah, look, so that that to me that's a really good example of um of your mindset when it comes to value and what you see value in. If um, if you're if back to that example, if you were the tile that goes to the supplier this afternoon and the tile shows you this, the the supplier shows you this new product, and straight away you're like, fuck mate, I'm not interested in that. I I can't even get work with what I'm using at the moment, and it's cheaper. Like I if I if I buy more expensive product, I'm gonna get even less work because I can't charge anymore. That is a 2x old school mindset mentality that is going to keep you stuck, that is going to keep you struggling, that is going to stop you from earning the money that you should be earning. Um people see value in all different things, and like seriously, as tradies, as builders, please. I encourage you to spend more time educating the people that you're selling your services to. Um just completely take the the cost, the dollar conversations out of it, and just purely focus on educating your clients on where you add value. Um, whether you're a plumber or a plaster or a tile or a bricklayer, a block layer, a concreter, electrician, I don't care what you are, a balustrading guy, a pool building guy. Uh if you're not adding value to your clients, if you're not educating, if you're not educating your clients and showing them how that how you are adding value to their project, you're you're wasting your time. You're you're going to constantly be working with people that will question what you're charging, will question your invoices, will try and come up with excuses not to pay you what you should be paid or what you've invoiced for. And you're really just creating your own problems. Um, I haven't said it for a while on the podcast, but you all know, like one of my best sayings is Grant Cadone saying, nothing happens to you, everything happens because of you. This is a perfect example of that. So um guys, I'll wrap this one up. But look, if you've got questions, if you're um if you don't quite get what I'm talking about, like there is so many books out there that talk about this sort of stuff. Um uh like I said, the the creature from Jekyll Island, um the richest man in Babylon, like all those stories, uh all those books all come back to how you see value and what you see value in. So spend some time, uh, listen to Audible books, listen to some podcasts. But this is a really important uh, I guess, subject or topic to be more open minded about. Um, stop living your life around mentalities and mindsets about that you've grown up with or that you've been told or that you believe in, and uh get a bit more open minded about it because it's powerful stuff. Like when you change your your mindset on what you see value in, it's it's really, really powerful. Um And I've seen how quickly it can change the growth in people's personal wealth, the growth in their business, all those types of things. So as usual, guys, like, share, subscribe, all those things. Please share this podcast with every other person in the construction industry so that we can continue to create a new building industry and make this Australia's number one construction podcast. Go to the DwaynePears.com website, grab your merch, get behind us, support us. Love you guys. Thanks so much for watching or listening, and we'll see you on the next one. All right, guys, I want to introduce you to a really exciting new product that I believe is going to play a massive role in Australia building healthier homes. As you all know, I am extremely passionate about healthy homes, and I'm doing a lot of research and putting a lot of time and effort into making sure my construction business is leading the way when it comes to building healthy homes here in Australia. We've teamed up with the guys from Highwood Timber. Highwood Timber are pioneering condensation management with their high flow ventilated LVL batten system. High flow battons give builders a stronger, straighter, and smarter way to create a ventilated cavity behind cladding and underneath roofs without compromising on structural performance. While tackling condensation to improve building health and ease of insulation, highwood battons are built to perform. When it comes to dealing with condensation and ventilation, high flow battons will help you create continuous ventilated cavities behind all your cladding and underneath your roof sheeting. They reduce condensation risk and support healthier, longer lasting buildings. Highwood timber battons are also in alignment with the proposed NCC condensation management requirements as well as passive house ventilation requirements. Being an engineered LVL product, they are stronger, straighter, and more dimensionally stable than a solid material such as pine. This helps resist warping, twisting, and shrinkage, ensuring more consistent installs less prone to splitting than solid timber. Highwood timber batten are precisely manufactured, meaning that your installation will be faster and easier than other products on the market. The part that I like the most about these battens are they are H3 treated for long-term protection against decay and turmoiles. They use a waterborne H3 treatment which reduces reactivity with membranes and adhesives when compared to LOSP. These are the exact battens that you want to be using on your homes and your builds if you are considering building healthier homes or passive homes. Check them out, Howard Timber Products.