How I got 700 people to pay me $40,000 each…no bs..

Summary

• Selling high-value packages is easier when you clearly communicate the immense return on investment you provide to your clients. For example, if you make someone $239,000, they won't hesitate to pay you $42,000.
• Hosting client events and large-scale employee meetings can highlight your business's scale and success, which can impress even skeptical family members who might question the value you provide.
• Value is challenging to define for entrepreneurs, but it's crucial to understand and articulate well. It determines how much clients are willing to pay for your service or product.
• The value equation has four components:
  • Dream Outcome: Make sure the result you're promising is something that clients deeply desire. Align your services with their ultimate goals to increase perceived value.
  • Perceived Likelihood of Achievement: Increase clients' belief that they will achieve the promised outcome. Use successful case studies and testimonials to boost their confidence.
  • Time Delay: Decrease the time between purchase and delivery of the promised outcome. Speed is highly valuable to customers, and they'll pay more for faster results.
  • Effort and Sacrifice: Minimize the effort and sacrifice required from your clients to achieve the desired outcome. The less they have to do or give up, the more valuable your offering is.
• Competing on speed can help you stand out even against free services. For instance, expedited DMV services are highly successful despite government services being free due to their efficiency and time-saving aspect.
• Pricing should reflect both the top and bottom sides of the value equation: Enhance the dream outcome and perceived likelihood of achievement while reducing time delay, effort, and sacrifice.
• Aiming to reduce effort and time to zero can make a product infinitely valuable. Consider how industry giants like Amazon and Netflix have successfully employed this strategy.
• Understand that even if you increase the perceived value by enhancing the dream outcome, you must also work on decreasing the bottom factors for a truly compelling offer.
• Differentiating between effort (what the client has to do) and sacrifice (what they have to give up) can inform how you structure your service to add value.
• Use the Value Equation as a tool to assess and improve your business offerings: It can lead to innovation and better customer satisfaction as you tailor your products and services to maximize value.
• Remember that the concepts of value and pricing are intertwined: A clear understanding and application of the value equation can help you justify higher prices and make sales easier.
• Lastly, always aim to facilitate others' success by providing the necessary tools without overextending on costs or relying on trendy internet courses. Your goal is to ensure entrepreneurs have what they need to thrive.

Video

How To Take Action

I would suggest implementing strategies to sell high-value packages by being very clear about the big results you can give your clients. If you can make someone a lot of money, they will be happy to pay you well. You can start by showing them stories of other people who did really well because of your help. That way, they'll believe they can do it too.

A good way of making your stuff look super valuable is by getting results for your clients fast. Everyone loves quick wins! So work hard on making things happen for your clients sooner rather than later. If you can give results on the same day or the next day, you're golden!

It's also smart to make it easy for your clients. The less they have to do, the better. Think about how you can take away their hard work or things they don't want to give up. If your service can save them time and effort, they will see it as really valuable.

Remember, when you price your stuff, you should think about how good the results are and how sure they can be that they'll get those results. And at the same time, make it as fast and as easy as possible for them.

Finally, always focus on helping others succeed. Give them the tools they need without making it too expensive. This way, you help them win and grow their business or personal skills without breaking the bank.

Quotes by Alex Hormozi

"If you can get these bottom things down to zero… you have an infinitely valuable product"

– Alex Hormozi

"The biggest companies decrease the downside of the equation"

– Alex Hormozi

"If you ever compete against somebody who's free or giving away free stuff, compete with speed"

– Alex Hormozi

"We want to increase the perceived likelihood of achievement and when you increase the dream outcome"

– Alex Hormozi

"This is why a lot of marketers start promising bigger and bigger things"

– Alex Hormozi

Full Transcript

you have to spend an hour arm wrestling a client to sell a 1 000 package whereas here people buy 40 000 packages over the phone in less than 15 minutes so when i was 28 years old i was five or six years into business or my business career and i had just gone through a five-day gauntlet so i had done a two-day client event which was we had six or seven hundred clients uh that had come to our highest level program in person and then the next day i had my executive meeting then two days after that i did a meeting uh with all 135 of our employees who flew out uh to austin to to to do a two-day conference with us do some trainings all that kind of stuff my dad calls me up after this kind of five day marathon and he says hey alexander because that's what he calls me right he says hey alexander but he sounded really way more concerned and i was like what's going on um and so i roll out of bed put a hoodie on walking in the hallway so i didn't want you know wake layla and he says i thought you said this was just going to be a meeting of your highest level uh clients and i was like it was he was like didn't those people pay like 42 000 a year the highest level people and i was like yeah he's like but i thought but you just said you had like 700 people there and i was like yeah i know and i was like what's the issue he was like you had 700 people who paid that much money and i was like yeah what kind of came next was something that i think probably stung a little bit at the time but i knew that it wasn't coming from a place of where i didn't think it was coming from a place of of meanness and he says do they know that they're paying you that much i was like yeah they're aware it's not like i'm magically siphoning money out of their bank accounts he's like well i mean i hope i hope what you're giving them is worth it that could have really stung and it probably did um but i think i was kind of in such an emotionally exhausted state because if you've done five days of just pure events of it i was like i had no adrenals to get angry with and so i said well let me walk you through it so i said if i made you 239 000 would you pay me forty two thousand dollars he's like well how long would it take me and i was like it would take you know eleven months he was like okay well do i know i'm gonna make that money and i was like yeah you're pretty sure you're gonna make the money it was like okay he's like what would i have to do i was like you would you know wouldn't have to do a ton you'd have to probably do about 15 hours a week of work he was like okay um and would i have to pay that all up front or like how would i have to pay you i was like you would pay me as you made the money he was like huh well then yeah i would do it and i was like and that's why they do too and so when i walked my father through that kind of mental explanation partially part of it was to make sure that my father you know felt like i was legit but the other part of it his questions actually uh denote what the components of value are and so the purpose of this video is to walk you through the value equation which i think you know might be one of the bigger contributions that i'll have into the the marketing world and there are four components to value that's why i have my little handy-dandy ipad here so we can do this all visually alright so we'll say value and we have the four components of course of value to do when i was creating this it was because i wanted to figure out what this word meant i think value is one of the hardest things that we have as entrepreneurs to understand we just say it it's it's used loosely lifetime value you know provide more value excessive value blah blah blah right but we don't know what it actually means and if you ask someone what is value right how do you just how do you describe value how do you how do you measure or quantify value i think this is my one of my better things and so this is the value equation as alex for mostly defines it okay so there are four components to this the first component is what i consider the dream outcome all right and when i was thinking about this it all started because i was really trying to figure out why some people would buy some things and not other things and at the at the very beginning of this it was if i were selling to men in general more men value making money then losing weight right and so in general the category of things that make people money cost more for men than the category of things of losing weight and that's because the dream outcome of making money at least for men increases status more than losing weight does and so as a result that is deemed more valuable and so while i'll go through each of these components i'm going to give you two kind of examples of one that exemplifies it and doesn't exemplify it so that you can see it kind of in the real world the first component is is the thing that we are selling valuable in terms of is the dream outcome that we're going to deliver to the prospect something that they would like the reason this is probably the first one is because it kind of defines the category now within a category the remaining three variables are the things that will determine what is expensive and what is not and to go back to the the weight loss scenario if i have uh a woman for example who wants to lose weight and i sell there's probably some things that help people lose weight that are five dollars and some things that help you lose weight that are fifty thousand dollars so you've got a five dollar ebook and you've got liposuction all right so why is one five dollars and 150 000 when the dream outcome is the same of losing weight that's where the other three variables of value come into play value number two and obviously the goal here is to increase the dream outcome the more the more appealing we can make it seem the more viscerally we can describe what the dream outcome is going to be like when the when the prospect experiences it then they're going to deem it more valuable and then by extension be willing to pay us more for it the second component of value is perceived likelihood of achievement and believe it or not this was actually the last of the four because i was still trying to figure it out because i felt like something was missing and so this is the easiest example that i can give you mentally for two things where one is more valuable than the other based on the perceived likelihood of achievement and so for example if you were going to get now we'll use liposuction as an example if you're gonna get surgery right from a from a from a doctor and one doctor this is their first surgery coming out of medical school and the other doctor it's their 10 000th surgery of this specific type of surgery which guy would you be willing to pay more for well obviously the 10 000 surgery guy right i mean if anything you probably have the the first time surgery guy you'd want to do it for free or have him pay you right and so and what's funny about this just as an added tangent is that the guy who it's their first time would probably end up taking longer so you're actually getting less time with the guy who's done it 10 000 times than the guy who's done it once or never right and so even though you're actually getting less time you're willing to pay more for it which is just another interesting thing which is why value is not uh time in terms of how long it takes you to fulfill something should never be in the value equation for yourself all right so first is dream outcome is the thing that we're that we're going to sell this the experience that they're going to have would they imagine themselves experiencing going to be allowed to them second is how likely do they perceive the achievement of that dream outcome if i buy something right like that ebook example if i'm buying an e-book versus liposuction the likelihood that i think that i'm actually going to get the stomach that i want is probably significantly lower with an e-book than with liposuction right so the perceived likelihood of achievement is lower and by extension i will now get less value i will perceive less value and be willing to pay less for it and so for us as business owners and promoters for our businesses the goal is that in this equation and the reasons a fraction is that we want to increase both of these things right we want to increase the perceived likelihood of achievement and when you increase the dream outcome this is why a lot of marketers start promising bigger and bigger things i also believe that it's the most amateur it's the most beginner but it's where everyone starts alright this is where i started my career where all i would do is dream is is do bigger and bigger dream outcomes i promise more and more and the perceived likelihood of achievement what i did is i put more and more testimonials so the more testimonials i had the higher the certainty that the person or the prospect would experience what i was selling they believed me that if i had a thousand testimonials versus one you believe the person is better at the thing right and if they're better at the thing you're more certain which actually decreases risk which becomes more valuable third so this is the bottom side of the equation right so the top side of the equation we're trying to increase the bottom side of the equation we're trying to decrease all right so this is time delay so the time delay is the time between when i pay and what i get what i want i have this kind of in two separate pieces here well i'll just i'll just talk about the main one and then i'll talk about the about the fourth one we'll hit it all right so time delay and this is probably one of if not the most powerful things like if you want to enter into a marketplace you can do whatever the best guy is doing and do it in half the time and you will become more valuable right people will pay for speed all right and if you ever compete against somebody who's free or giving away free stuff sometimes you compete against government services i've got a friend of mine who does dmv expedited services in new mexico all right and they have 14 locations of basically expedited dmv services so you can renew your license and all that kind of stuff and they cost 50 bucks instead of being free from the government and they murder it murder it even though they're competing at something that's free they beat them on speed and so if you ever are competing against uh free compete with speed right fast speeds free okay so time delay can i do the thing faster can i get them there faster now the longer it takes the less valuable my service or product is right the shorter it takes the more valuable it is so in theory if i were to click buy on a digital product for a six pack and then look at my abs and i have a six pack that would be an infinitely valuable product right and so if we can think about our services as like how quickly right can i make this happen in reality a different example would be um if i were selling marketing services right to a physician and as soon as their card ran their phone rang right on the front desk with somebody saying hey i just heard about your thing i'm qualified i'd like to buy your services that would be unbelievably valuable right immeasurably valuable because of the speed right and so you can in a very real way increase the value of what you sell without changing the thing but only delivering the outcome faster that's the third component of value so the idea here is that we want to decrease the time delay right we want to make it faster for the prospect to experience the outcome that we are promising fourth component of value all right and there's two components to this i'm going to give you some nuances here it's effort and sacrifice so effort is what someone must do that they don't want to do in order to achieve the outcome sacrifice is what they have to give up or stop doing that they do enjoy doing in order to achieve the outcome so i'll give you an example of both all right so it's kind of like 4 4a and 4b right but i think they're kind of i bulk them in the same thing because i think they are similar enough that they're worth uh putting in the same bucket so effort for example would be like if i wanted to lose weight right then uh if i'm you know cindy lou all of a sudden i'm not doing certain things i might not be weighing my food i might not be counting my calories i might not be eating you know shopping at the healthy grocery store i might not be working out in the morning i might not be waking up right early in order to get the gym i might not have an extra hour or two every day that i have to dedicate to this i might not be sore right these are all things that i now have to experience that i don't want to experience that are part of effort right these are things that make this less valuable on the flip side if i were to uh sacrifice i'm sacrificing the foods i love i'm sacrificing sleeping in i'm sacrificing walking down the stairs without being in pain and so i think effort and sacrifice oftentimes are flip kind of both sides of the coin right they're either they're heads and tails of the same concept which is why but i think if you can think of that in terms of your own services like what am i making someone give up and what am i making someone start doing that they weren't doing before that they don't want to do right and so again the goal here is how can i decrease the effort and sacrifice associated with achieving the outcome when they buy from me the example would be if i had the the abs thing right now let's say it was instant but it was like incredibly painful right well you clicked the button then you get the abs but it was just like it felt like fire all over your body that would be a lot of effort from sac i mean that's painful right that's literally painful versus nothing at all well in each of those examples the one that isn't painful is going to be more valuable right and so as i think through product lines service lines i always attack it from this perspective all right is how can i create more value by increasing the dream outcome and my expression of it so that they believe what i'm saying and the way i have depicted what they want to be actually what they want and you would be surprised how many times people get this wrong right i was talking to um dr john berardi is the co-founder of precision nutrition they sold for a a nine figure plus exit he was talking about one of the biggest breakthroughs they had in their business when they understood the job to be done all right so they sold search certifications right he said most people think that selling certification is about selling continued education he was like that's not the dream outcome people are not actually wanting to buy the certification the dream outcome of the certification and the experience around that is actually being in a community and being meshed with other people who are just like you weird just like you and so as soon as they realized that that was actually the job to be done and people just wanted a socially acceptable excuse to go do that right certification is socially acceptable excuse to do that then in that instance now they had to find the dream outcome properly as to what people actually wanted right and so that was a huge breakthrough in their business and then business well up and all that kind of stuff and so getting the dream outcome right may seem simple but a lot of times being able to depict it accurately back to the prospect as they desire it um is extremely valuable so the goal is to increase the top side and decrease the bottom side and one of the things that and the reason this is a fraction and not an addition and then subtraction equation is that if you can get these bottom things down to zero right getting the bottom to zero you have an infinitely valuable product so no matter what your promise is on the top even it's tiny a tiny inconvenience you help people avoid if it's immediate and it requires no effort on their part you have an infinitely valuable product and when i look at the biggest businesses when i look at my own businesses and how i've changed as an entrepreneur over time i used to focus only on the top side and now when i look at the amazons i look at the netflix i look at uber all of that stuff is stuff that decreased the downside uber made it immediate and you now you now if you've seen on lyft you can be uh you can get first in line right so it's like boom you can hit it for an extra five dollars you can get picked up an extra like in a minute right it's crazy but they were smart about it they realized they could increase the value by decreasing the time delay netflix made decreased all the effort and sacrifice that went along with watching television and seeing uh and running movies and all that stuff it was immediate for them right there's no effort no sacrifice it's all right there you don't have any picking it's just boom they're like make suggestions etc this theme amazon right you buy it and then they've got drones delivering it to you in two hours right they consistently the biggest companies decrease the downside of the equation which is where more of the work happens but in my opinion it's also where the biggest moat lies from a competitive advantage standpoint and so this as i look at my companies this is what i'm focusing on with our products and our services how can we decrease the time delay how can we how can we decrease the effort and sacrifice that are associated with achieving the outcome that we want and then in so doing increase the perceived likelihood of achievement of the pro of the prospect so what i want to do is give you one side-by-side example of this concept so you've got personal training and you've got uh lipo all right so you've got both kind of versions of the same dream outcome all right so both stream outcomes are you're gonna look good you're gonna feel good all that kind of stuff right so i would say this is a is a one out of one um if we were to rate this on a binary scale of does it achieve the dream outcome yes personal training will help you look good feel good etc liposuction help you look good feel good etc all right now look at let's look at the second second thing here right perceive likelihood of achievement if you're buying personal training the perceived likelihood of achievement probably kind of low right because you're like am i really going to do this am i really going to follow the nutrition plan am i really going to wake up you know am i going to do all this stuff do i really think it's going to happen for me probably put a zero most people don't actually think they're going to be successful when they buy the thing now on the contrary liposuction do you think that you're going to have less fat on your stomach when you buy section the answer is yes you do think that you're going to have less so the perceived likelihood that you're going to do it very high which is a one let's go to number three so time delay all right so personal training am i going to have it immediately no personal training might take 12 months or 18 months or 24 months before i get to my ideal weight and even then i still might not be my body might not the way i want it to look or my stomach might have extra skin all that kind of stuff right so it's going to take a long time for me to get to where i want to get to right it's not going to happen soon boom we've got another another zero here now liposuction if they just suck all the stuff out of my stomach and they cut the skin off right and it's nice and tight right what's the like what's the the time delay on that i don't know maybe a month maybe two months right before before it's it's all ready and sucked in right so it's a short and much shorter time time delay for the dream outcome to occur and then finally effort and sacrifice for personal training all the things i gave earlier right i gotta give i gotta i gotta go i gotta change the way i shop i gotta change the way i eat i gotta wake up early i gotta be sore three days a week right i might not be able to eat with my kids like there's all these other pains that go with i gotta learn how to cook healthy all these things right lipo i don't change anything right the effort and sacrifices i i fall asleep and instantly i'm woking back up from my medical coma i am sore in my stomach for sure you know for three or four weeks but then after that it's done right whereas here on this personal training side right i'm going to be sort of for for years right now my goal here is not to debate whether uh you know i think people should do fitness or do liposuction i'm obviously just do whatever you want right but for the for the for the context of us as business owners to understand the difference in value this is a one out of four and this is a four out of four which is why you have to spend an hour arm wrestling a client to sell a 1 000 package whereas here people buy 40 000 packages over the phone in less than 15 minutes and that is the difference of value and that is why the value equation is how i think that i this is how i see business this has taken me a long time to figure out and so i wanted to share it with you guys so anyways lots of love keeping amazing and if this was interesting for you fyi my book just released um it's 99 cents you can get it i made it 99 cents and the goal of all the things that i have here is um you know we're trying to build a portfolio of companies that does a billion dollars in revenue we're currently at about 85 million i know there are a lot of broke people in the world and uh my point here is to make sure that you are not one of them and to equip entrepreneurs with the stuff that they need to succeed without having to buy any courses on the internet so uh keeping awesome lots of love and see you in the next vid bye