The Frozen Yogurt Secret
Summary
- Understand that businesses often lead with their cheapest products. In the case of yogurt stores, the variety of yogurt flavors is the first thing presented because yogurt has the lowest cost per ounce for the store.
- Recognize that businesses charge the same price for items with different cost bases, which maximizes their profit.
- Be aware that the placement of items in a store is strategic. Yogurt stores offer dry toppings like chocolate chips, crackers, and cookies after the yogurt because they're also inexpensive and have a longer shelf life.
- Note that the most expensive items, such as fresh fruit, are positioned last. This is because they cost more and could spoil, so stores want customers to use these sparingly.
- Remember that businesses structure their offerings to both provide selection and optimize profits, arranging items so that the most profitable ones are more likely to be chosen or used in greater quantities.
Video
How To Take Action
I would suggest understanding how to set up your products or services to increase your profits. Start with what costs you less and get people interested in those first. For example, if you run a food business, let the cheaper ingredients or dishes be the first thing customers see, so they might choose those more.
Always think about how you're pricing things. Try to charge the same price for items that cost you different amounts to make or buy. This can help you earn more money from things that are cheaper for you to get.
Next, look at how you place items or present services. Offer the low-cost items first. If you sell things that last a long time without going bad or are cheap, put those out front. For example, if it's a store, the less expensive snacks could be at the start of the aisle.
Be careful with expensive stuff that could go bad, like fresh fruit at a yogurt shop. Put these items at the end where customers will see them after they've already picked other things. This way, people won't use too much of the costly stuff.
Remember to set up your offerings so you give people good choices but also make sure you're making a good profit. Think about what order customers see and pick things, and use that to help your business make more money.
Quotes by Alex Hormozi
"Yogurt is actually the cheapest thing per ounce for the store but everything's charged at the same price"
– Alex Hormozi
"They want you to fill up your cup with the thing that costs the least for them that they can charge the most for"
– Alex Hormozi
"The next cheapest thing that they have well it's the next set of toppings which usually dry toppings"
– Alex Hormozi
"They don't go bad they can last longer and they're usually cheaper again"
– Alex Hormozi
"They give you the selection but they optimize the process so they make the most profit per cup"
– Alex Hormozi
Full Transcript
yogurt stores are making more money on you than you think you walk up and what's the first thing you have you have all the different flavors of yogurt why is that first because yogurt is actually the cheapest thing per ounce for the store but everything's charged at the same price and so they want you to fill up your cup with the thing that costs the least for them that they can charge the most for what's the next cheapest thing that they have well it's the next set of toppings which usually dry toppings they don't go bad they can last longer and they're usually cheaper again that's the chocolate chips the crackers the cookies those things now what's the most expensive thing per ounce well that's going to be all the fruit those things go bad they have to buy them fresh and so they wait to the very end so you've almost filled up your cup and just put a little bit on and that way they can give you the selection but they optimize the process so they make the most profit per cup
