This Lesson Cost me 5000000

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This Lesson Cost me $5,000,000…

Summary

  • I learned a difficult lesson when my employees complained about our pricing, saying it was too high and contributing to high churn rates of 15% month over month.
  • Against my better judgment, I agreed to drop our weekly rate from $800 to $600 and add additional coaching services without increasing the price.
  • This decision was intended to reduce churn and increase customer satisfaction.
  • After implementing the price drop and enhanced services, complaints arose from existing clients who were upset about previously paying a higher rate.
  • This change not only upset customers but also reduced my profits by $400 a month per client.
  • Despite our efforts, the churn rate remained unchanged after the pricing adjustment and service additions.
  • As a result of listening to those employees and making those changes, I lost $5 million.
  • It's important to not devalue your service or product out of fear; sometimes, lowering prices does not resolve underlying issues and can lead to larger financial loss.

Video

How To Take Action

To avoid making the same mistakes I did, I suggest sticking to your value. Stay firm on your price if you know it's worth it. If you're scared that it's too high, do not lower it out of fear. Sometimes, lowering prices doesn't fix the real problem. If people say your business is expensive, look into adding more value instead of dropping the price.

Okay, here's what to do:

  1. Examine the value you provide: Make sure you understand why your product or service is worth it. Ask yourself, "Am I giving my clients enough reason to stay?"

  2. Listen to feedback, but be smart: Take what your employees and customers say seriously. But remember, you know your business's worth. Don't make fast changes just because someone said so.

  3. Focus on adding value: Can you give something extra without costing you a lot? Think about a small bonus, a little more time with you, or a helpful resource. More value can make your customers happier without cutting your prices.

  1. Communicate changes clearly: If you do change something, make sure your current clients know why. Help them see it's fair for everyone, including them.

  2. Measure the impact: After any change, look at your numbers. Did the churn rate go down? Are you making less money? If things aren't working, you might need to go back to how they were before.

  3. Don't fear prices: If you're great at what you do, charge for it. Don't let fear make you lose money. Your confidence in your price can make your customers confident too.

  1. Learn from mistakes: If you mess up, it's okay. Figure out what went wrong and how to fix it. Don't lose a lot of money before you do this.

Follow these steps, and you'll handle pricing like a pro. Remember, more value, not less money!

Quotes by Alex Hormozi

"Soul crushing right because they were like our churn is 15 month over month right it's terrible."

– Alex Hormozi

"I think we got to lower our price."

– Alex Hormozi

"We're going to go from 800 a week to 600 a week."

– Alex Hormozi

"Big announcement super excited."

– Alex Hormozi

"Give more for less just crazy over delivery."

– Alex Hormozi

Full Transcript

the corresponding increase in sales i'll give you one hard learned example that i had my employees two years ago bitched and moaned about how they thought we were too expensive soul crushing right because they were like our churn is 15 month over month right it's terrible it's it's it's yeah heartbreaking and we had been there for like a year they're like i think we got to lower our price so we said we're going to go from 800 a week to 600 a week that was going to be our price drop we made this big announcement right big announcement super excited not only that we're going to give a discount and add coaching services on top so we're going to give more for less just crazy over delivery first off i got complaints from clients because they were upset that they had paid more number two i cut my profit by 400 dollars a month and my churn remained the same wow so that series of employees lost me five million dollars wow and you do not have to learn that lesson

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