How To Make $5 Million in 8 Weeks
Summary
- We significantly increased a business's profit by doubling the price of their service. This change alone led to a boost in perceived value and surprisingly attracted more customers, thereby increasing profit margins.
- In most cases, increasing the price doesn't decrease demand in the same proportion. Doubling your price might reduce sales by a smaller margin but can significantly increase overall profit.
- It's important to test pricing strategies regularly, just as you would test marketing pages, sales scripts, or offers. The price is one of the most powerful levers for profit increase.
- To determine the right price increase, start by surveying your existing audience with questions that help understand both their demographics and their perceived value of your product or service.
- Communicate any price changes internally to your team before announcing them to your customers. Use the past, present, and future framework to explain the reasons behind the price increase.
- Prepare for a possible initial drop in sales volume following a price change. It's essential to let the situation settle and then assess the new profit margins to ensure the change is beneficial.
- In the hypothetical scenario of a "Grow Your Calves" program, we would first conduct a detailed survey to analyze customer demographics and value perception. Then we'd adjust pricing based on that data, potentially leading to a significant profit increase.
- Emotional attachment often prevents business owners from raising prices. However, overcoming this fear and testing new pricing strategies can reveal untapped profit potential.
- Remember, the key is to find the "sweet spot"—a price point that feels like a stretch but still within reach for your customers, maximizing profit without significantly impacting demand.
Video
How To Take Action
A good way of doing more with what you have is by focusing on pricing. If you have a product or service you think is really top-notch, try raising the price! Don't be scared. Price can make your stuff seem more valuable to people. They might even want it more because it costs more.
First, ask your customers what they think about what they're buying from you. Find out why they bought it, what they make (like money-wise), and what’s important to them. This helps you see how much they can spend and what they love about your stuff.
Then, before you tell everyone you're upping the price, tell your team. Make sure they know why prices are going up and what it means for the future. This way, they can explain it to customers, too.
Next, let your customers know. Use the past, present, and future idea: talk about why things were a certain price before, why you're changing it now, and how this helps in the long term.
Now, get ready for maybe fewer people buying at first when the price goes up. It's okay, don't freak out. Give it some time and look at the numbers later. Are you making more money even with fewer sales? If yes, then you did a great job!
So, for example, if you have a "Grow Your Calves" workout program, and you learn that people would pay more for it, bump up the price. Try something that feels like a stretch to them but not too crazy. If you do it right, you could be making way more than before. Maybe you'll even get more customers because your calf program looks like the real deal with a higher price.
Remember, testing is key. Price is a big deal and can change a lot for your business. Don't just set it and forget it. Keep an eye on how it's working out.
Quotes
"I will double the amount of customers that you bring in every month with this business"
– Alex Hormozi
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"I will double your price"
– Alex Hormozi
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"I will double how long they stay"
– Alex Hormozi
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"The number one lever that you have on profits is pricing"
– Alex Hormozi
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"Let the math do the talking"
– Alex Hormozi
