NEVER lower your prices…

Summary

• If you're selling something you truly believe in, you're likely to make more money.
• Conviction in your product can lead to the decision to increase prices for the better.
• When I switched from a $99 to a $299 per month program, I tripled my prices but added more value, resulting in doubling the revenue despite losing one-third of my customers.
• Attempting to decrease churn by lowering prices can be a costly mistake.
• Lowering prices from $800 to $600 per week led to a $5 million annual profit loss without a change in churn.
• If you add more services and lower your price at the same time, this can be harmful if your churn doesn't decrease as you expect.
• Increasing costs by $1 million annually and reducing top line by $400,000 per month is a bad combination if churn isn't affected.
• There are six ways to increase lifetime value (LTV): increase prices, decrease costs, and focus on resells, upsells, cross-sells, and down-sells.
• In most cases, providing more value and charging a higher price will make you more money, while servicing fewer people at higher prices.
• Usually lowering your price leads to making less money, even with increased value provided.
• Small changes in pricing can have a significant impact; increasing prices can be better than lowering them for profit margins.
• Understand the relationship between pricing changes and profit; reducing prices may necessitate selling more for the same profit, while increasing prices might not reduce sales as much but can increase profit.
• Making pricing decisions should be approached cautiously, as they can have substantial impacts on your business's financial health.

Video

How To Take Action

Okay, here's what you should do if you want to make more money and grow. Believe in what you're selling. That's key. If you know you got a great product, you might want to bump up that price. Adding value can justify a higher price tag, and that could mean you make more cash, even if not everyone sticks around.

Here’s what went down when I made my move:

1. I switched from a $99 to a $299 program because I believed in it more. I lost some customers, but still doubled my revenue because I was giving them something much better.
2. I tried lowering prices to make customers stay longer (churn less). Not a good move. I cut prices and added more services. The thing is, it didn't work – churn stayed the same and I lost a lot of profit.

So, here's what you need to do:

• If you're gonna change your prices, think about lifetime value (LTV). Can you bump it by doing things like adding upsells or cross-sells instead of lowering your prices?
• Think real hard before you drop your prices. You gotta sell a whole lot more just to make the same amount of money.
• If you do raise prices, guess what? You might not lose as many customers as you think but could make a whole lot more.

Always remember, pricing decisions can really shake up your business. Be smart about it. If you can provide more value, and charge for it, go for it. Helping fewer people at a higher price can actually work out better.

Quotes

"Pro tip: If you can sell something that you truly believe in, you'll make a lot more money"

– Alex Hormozi

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"Most times when you lower your prices, you make a lot less money"

– Alex Hormozi

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"Providing more value and charging a higher price… will make you more money"

– Alex Hormozi

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"Servicing fewer people at higher prices… will make you more money"

– Alex Hormozi

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"Small tweaks, big changes, lots of impact"

– Alex Hormozi