The SIMPLE FORMULA that has DESTROYED BILLION DOLLAR BUSINESSES

Summary

• Understand the three key lines in your business: price, value, and cost of goods.
• Ensure there is a significant customer surplus, which is the value customers feel they receive above what they pay.
• Create a product that provides immense value but costs you very little, echoing the Netflix model of high margins and customer satisfaction.
• Aim for a customer surplus that is so great that it prompts word-of-mouth marketing, effectively reducing your customer acquisition costs to zero.
• Focus on scaling your business through word-of-mouth rather than solely relying on traditional marketing methods.
• Strive to adjust the three lines – provide maximum value, minimize cost of goods, and set a price point that ensures valuable customer surplus.
• Utilize this framework to not only improve your own business but also to understand and assess the value proposition of potential competitors.
• By focusing on delivering high value at low cost, you position yourself to make a significant profit and help a vast number of people.

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How To Take Action

I would suggest focusing on creating a product or service that delivers amazing value at a low cost. First, think about what can offer a lot of value to your customers, something they'll love and talk about. This could be anything from a handmade item to a unique service. Now make sure that this awesome thing doesn't cost you much to make or do.

Then, set a price for your product or service that's fair but also lets you make a good profit. Remember, the more value customers feel they're getting compared to what they're paying, the happier they'll be. That means they'll want to tell their friends about it.

Also, always look for ways to make your product or service better without increasing costs. This could mean finding cheaper materials that still do a great job or making your processes more efficient.

Keep an eye on what your competitors are doing too. By understanding their price, value, and costs, you can figure out how to make your own product or service stand out.

Let's make sure to give customers so much value that they can't help but talk about us. If we do this, we won't have to spend much on marketing because our happy customers will be doing that for us, for free. The key to growing your business and making a lot of money is to master these three things: price, value, and cost. Let's work on that and help a lot of people while building our businesses.

Quotes

"The higher the surplus, the greater the distance between these two things here, the more value they will perceive that they have gotten from your services"

– Alex Hormozi

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"The bigger you do this discrepancy, the more viral your business will become"

– Alex Hormozi

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"If you conquer this piece, you conquer the customer surplus in terms of how much value they are getting for what they are paying, then you will have an infinitely scalable business"

– Alex Hormozi

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"The goal should always be to have a business that grows on word of mouth"

– Alex Hormozi

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"If you have the surplus big enough and you go from good to great and great to so good that people cannot help but tell their friends about you, remarkable or remark worthy, then you will have more customers than you know what to do with"

– Alex Hormozi