From: alexhormozi
Offering initial products or services for free can be a strategic way to build a business, especially an online service business, as it allows for low-stakes learning and the acquisition of crucial assets [00:14:26]. This approach enabled the speaker to make their first $10,000 online [00:00:00].
Personal Journey: The Free Training Project
The speaker’s journey began with a deep passion for fitness [00:00:09]. Recognizing this passion, colleagues even offered to front money if the speaker pursued fitness professionally [00:00:24]. A pivotal moment occurred when someone offered to pay for fitness advice, sparking the realization that profit could be made from a passion [00:01:55].
This led to the creation of the “Free Training Project” [00:00:33]. The initial idea was for individuals to donate 1,000 to a charity of their choice in exchange for three months of free training [00:00:36]. This was considered “free” because the payment was not directly to the trainer, but to a cause the client cared about, providing “skin in the game” [00:00:41].
Key Advantages of Starting Free
1. Acquiring Proof and Testimonials
The primary reason to start with free services is to accumulate tangible proof of effectiveness [00:03:03]. The speaker began by offering free help to friends (“homies”) to gather before-and-after pictures and testimonials [00:02:40]. These initial clients provided diverse success stories, such as a 50lb weight loss, body recomposition, and improved appearance, which served as evidence of the trainer’s expertise [00:03:22].
This early proof is more powerful than an elaborate offer with no supporting evidence [00:03:09]. Testimonials should be similar enough to potential clients’ situations to make the results believable and transferable [00:03:16].
2. Generating Referrals
Once clients achieve results, they become a source of valuable referrals [00:03:56]. Referrals are considered the most important type of marketing because:
- They are free [00:04:03].
- Referred leads have a higher likelihood of purchasing at higher prices [00:04:09].
- Clients acquired through referral are more likely to refer others, creating a self-perpetuating growth loop [00:04:22].
If a business isn’t generating referrals, it suggests the service might not be good enough yet [00:04:36]. Providing value upfront, even for free, encourages clients to share their positive experiences [00:11:12].
3. Building an Initial Customer List
By working with friends and then through referrals, the speaker built an initial customer list of around 6 to 10 people [00:02:24], [00:11:31]. These early, free clients were instrumental in refining the service and gathering necessary proof before transitioning to paid offerings. The “free training project” specifically helped gather a wider range of transformations and support for the charitable aspect [00:12:14].
4. Overcoming Fear of Charging
Starting with free services can help entrepreneurs overcome the “fear of charging for making money” [00:13:12]. By first demonstrating value and achieving results, the transition to paid services feels more natural and justifiable.
5. Learning in a Low-Stakes Environment
An online service business is ideal for beginners because it has low startup costs, minimal recurring overhead, and can be operated from anywhere [00:14:04]. This allows new entrepreneurs to make inevitable mistakes without high financial risk [00:14:26].
6. Templating Solutions
The initial free period provides an opportunity to develop and template solutions for common client needs [00:26:30]. For instance, the speaker created an extensive Excel sheet to quickly generate customized meal plans and grocery lists, saving significant time later [00:25:50]. This investment in efficiency during the free phase allows for greater value delivery at lower cost when the service is monetized [00:27:29].
7. Strategic Compensation Beyond Money
While clients don’t pay money directly, they can compensate the service provider in other valuable non-monetary ways [00:24:03]:
- Testimonials: Powerful marketing assets that can generate more money long-term than a single payment [00:24:08].
- Feedback: Crucial for improving the service and addressing common client issues [00:26:39].
- Referrals: As noted above, they are a free and high-converting lead source [00:24:32].
The speaker advocates for a “full price or free” approach, avoiding discounts to maintain perceived value and avoid negotiation [00:24:47]. The “free” offer is a trade for these valuable non-monetary assets [00:25:27].
Transition to Paid Services
After a year of running the free and charity-based projects, gathering testimonials and proof, the speaker officially launched a paid service called “Skinny to Swoll” [00:13:21]. This involved charging new clients 4,000 per month and ultimately $12,000 [00:13:32]. The existing free clients could also transition to paid services without significant loss, as they valued the results [00:12:50]. This strategy aligns with the broader principle of transitioning from free to paid services.
Modern Application: The Rule of 300 for Lead Generation
For beginners, the speaker recommends a “Rule of 300” for generating leads [00:06:01]:
- Post Content: Share one piece of content on one platform [00:06:08].
- Make 100 Comments: Engage thoughtfully in relevant groups or communities [00:06:17]. These comments gain visibility by piggybacking on other people’s content [00:10:28].
- One-on-One Outreach: Reach out to anyone who liked your post, commented on your post, liked your comments, or replied to your comments [00:07:10]. These individuals have shown interest, making them “engaged leads” [00:08:00]. This strategy effectively uses free content for lead generation.
This process, though requiring 2-4 hours daily, helps overcome the initial hurdle of having no audience by actively letting people know you exist [00:10:58], [00:11:07]. This directly relates to effective marketing and cost-saving strategies.