From: alexhormozi
Ashley Caps, founder of AC Styles, operates a personal styling business that generates approximately $309,000 annually with a 42% net profit margin, serving over 1,000 clients in four years [00:34:36]. Her business model already incorporates strong elements of continuity and recurring revenue, which are crucial for building a sustainable business model.
Current Continuity Model
AC Styles employs a two-phase approach that naturally transitions clients into ongoing relationships:
- Onboarding Phase (Phase One): This initial package costs $8,500 over 60 days [03:26:01]. It includes a style assessment, gutting and reorganizing the client’s current wardrobe, and introducing 5 to 10 new outfits [02:01:21], [44:51:39]. A key component is documenting an inventory of their closet for future reference [45:07:44].
- Ongoing Styling Sessions (Phase Two): After onboarding, clients can opt for monthly at 4,500 per quarter [03:30:30]. This includes ongoing styling, new lookbooks, and an on-demand service for quick requests [02:14:02].
Ashley’s business also generates about 10% of its revenue from commissions on clothes purchased through vendors [03:36:03]. Notably, AC Styles transitioned from offering two tiers, including one-time services, to focusing solely on the luxury tier, which proved more profitable [03:47:04].
Strong Retention Metrics
Ashley’s business demonstrates excellent customer retention:
- Out of 40 active clients, only one churned in the last year, representing an annual churn rate of approximately 2.5% [07:17:10].
- The Lifetime Value (LTV) of a customer is estimated at $10,000 annually [07:00:46].
- The LTV to Customer Acquisition Cost (CAC) ratio is 16:1, indicating a very healthy economic model where the cost of acquiring a customer is significantly lower than the revenue they generate over their lifetime [07:03:09].
Many existing clients are grandfathered into older pricing models, such as 1,500 quarterly [46:27:07]. The new pricing (2K/month or 4500/quarter) was only implemented in September [46:48:38].
Expert Analysis and Recommendations for Continuity
According to business expert Alex Hormozi, every quality business has recurring or reoccurring revenue [03:02:26]. The quality of a service or product is determined by the percentage of customers who want to buy it repeatedly [03:13:58]. The ideal scenario is to acquire a customer once and have them continue paying for life [03:17:41].
Given Ashley’s already robust continuity metrics (low churn, high LTV, and good “stick rates” where clients keep paying [06:37:54]), major overhauls to the continuity model were not prioritized. Instead, the focus was on leveraging existing strengths and increasing volume.
Pricing Strategy for Continuity
Alex advised Ashley to maintain both monthly (4,500) pricing options for her ongoing services [47:44:06]. The monthly option serves as a “price anchor,” making the quarterly option seem more appealing even if a higher percentage of clients choose it. This strategy helps to manage client perception of value and cost. He suggested that her LTV would naturally increase over time as more clients transition to the new, higher pricing structure [50:05:37].
Ultimately, the market should dictate pricing. Continuously edging up prices until customer acceptance wanes helps identify the optimal price point for the target audience [49:37:37].
The Core Opportunity: Scaling Volume
While continuity is strong, the primary challenge identified by Ashley was a lack of consistent lead flow [06:17:47]. With healthy core economics, the main leverage point for her business is simply to increase the number of leads [07:32:05]. Ashley’s business currently generates an astonishing 1 invested in marketing [34:40:02], indicating immense untapped potential by simply increasing ad spend and optimizing lead generation. This demonstrates the power of a strong core business model in fueling rapid growth once lead flow is addressed.