From: alexhormozi
To significantly increase revenue, consider selling more expensive items [00:00:32].
The 10x, 50x, 100x Pricing Mindset
Start by identifying the average price of your current offering. Then, conceptualize products or services that are 10 times, 50 times, or even 100 times more expensive [00:00:18]. For example, if your main product is 1,000 (10x), 10,000 (100x) [00:00:23]. The goal is to provide value at these higher price points that justifies the cost, making the customer feel they are getting a “Ferrari for $10,000” [00:04:24].
Strategic Market Positioning
There is no strategic benefit to being the second cheapest in the market [00:00:34]. The only strategic benefit to being the lowest cost provider is if your entire business is built around operational efficiency and automation, allowing you to provide the same product for less [00:00:41]. Otherwise, attempting to compete on price will lead to no profit and potentially running a non-profit business [00:00:53]. Instead, aim to be the most expensive [00:00:37].
The Power of Price Anchoring
Price anchoring is a highly effective psychological strategy in pricing strategies and adjustments [00:01:29].
How it Works
Presenting a significantly high price first makes subsequent, lower prices seem more reasonable by comparison [00:01:47]. For example, if you first see a suit priced at 2,900 suit suddenly appears affordable [00:01:14]. Similarly, in a pricing menu for a membership, list the most expensive option first; all other options will then appear cheaper [00:02:08]. This works across various industries, from wine to software, because it leverages psychological principles [00:02:17].
Benefits of High Anchors
- Anchors Other Pricing: It “stretches the length” through which customers perceive your pricing, making other options appear more attractive [00:01:52].
- Attracts “Whales”: A certain segment of the population consistently buys the most expensive option [00:04:43]. Including a super expensive item on your menu does not hurt and may surprise you with sales [00:04:46]. If you don’t get a gasp from the price, you didn’t go high enough [00:04:54].
Tiered Pricing Structure
When offering multiple options, like small, medium, and large, the placement of the middle price point can influence which product sells the most [00:02:38].
- If you have a 10 (large) option, and you price the medium at 6 option because it seems like a great deal for only a dollar more than the small [00:02:51].
- However, if you price the medium at 10 option, perceiving that for just one dollar more, they get twice the value of the small [00:03:06].
Defining Value and Overcoming Price Objections
Price vs. Value vs. Deal
- Price: What you pay [00:03:22].
- Value: What you get [00:03:22].
- Deal: The discrepancy between price and value [00:03:23].
The “Affordability” Myth
The belief that customers “cannot afford” expensive items is often incorrect [00:04:05]. If a customer truly understands the value of an expensive product—perceiving it as a “Ferrari for $10,000”—they will find a way to acquire the money [00:03:39]. The reason someone isn’t buying is usually that they don’t understand the value [00:03:54]. The goal is to make the value, relative to the price, a huge bargain [00:04:13].
Pricing by Customer Segmentation
Avoid small incremental price differences like 110, 100, 1,000 per month [00:05:34]. Your service might be worth more to a large corporation like Coca-Cola than to a local brewery, and you can price accordingly [00:05:44]. An expert providing a 10% conversion rate optimization might be worth 1 million store, but 100 million store, based on the value delivered to their specific business [00:05:53].
By implementing these high ticket sales strategies and strategies for premium pricing, you can optimize your pricing and compensation strategies and maximize profits [00:06:06].