From: alexhormozi
The core idea of selling the same thing for more money is by crafting offers so compelling that people feel “stupid saying no” [00:00:00]. Nailing your offer is identified as the single most impactful action for increasing revenue [00:00:06], [00:00:38].
What is an Offer?
An “offer” is defined as what you literally give someone in exchange for money [00:02:24]. It serves as the bridge between the product (the “stuff”) and the market (the “peoples”), packaging and communicating what is exchanged for dollars [00:02:28].
Shitty Offers vs. Strong Offers
A “shitty offer” weakly connects to the market, resulting in little flow [00:02:38]. Indicators of a poor offer include:
- Difficulty in acquiring leads [00:02:51].
- Low purchase intent from most people [00:02:52].
- Customers comparing your prices to competitors, leading to a price-driven decision [00:02:54], [00:03:13]. This means prospects view offerings as interchangeable and opt for the lowest price [00:03:16].
A “strong offer” connects to a large segment of the market, generating more revenue [00:03:35]. The goal is to make an offer that makes the entire target niche feel they “need this” [00:03:44]. This often involves doing more work than competitors are willing to do [00:03:55], shifting customers to a value-driven decision [00:04:02].
Benefits of Nailing Your Offer
A well-crafted offer directly impacts business success by:
- Increasing Response Rates: More people engage with your advertisements [00:04:17].
- Increasing Conversion Rates: More people you interact with will say yes to your offer [00:04:26].
- Enabling Premium Pricing: Customers are willing to pay higher prices [00:04:33].
These combined effects lead to significantly higher revenue and profit [00:04:41]. An example shared showed an agency’s return on advertising increase from 0.5:1 to 11.2:1 just by changing the offer, without altering the business mechanics [00:05:07], [00:07:53].
Selling to the Right People
Selling to valuable people makes more money than selling to anyone regardless of who they are [00:08:41]. The same amount of work can yield 100 times the pay if the client inherently has more value or potential for growth [00:09:38], [00:09:59].
Value Derivation
The value derived is often about who you find, not necessarily what you provide [00:12:41], [00:12:43]. Choosing to serve clients who are more valuable (e.g., a billionaire vs. an average person) can dramatically increase outcomes for the same effort [00:13:24].
Characteristics of a Desirable Market Segment
When selecting a market, four characteristics are crucial:
- Pain: Do they have a problem you can solve [00:14:19]? Look for “starving crowds” — underserved sub-segments within markets that have money but haven’t been presented with the right offer [00:15:28].
- Purchasing Power: Do they have the money to spend [00:14:21]? Anecdotally, revealing the price earlier in the sales process attracts better-qualified prospects who can afford the offering [00:16:26].
- Ease of Finding: Can you find them easily [00:14:25]? Aggregated groups (associations, Facebook groups) make advertising and outreach more efficient [00:17:12].
- Growth: Will the market be bigger tomorrow than it is today [00:14:28]? It is essential to be in a growing market (“the right boat”) rather than a shrinking one, as market forces can override even the best management [00:18:55], [00:19:57].
The Importance of Charging More (The Right Price)
“Charge as much as you can without cracking a smile” [00:20:56].
Price to Value Discrepancy
Price is what you pay; value is what you get [00:21:11]. Customers cancel or don’t buy when perceived value falls below price [00:21:20]. Everyone seeks a bargain, meaning they desire high value for the price [00:21:30].
There are two ways to increase this discrepancy:
- The Hard Way (Lowering Prices): Competing on price turns your offering into a commodity and often leads to lower profits [00:21:51]. This often results in a “vicious cycle” where businesses continually offer more for less, eventually struggling to remain profitable [00:25:00].
- The Easy Way (Increasing Value): Competing on value creates a value-driven decision [00:22:15]. The goal is to stack so much value that the price naturally follows, forcing the customer to view your offer as incomparable [00:22:22]. While price has a floor (zero), value can increase infinitely [00:23:22].
The Virtuous Cycle of Price
Increasing your price initiates a positive feedback loop:
- Increased Emotional Investment & Perceived Value: Prospects emotionally invest more and perceive higher value [00:25:52].
- Improved Client Results: Due to higher investment, clients achieve better results [00:25:57].
- Reduced Demandingness: Higher-paying clients tend to be less demanding [00:26:03].
- Increased Revenue per Customer: More money means you can provide better service and fulfillment [00:26:25].
- Enhanced Profit and Impact: Higher prices lead to more profit, a sense of being a “good business person,” and increased perception of positive impact on the world [00:27:07].
- Better Service and Sales Conviction: The ability to attract and pay better talent increases service levels, and the sales team gains greater conviction in the offering, leading to more persistent and effective selling [00:27:30].
The Bidirectional Relationship Between Price and Value
A science experiment demonstrated that blind taste testers rated the same wine differently based on its perceived price (cheap, medium, expensive) [00:30:41]. This illustrates a bidirectional relationship where price itself is a component of perceived value [00:31:12]. Charging more can make people perceive your product as inherently more valuable [00:31:17]. The goal is to be so much more expensive that consumers categorize your solution differently [00:31:41].
Reverse Engineering Value: The Value Equation
Value is not an amorphous concept; it’s a formula that can be repeated [00:38:34]. The value equation comprises four variables [00:37:26]:
- Dream Outcome: The amazing result the customer desires [00:37:28].
- Perceived Likelihood of Achievement: How likely the customer believes they will achieve that outcome [00:37:32].
- Time: How quickly the outcome can be delivered [00:37:36].
- Effort/Sacrifice: How easy or difficult it is for the customer to achieve the outcome (minimizing this) [00:37:37].
To increase value, focus on:
- Making it easier [00:37:45].
- Delivering it faster [00:37:47].
- Ensuring it’s something they genuinely want [00:37:49].
- Decreasing the risk associated with the purchase [00:37:50].
For services where client performance is key to success, charging enough to make them emotionally invested (e.g., a deposit that is returned upon success) encourages higher commitment and better outcomes [00:32:05].
Enhancing Value Through Offer Structure
Additional elements can enhance the perceived value and compel purchases [00:38:53]:
- Scarcity: Limiting the number of available items or opportunities [00:40:54].
- Urgency: Setting a deadline for the offer [00:38:49].
- Guarantees: Offering a clear promise of results or a refund, reducing perceived risk [00:42:47].
- Bonuses: Adding additional valuable components to the core offer, such as personalized consultations, expert reviews, or access to exclusive networks [00:41:22].
- Naming: Giving a compelling name to the offer [00:38:51].