If I Started A Business in 2026, I'd Do This | Ep 977
In this episode of The Game, Alex Hormozi explores business strategies centered on high-ticket offerings and their role in generating immediate cash flow. He draws parallels to Tesla's approach of starting with premium models, explaining how businesses can use premium one-on-one services to build revenue while gathering insights for future scalability.
The episode covers the practical aspects of implementing high-ticket services, including pricing strategies, profit margins, and customer experience optimization. Hormozi discusses how businesses can enhance perceived value through strategic pricing and service delivery, and explains why factors like speed and priority access often matter more to wealthy clients than cost savings. The discussion provides a framework for businesses looking to balance immediate profitability with long-term scalability goals.
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Pricing and Value: High vs. Low-ticket Strategies
Alex Hormozi discusses how businesses can leverage high-ticket offerings to generate immediate cash flow while gaining valuable insights for future scalability. He recommends offering premium one-on-one services at significantly higher rates, comparing this approach to Tesla's strategy of starting with expensive models before developing more affordable options.
Business Strategy and Profit Margins
While one-on-one services aren't scalable, Hormozi explains they can be extremely profitable due to their 100% margin. He advises capping time spent on these services to maintain focus on long-term goals while maximizing their short-term revenue potential. To enhance perceived value, Hormozi suggests directly addressing the high price point with clients and using these premium offerings to elevate the perceived value of lower-priced, scalable services.
Customer Experience and Value Delivery
According to Hormozi, speed and efficiency in service delivery can often be more valuable than cost savings, particularly for wealthy clients. He emphasizes the importance of streamlining the customer journey by removing unnecessary friction points. For high-ticket clients, guaranteed priority access and rapid response times not only justify premium pricing but also enhance the overall perceived success of the service. This approach to customer experience allows businesses to command higher prices while maintaining strong client satisfaction.
1-Page Summary
Additional Materials
Clarifications
- "High-ticket" offerings are products or services sold at a premium price, often providing personalized or exclusive value. "Low-ticket" offerings are lower-priced, more accessible products or services designed for mass sales. High-ticket sales typically involve fewer customers but higher profit per sale, while low-ticket sales rely on volume. Businesses use both to balance immediate revenue and long-term growth.
- One-on-one services have a 100% profit margin because the primary cost is the provider's time, which is not an additional expense like materials or production. There are no third-party costs or overhead directly tied to each session. The revenue from the service goes entirely to the provider after accounting for fixed business expenses. This contrasts with product sales, where manufacturing and distribution reduce profit margins.
- Tesla initially launched high-end, expensive electric cars to establish brand prestige and generate revenue. This strategy allowed them to fund development of more affordable models later. The comparison highlights using premium offerings to build cash flow and credibility before scaling. It shows how starting with high-ticket products can support long-term business growth.
- Scalability in services means the ability to increase the number of customers served without a proportional increase in costs or resources. For example, digital products or group programs can be scaled more easily than one-on-one services. One-on-one services require the provider's direct time, limiting how many clients can be served simultaneously. Scalable services allow businesses to grow revenue faster by serving more clients efficiently.
- Capping time spent prevents burnout and frees capacity for scalable projects. It ensures high-ticket services generate profit without consuming all resources. This balance allows focus on building systems that grow the business long-term. Time limits also create urgency and exclusivity, enhancing perceived value.
- "Perceived value" is the worth a customer assigns to a product or service based on their expectations and experience, not just the actual cost. Addressing high price points openly helps justify the cost by highlighting unique benefits and quality, reducing sticker shock. This transparency builds trust and reinforces why the premium price is reasonable. It also elevates the customer's sense of exclusivity and importance.
- Wealthy clients often value their time more than money, so saving time through speed and efficiency directly increases their productivity and satisfaction. Delays or inefficiencies can cost them opportunities or cause frustration, which outweighs minor cost savings. Fast, seamless service also signals exclusivity and high status, reinforcing the premium nature of the offering. Thus, paying more for quicker, smoother experiences aligns with their priorities and lifestyle.
- "Friction points" are obstacles or difficulties that slow down or complicate a customer's interaction with a business. These can include long wait times, confusing website navigation, complicated checkout processes, or poor communication. Removing friction points makes the experience smoother and faster, increasing customer satisfaction. For high-ticket clients, minimizing these issues is crucial to justify premium pricing.
- Guaranteed priority access means high-paying clients receive faster, exclusive service without waiting in line. Rapid response times ensure their issues or requests are addressed immediately, reducing downtime or frustration. These benefits save clients time and stress, which is highly valuable, especially for busy or wealthy individuals. Thus, clients perceive the premium price as justified by the superior convenience and attention they receive.
- Improving customer experience increases perceived value, making clients feel their investment is worthwhile. Enhanced service, like faster responses and fewer hassles, creates a sense of exclusivity and priority. This emotional and practical benefit justifies charging premium prices. Higher prices are sustainable when customers believe they receive superior treatment and outcomes.
Counterarguments
- High-ticket strategies may not be suitable for all markets or customer segments, as some businesses may benefit more from volume sales at lower prices.
- The assumption that one-on-one services have 100% profit margins overlooks the indirect costs such as time investment, opportunity costs, and resources spent on client acquisition and retention.
- Focusing too much on high-ticket items might alienate a broader customer base that could provide a more stable and consistent revenue stream through lower-priced offerings.
- The strategy of using high-ticket services to elevate the perceived value of lower-priced services might not work if the quality or value proposition of the lower-priced services is not inherently strong.
- Speed and efficiency are important, but they are not the only factors that contribute to customer satisfaction; personalization, quality of service, and customer care are also crucial.
- Streamlining the customer journey is important, but overemphasis on efficiency could lead to a less personalized experience, which might not be desirable for all high-ticket clients.
- Guaranteeing priority access and rapid response times for high-ticket clients could create a tiered service system that might lead to dissatisfaction among regular clients.
- Commanding higher prices through enhanced customer experience is effective, but it also requires continuous investment in service quality and innovation to maintain high client satisfaction.
- There is a risk that focusing on premium clients could lead to neglecting innovation in the core products or services that are accessible to a wider audience.
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Pricing and Value: High vs. Low-ticket Strategies, One-on-one Benefits, and Increasing Perceived Value Tactics
Alex Hormozi shares expertise on using high-ticket offers to inject immediate cash flow into a business while also gaining invaluable insights and marketing material from working closely with select clients.
Offer a Premium, High-Ticket One-on-one Service to Select Clients
Exclusive Offerings Provide Initial Cash Flow and Proof of Concept for Scalable Products
Hormozi recommends dedicating a portion of your time to offer premium, one-on-one services at a significantly higher rate than standard offerings, which serves to provide initial cash flow. He compares this approach to Tesla’s business strategy, which started with a high-cost roadster and used the funds and proof of concept to develop more affordable models later on.
Engaging High-Value Clients Individually Helps You Learn, Reassess Their Spending Potential, and Enhance Brand Reputation
Hormozi emphasizes that engaging high-value clients individually can elevate a provider's authority and offer valuable marketing insights. The direct engagement often leads to high-quality case studies and a greater understanding of a client’s expenditure capacity, which in return enhances a brand’s reputation.
One-on-one Services: Unscalable but Profitable
One-on-one Time Sales Can Boost Revenue and Margins For Business Growth
Alex Hormozi shares his personal experience where he offered one-on-one personal training and recognized its significant impact on monthly income. He identifies the one-on-one model as unscalable but extremely profitable due to the 100% margin, which can significantly fuel business growth.
Capping Time On Clients Boosts Focus, Pricing, and Profits
Hormozi advises capping the time spent on one-on-one services to maintain focus on long-term goals, while signifying their short-term efficacy in generating revenue. Selectively providing these services can increase pricing and boost profits due to the scarcity and demand.
Employ Tactics to Increase Perceived Value of Offerings
Highlight and Challenge the High Price of Your Premium Offering To Anchor Value Perception
Hormozi believes that tackling the high price of premium offerin ...
Here’s what you’ll find in our full summary
Pricing and Value: High vs. Low-ticket Strategies, One-on-one Benefits, and Increasing Perceived Value Tactics
Additional Materials
Counterarguments
- High-ticket items may not be accessible or appealing to a broader market, potentially alienating a significant portion of potential customers who cannot afford such services.
- Focusing on premium, one-on-one services might lead to a neglect of the development and innovation of more scalable, affordable products.
- The strategy assumes that there is a market of high-value clients willing to pay premium prices, which may not be the case in all industries or market conditions.
- The approach may create a brand image that is too exclusive, potentially deterring future customers who might perceive the brand as out of reach or not aligned with their values.
- High-ticket strategies can sometimes lead to a dependency on a small client base, which can be risky if one or more high-value clients discontinue their services.
- The emphasis on exclusivity and high pricing might not always translate to higher perceived value; some customers may see it as a lack of value or price gouging.
- The profitability of one-on-one services is contingent on the provider's time, which is a finite resource, potentially leading to burnout or a decrease in service quality if not managed properly.
- Leveraging high-ticket services to boost the perceived value of lower-price ...
Actionables
- You can identify a skill or knowledge area you excel in and offer personalized consulting sessions on a freelance platform. By setting up a profile on a site like Upwork or Fiverr, you can market your expertise to those seeking specialized guidance. For instance, if you're proficient in social media marketing, you could offer to help small businesses develop their social media strategy on a one-on-one basis.
- Consider creating a limited series of handcrafted products if you have a hobby like woodworking or jewelry making. By producing a small batch of unique items and selling them at a premium price on platforms like Etsy, you can gauge interest and gather feedback for future, more affordable product lines. This approach allows you to test the market without a significant upfront investment.
- If you're knowledgeable about a particular subject, start a niche b ...
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Business Strategy: Enhancing Efficiency to Boost Profit Margins and Outcompete
Businesses need to understand the significance of prioritizing efficiency and profit margins, often over scaling excessively, to stay competitive and financially healthy.
Prioritize Efficiency and Profit Margins Over Scale
Business experts suggest that companies should focus on efficiency and expanding profit margins rather than just scaling up in size to grow and outcompete in the market.
High-Ticket Clients Drive Rapid Growth and Expansion
Hormozi notes that high-ticket clients can significantly drive rapid growth and expansion for businesses. By targeting this demographic and attending to their specific needs, businesses can grow faster and more sustainably.
Prioritizing High-Ticket Clients With Higher Vendor Payments Yields Competitive Advantage
When businesses prioritize high-ticket clients and deliver higher quality services, they can afford to pay vendors more. This strategy builds a competitive advantage as it assures better service delivery and client satisfaction, which in turn draws more high-ticket clients and fortifies the business's market position.
Speed and Latency Drive Value and Persuasion
In the high-end market, the responsiveness and speed of service delivery can often hold more value than just the cost of the service itself, leading to opportunities for premium pricing models.
Quick Results Trump Cost Savings
Hormozi suggests that wealthy clients typically find quick results more appealing than saving costs. This insight is critical for businesses in tailoring their services and setting prices; speed and eff ...
Here’s what you’ll find in our full summary
Business Strategy: Enhancing Efficiency to Boost Profit Margins and Outcompete
Additional Materials
Clarifications
- High-ticket clients are customers who purchase expensive products or services, generating significant revenue per sale. They are important because serving fewer, high-value clients can be more profitable than many low-value ones. These clients often expect premium service and faster results, which justifies higher pricing. Focusing on them helps businesses increase profit margins and build a strong market position.
- Scaling focuses on growing a business's size, often by increasing customers or locations, but can lead to higher costs and inefficiencies. Efficiency means optimizing operations to reduce waste and improve productivity, which directly boosts profit margins. Prioritizing profit margins ensures the business remains financially healthy and sustainable, even without rapid growth. Without efficiency, scaling can dilute quality and profitability, making growth less effective.
- Paying vendors more often secures higher-quality materials or services because vendors prioritize clients who pay well. This can lead to faster delivery times, better support, and customized solutions. Improved vendor performance enhances the overall quality and reliability of the business’s offerings. Consequently, this strengthens client satisfaction and builds a competitive edge.
- Speed refers to how quickly a service is delivered, while latency is the delay before the service begins or responds. Lower latency and faster speed improve customer experience by reducing wait times and increasing satisfaction. In high-end markets, clients value these factors because they enable immediate problem-solving and decision-making. This perceived value allows businesses to charge premium prices for faster, more responsive service.
- Wealthy clients often value their time more than money, so quick results help them achieve goals faster. Delays can mean lost opportunities or increased stress, which they want to avoid. They can usually afford higher costs, so saving money is less critical than efficiency. Fast outcomes also enhance their competitive edge and decision-making speed.
- Premium pricing is justified when customers receive faster, prioritized service that saves them time and reduces uncertainty. This exclusivity creates added value beyond the basic product or service. Businesses can charge more because clients perceive the quicker response as a significant benefit. The mechanics involve dedicating resources to ensure these clients get immediate attention and problem resolution.
- Higher vendor payments often enable vendors to provide better quality materials or services. ...
Counterarguments
- While prioritizing efficiency and profit margins is important, focusing solely on these aspects may lead to missed opportunities for innovation and long-term growth that scaling can provide.
- Scaling up can also bring about economies of scale, which can reduce costs and potentially increase profit margins in the long run.
- Targeting high-ticket clients might limit the customer base and make the business vulnerable to market fluctuations affecting this demographic.
- Over-prioritizing high-ticket clients could alienate other customer segments that might offer more stable and consistent revenue streams.
- Paying vendors more is not always feasible or sustainable, especially for small businesses or startups with limited cash flow.
- A focus on speed and rapid service delivery might compromise the quality of the service or product, leading to customer dissatisfaction and potential damage to the business's reputation.
- Premium pricing models can exclude a significant portion of the market, p ...
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Customer Experience: Reducing Friction to Deliver Value Quickly
The goal of delivering customer value quickly and effectively is critical in business, and Hormozi outlines strategies for enhancing customer experience by reducing friction and emphasizing speed.
Eliminate Friction in Customer Experience
Analyze and Streamline the Customer Journey
Hormozi argues for a streamlined customer experience, which involves analyzing the customer journey and systematically removing unnecessary action points. By reducing friction throughout the customer experience, businesses are able to justify higher pricing due to the more efficient delivery of value.
Streamlining Delivery and Execution Justifies Premium Pricing
The process of streamlining not only improves customer satisfaction but also justifies premium pricing. As the delivery and execution become more seamless, customers are more willing to pay a higher price for the perceived increase in value that comes from a frictionless experience.
Prioritize Speed and Low Latency In Value Delivery
Halving Delivery Times for High-Ticket Clients Motivates Action
Hormozi emphasizes the persuasive power of speed, suggesting that halving delivery times for high-ticket clients can significantly motivate their ac ...
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Customer Experience: Reducing Friction to Deliver Value Quickly
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Counterarguments
- While reducing friction is generally positive, over-streamlining could lead to a loss of personal touch or customization that some customers may value.
- Higher pricing justified by efficiency may not be viable for all customer segments, especially price-sensitive consumers.
- Improving customer satisfaction through streamlining assumes that all customers value speed and efficiency over other factors, which may not always be the case.
- Halving delivery times for high-ticket clients might not always be feasible or sustainable, especially if it compromises the quality of the product or service.
- The focus on high-ticket clients could lead to neglecting the broader customer base, potentially harming long-term business prospects.
- Rapid responses and priority access for high-ticket clients may create a tiered service system that could alienate or frustrate other customers.
- The assumption that premium pricing is always justified by hig ...
Actionables
- You can map out your weekly grocery shopping to minimize time and maximize value by creating a route that hits all your stores in an efficient order, considering traffic patterns and store layouts.
- This approach reduces the friction in your shopping experience, similar to how businesses streamline customer journeys. For example, if you know you always buy certain items from specific stores, plan your route to minimize backtracking and waiting times. If Store A and Store B are on the same street but traffic is usually heavy going towards Store B around the time you shop, hit Store A first.
- Enhance your personal service interactions by preparing concise, clear questions or requests beforehand when dealing with customer service or professional services.
- This strategy mirrors the idea of providing rapid responses to high-ticket clients. For instance, if you're calling your internet service provider about an outage, have your account information, a summary of the issue, and any troubleshooting steps you've already taken ready to go. This preparation can lead to faster, more effective service and a better overall experience.
- Implement a personal policy ...
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