The Shortcut to High Margin Income. Hormozi Hotline | Ep 984
In this episode of The Game, Alex Hormozi advises a business owner who provides automation services to freelancers on how to transform their current business model into a more profitable venture. The conversation explores the potential of creating a high-margin educational product, with specific pricing strategies and membership structures that could help the business owner increase their annual earnings.
The episode also covers broader business insights, including marketing strategies for leveraging existing audiences, particularly on LinkedIn, and approaches to authentic content creation. Hormozi addresses questions about scaling businesses and discusses alternative growth strategies for medical practices, including the benefits of adopting a concierge model over traditional insurance-based services.
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1-Page Summary
The Caller's Current Business Model and Revenue
A caller has built a successful automation business focused on order processing. By charging clients $600 monthly for automation services, they've achieved an annual income of $120,000. Their primary clientele consists of freelancers seeking work automation solutions rather than business owners.
Advice For Creating a High-Margin Training/Certification Product
Alex Hormozi suggests that the caller could significantly increase their earnings by creating an educational product around their automation expertise. He recommends developing a membership program priced between $3,000 to $6,000 annually, offering 20 business automations. Hormozi explains that by selling to just two people per week through a call funnel, the caller could achieve a net profit of $500,000 annually. He advises differentiating between one-time educational content and ongoing services in the pricing structure.
Strategies For Marketing and Selling the Product
Hormozi recommends leveraging the caller's existing audience from their previous automation videos, particularly on LinkedIn, to generate leads for the membership program. He emphasizes the importance of using authentic storytelling and real-life business examples to stand out from AI-generated content. For those struggling with outreach, Hormozi suggests taking on initial clients at discounted rates to build a portfolio of success stories.
General Business Advice
For new medical practices, Hormozi recommends focusing on content creation and marketing rather than competing with established practices on advertising spend. He suggests considering a concierge model serving fewer clients at higher fees, which can be more profitable than traditional insurance-based practices. For business scaling, Hormozi advocates exploring alternative growth channels such as influencer partnerships, wholesaler relationships, and B2B collaborations, rather than simply increasing ad spend.
1-Page Summary
Additional Materials
Counterarguments
- The assumption that a higher-priced membership program will automatically lead to increased earnings may not account for the potential difficulty in convincing freelancers, who are often budget-conscious, to invest in a more expensive service.
- The success of selling to two people per week may be overestimated and not account for market saturation, the quality of the sales funnel, or the actual demand for such a high-priced membership program.
- The advice to differentiate pricing between one-time educational content and ongoing services is sound, but it may not consider the potential for customer confusion or the challenge of communicating the value proposition of each offering clearly.
- Leveraging an existing audience for lead generation is a valid strategy, but it assumes that the audience is large and engaged enough to provide a sufficient number of leads.
- Authentic storytelling and real-life examples are effective marketing tools, but they require a skill set that not all business owners possess, and there may be a learning curve involved in mastering these techniques.
- Offering discounted rates to initial clients could devalue the service and set a precedent for future pricing expectations, making it difficult to charge full price later on.
- The advice for new medical practices to focus on content creation and marketing over advertising spend does not consider the potential need for immediate patient acquisition that some advertising can provide.
- The concierge model may not be suitable for all medical practices, especially those that aim to serve a broader segment of the population or that rely on the volume of patients.
- Exploring alternative growth channels is a good strategy, but it may not be feasible for all businesses due to resource constraints, and it may not yield the same level of growth as targeted advertising in certain industries or markets.
Actionables
- You can start a blog to share your journey with automation, detailing how it improves your daily tasks and productivity. By documenting your experiences, you can attract an audience interested in automation and potentially convert them into clients for your services. For example, if you automate your email sorting, write a post about how much time it saves you each day and the impact on your work-life balance.
- Consider offering personalized automation consultations for individuals in your network. Reach out to friends, family, or colleagues who may benefit from automating repetitive tasks and offer to set up a simple system for them. This hands-on approach can help you refine your skills and could lead to referrals or testimonials.
- Explore partnerships with local community colleges or adult education centers to teach a class on the basics of automation. This can help you establish credibility, reach a new audience, and potentially discover new client needs that you can address with your services. You might create a curriculum that includes real-world scenarios, like automating bill payments or managing personal schedules, to make the content relatable and valuable for students.
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The Caller's Current Business Model and Revenue
The caller has established a lucrative business model that revolves around offering automation services, specifically in order processing.
Caller Earns $120,000/Year From $600/Month Order Processing Automation
The caller's venture capitalizes on the growing demand for efficiency in operations. By charging clients $600 per month for order processing automation, the caller manages to accumulate an impressive annual income of $120,000.
Freelancers, Not Business Owners, M ...
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The Caller's Current Business Model and Revenue
Additional Materials
Clarifications
- Order processing automation uses software to handle tasks like receiving, tracking, and fulfilling customer orders without manual input. It integrates with sales platforms, inventory systems, and shipping services to streamline workflows. Automation reduces errors, speeds up order fulfillment, and improves customer satisfaction. Common tools include automated invoicing, inventory updates, and shipment notifications.
- The $600 monthly fee typically covers the setup, maintenance, and ongoing support of the automation system. It may include software licenses, integration with clients' existing platforms, and regular updates to ensure smooth operation. Pricing reflects the value of time saved and error reduction for clients. This fee structure helps sustain the service provider's business and ensures consistent service quality.
- To earn $120,000 annually at $600 per month, the caller must have 20 clients ($600 × 20 clients × 12 months = $144,000, slightly above $120,000). This suggests some clients may pay less or there are occasional gaps in service. The calculation assumes consistent monthly payments from all clients throughout the year. Client numbers and payment consistency directly impact total revenue.
- Freelancers typically handle all aspects of their work themselves and seek automation to save time on repetitive tasks. Business owners often manage larger teams and complex operations, requiring automation that integrates multiple systems and scales across departments. Therefore, freelancers prioritize simple, individual-focused tools, while business owners need comprehensive, customizable solutions. This difference shapes the type and complexity of automation each group seeks.
- Freelancers often handle all aspects of their work alone, so automating tasks saves them significant time and effort. Business owners typically have teams or systems already in place, reducing their immediate need for simple automation. Additionally, freelancers may have less access to expensive, customized automation soluti ...
Counterarguments
- The revenue model assumes consistent subscription from clients throughout the year, which may not account for churn rates or seasonal variations in demand.
- The focus on freelancers might limit the market reach, as business owners could represent a significant portion of the potential market for automation services.
- The text does not address the scalability of the service or the potential need for additional resources as the client base grows.
- The text implies that business owners may have different needs for automation but does not explore or validate what those needs are or how they could be met.
- The sustainability of the business model in the face of increasing competition in the automation service market is not discussed.
- The text does not consider the impact of technological advancements that could either enhance or disrupt the current business model.
- The text does not mention customer satisfaction or the quality of the service p ...
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Advice For Creating a High-Margin Training/Certification Product
As highlighted by Alex Hormozi, there's profit potential in educating others on in-demand skills, particularly automation. He advises the caller to monetize their expertise by developing a high-margin educational product which could lead to substantial earnings.
The Caller's Automation Skill Is in High Demand, Creating an Educational Product Could Achieve a $500,000 Net Profit
Hormozi suggests that the caller’s valuable skills in automation place them in an opportune position to create an educational product. He mentions that by establishing an automation certification or creating a high-margin training program, the caller can set a price between $3,000 to $6,000 per year for membership.
Sell $3,000 to $6,000/Year Membership For 20 Business Automations
Hormozi advises the caller to sell a membership program that includes 20 business automations, which can be priced at $3,000 to $6,000 annually. He notes that education alone isn't a recurring product, and value should be correctly assigned between the consumable elements and the one-time teaching. By differentiating elements that are consumable (ongoing community access and services) from one-time educational content, the caller can clarify pricing. The upfront education offer ...
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Advice For Creating a High-Margin Training/Certification Product
Additional Materials
Counterarguments
- The market for automation skills and training might be saturated, making it challenging to differentiate a new product and attract customers.
- High pricing may limit the accessibility of the training program, potentially excluding individuals or small businesses with limited budgets.
- The assumption that high-margin products will automatically lead to substantial earnings overlooks the importance of marketing, sales, and customer satisfaction.
- The success of the educational product is not guaranteed solely by the demand for automation skills; it also depends on the quality of the content and the effectiveness of the training.
- The estimate of achieving a $500,000 net profit may be overly optimistic without considering the costs of creating and maintaining the educational product, marketing, and support.
- The strategy of selling high-priced memberships might not be sustainable in the long term if the value provided does not match the cost.
- The call funnel sales mechanism may not be the most effective approach for all target audiences, and alternative sales strategies might be necessary.
- The advice d ...
Actionables
- You can identify a niche skill you're proficient in and offer personalized coaching sessions to individuals looking to learn that skill. For example, if you're good at graphic design, you could offer one-on-one sessions to teach others how to create their own marketing materials, setting a premium price for your personalized attention and expertise.
- Consider partnering with a tech-savvy friend to create an online course on a topic you're both knowledgeable about, splitting responsibilities such as content creation and marketing. This could be anything from baking artisan bread to basic car maintenance, with the course including video tutorials, downloadable resources, and access to a private forum for ongoing support.
- Explore subscription boxes as a business mode ...
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Strategies For Marketing and Selling the Product
Hormozi discusses ways to enhance marketing and sales strategies, focusing on leveraging past successes and storytelling to captivate audiences and effectively promote a membership program.
Leverage Leads and Audience From Past Automation Videos
Learn Automation to Drive Leads Into Membership Program
Using past successful content to generate new customer interest, as indicated by a caller who created videos on how to automate things. This content has successfully driven all customer leads to him. Hormozi suggests using the caller's audience on LinkedIn, who show an interest in learning automation, as a potential market for new video content. This could effectively drive leads toward the member's program. The caller's intention to start new types of videos could capitalize on his audience's existing interest in automation.
Recruit Freelancers to Promote the Membership Program for a Commission
For individuals not getting their desired outreach, such as the ghostwriter on LinkedIn, it's important to adopt strategies that set their content apart from AI-generated alternatives. Hormozi suggests the use of unique narratives and stories that AI cannot replicate, emphasizing real-life business examples and personal stories to create content that is difficult to copy. In addition, gaining experience and examples for storytelling can be valuable. Hormozi advises that taking on ...
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Strategies For Marketing and Selling the Product
Additional Materials
Counterarguments
- While leveraging past successes can be effective, it may not always translate to new customer interest if market trends or audience preferences have shifted.
- Targeting an existing audience with new content assumes that the audience's interests remain static, which may not be the case as people's interests can evolve over time.
- Creating new types of videos based on existing interests might lead to content saturation, causing audience fatigue and diminishing returns.
- Recruiting freelancers to promote the membership program could lead to inconsistent messaging and brand representation if not managed properly.
- Unique narratives and personal stories are valuable, but they may not always be sufficient to differentiate content in a crowded market.
- Taking on clients for free or at steep discounts to build a portfolio could undervalue the service provided and potentially attract clients who are not willing to pay for quality work in the future.
- Highlighting an individual's distinctive voice is important, but it may not resonate with all audience segments, limiting the reach of the content.
- Authentic storytelling is a powerful tool, but it requires skill and ma ...
Actionables
- You can analyze your most engaging social media posts to identify common themes for your video content. Look at the comments, shares, and likes on your past social media posts to see what topics resonate with your audience. For instance, if you notice that posts about productivity hacks get a lot of engagement, consider creating a video series on advanced productivity techniques to draw viewers into your membership program.
- Start a referral program with your current members to expand your audience base. Offer incentives like extended membership access or exclusive content to members who refer new subscribers to your program. This taps into the trust and networks of your existing audience, potentially bringing in leads who are already primed for your content.
- Engage with online communities related to your content t ...
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General Business Advice
In addressing strategies for growth and competition within varied business sectors, Alex Hormozi provides valuable insights into successful practices.
For a New Medical Practice, Focus On Marketing and Content Creation to Distinguish Yourself, as You Can't Outspend Established Competitors On Advertising
Establishing a new medical practice requires a differentiated approach to marketing if it is to thrive in a market with well-established competitors.
Fewer Clients Paying Higher Fees Can Make Concierge Service More Profitable and Sustainable Than Insurance Payments
Hormozi suggests that new medical practices should consider adopting a concierge model. In this model, physicians can cater to a smaller patient base—about 500 people—each paying a higher annual fee. This concierge approach, favored by experienced physicians, proves to be more profitable and manageable than relying on insurance payments. By focusing not on the volume of clients but on the value of service offered, practices can flourish even with fewer patients.
Scaling a Business Means Finding New Channels and Increasing Product Value, Not Just Increasing Ad Spend, Which Erodes Margins
Hormozi emphasizes the significance of scaling a business through strategies beyond merely increasing ad spend. This can be inferred through his advice on creating a training product and harnessing the potential of leads from past videos.
Exploring Influencer, Wholesaler, or B2b Collaborations For Growth Beyond Amazon
To achieve growth beyond platforms like Amazon, Hormozi advises looking at alternative avenues like collaborating with micro-influencers, other dentists for referrals in the case of medical practices, or opting for B2B wholesaling. These relationships can open up new channe ...
Here’s what you’ll find in our full summary
General Business Advice
Additional Materials
Clarifications
- A concierge medical model involves patients paying a fixed, often annual, fee directly to the doctor for enhanced access and personalized care. Unlike traditional insurance-based models, it reduces reliance on insurance billing and limits patient volume to improve service quality. This model often includes benefits like longer appointments, same-day visits, and direct communication with the physician. It shifts the financial relationship from insurance companies to patients, aiming for better care and practice sustainability.
- Insurance payments often involve complex billing, delayed reimbursements, and lower rates set by insurers. Concierge models reduce administrative overhead by eliminating insurance claims processing. Higher fees per patient provide predictable, upfront revenue and allow more personalized care. This leads to better cash flow and stronger patient relationships, enhancing sustainability.
- Scaling a business means growing its capacity to serve more customers or generate more revenue without a proportional increase in costs. It involves improving operational efficiency, expanding into new markets, or enhancing product offerings. Simply increasing advertising spend often leads to diminishing returns and higher costs, which can reduce profit margins. Effective scaling focuses on sustainable growth through innovation, partnerships, and optimizing existing resources.
- B2B wholesaling involves selling products in large quantities to other businesses, which then resell them to consumers or use them in their operations. It differs from direct-to-consumer sales where the business sells products directly to the end user. Wholesaling typically requires lower prices per unit but larger order volumes. This model focuses on building relationships with retailers or distributors rather than individual customers.
- Micro-influencers are individuals with smaller, highly engaged social media followings, typically between 1,000 and 100,000 followers. They often have niche audiences, making their endorsements feel more authentic and trustworthy. Partnering with micro-influencers can lead to higher engagement rates and more targeted marketing at a lower cost than working with celebrities. Their influence helps businesses reach specific communities effectively, boosting brand awareness and sales.
- Amazon’s algorithm promotes products with higher ratings and positive reviews, increasing their visibility in search results. Better product quality leads to more satisfied customers, which generates favorable reviews and repeat purchases. This creates a cycle where high-quality products gain more sales and better placement. Sellers benefit by investing in product excellence to improve rankings and attract more buyers.
- A backend sales process involves selling additional products or services to existing customers after the initial purchase. It increases customer lifetime value by encouraging repeat business or upgrades. This process often uses follow-up emails, special offers, or membership programs. Effective backend ...
Counterarguments
- While a concierge model may be more profitable for some, it may not be accessible or ethical for all patient demographics, potentially limiting healthcare access for lower-income individuals.
- The concierge model might not be suitable for all types of medical practices, especially those that aim to provide care for a larger community or have a public health focus.
- Focusing on fewer clients with higher fees could lead to a less diverse patient base, which may not be desirable for all medical practitioners.
- The advice to focus on marketing and content creation might not be feasible for all new medical practices, especially if they lack the resources or expertise to effectively produce and distribute content.
- Relying solely on a premium service model may not be sustainable in certain markets where price competition is a significant factor.
- The suggestion to avoid relying on insurance payments may not be practical for all medical practices, as insurance is a primary means of payment for healthcare services for many patients.
- The idea that scaling a business is not just about increasing ad spend is valid, but some businesses may find that strategic advertising investments can be a highly effective growth lever.
- Collaborating with micro-influencers and other professionals for referrals may not yield the expected growth for all types of businesses, especially if the target audience does not engage with infl ...
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