How Alex Hormozi made 10 million

 

 

 

Today, I want to share how I significantly increased my income as a CEO in various companies throughout my 20s and the critical lessons I absorbed. To make money swiftly, the first step is mastering the art of creating genuine value. The essence lies in understanding precisely what people want and compelling them to see the true worth of what you offer. It's not merely about selling a product or service; it's about focusing on the transformative results your offering can deliver. Let’s consider my gym licensing program. Customers willingly paid $500 a year, and my dad’s disbelief when he learned this was priceless! I told him, “If you could invest $10 to make $50, wouldn’t you do it?” This conversation highlights a vital truth: decisions stem from perceived value, not just price. Instead of determining prices solely based on costs, I concentrated on what customers gain in return. When you understand the principle of pricing based on the value you deliver, you can establish a business offering more than just sales. Let me introduce a value equation I've created to clarify this concept. This formula outlines how to maximize the value your products or services provide customers. There are four essential elements to focus on:

 

1. **Desired Outcome**: What ultimate goal does your customer want to achieve? They may want to enhance their fitness or lose weight if they join your gym.

 

2. **Feasibility**: How likely can they achieve this goal with your help? Your offering needs to align with their needs and desires.

 

3. **Time**: Remember, the longer it takes to see results, the less valuable your offering becomes. Aim to shorten your customers' journey.

 

4. **Effort and Sacrifice**: People feel more motivated when their efforts are manageable and sacrifices are minimized. To illustrate, let’s talk about tables.

 

A standard plastic folding table costs roughly $50, yet some people are willing to spend $20,000 to $100,000 on a luxurious wooden table. Why? This high-end table does more than hold things; it represents status and prestige. When someone with that exquisite table hosts guests and proudly shows it off, it’s no longer ordinary furniture—it elevates their pride and satisfaction. Now, consider how the luxury table offers exclusive benefits like same-day delivery and personalized service seamlessly fitting into a buyer’s home—enhancing their lifestyle and social standing. If you can meet the criteria of feasibility, time, and effort, a $20,000 price tag becomes justifiable. Ultimately, pricing isn’t just about covering costs; it should reflect your exceptional value. Using this approach, I could charge $4,500 for my gym consulting services while competitors were limited to $4,000. It wasn’t just a price increase but about delivering real value that justified the investment. The core takeaway? Understand what your customers genuinely desire from your offerings. Help them fulfill their dreams and goals; price won’t become an obstacle. Many entrepreneurs struggle with cash flow, especially when starting. I’ve faced those challenges as well. However, creating a system that quickly turns cash is the key to overcoming this issue. The secret is simple: leverage your customers’ payments for your next steps. Knowing how to attract customers is essential. For instance, we invested $1,000 in gym advertising, which generated $10,000 in revenue. With those earnings, we reinvested in more advertising, driving rapid growth. This technique relies on customer funding, meaning you can grow your business even with limited initial capital. Additionally, there are strategies to accelerate cash flow. One effective tactic was promoting upfront payments. We offered gym members a 5% discount for committing to three months in advance. This was a win-win: customers saved money while we secured important cash flow upfront. Lastly, we embraced upselling, providing existing members with opportunities like weight loss programs or supplements, and maximizing revenue from each individual. Let’s be clear: minor financial shortages shouldn’t stall your business growth. Success hinges on how quickly and efficiently you can generate cash flow, allowing you to attract new customers and drive sales. If you’re facing capital constraints, I urge you to implement the strategies I have discussed. Also, recognize that becoming wealthy and creating true wealth are distinct journeys. Creating wealth involves building your assets and maximizing your business’s value. This brings me to my wealth creation formula. Consider Starbucks a powerful example: the lifetime value of a single customer is approximately $1,400. By understanding this principle, you can set your business on a remarkable growth and success trajectory. Embrace this wisdom: focus on delivering immense value, and you’ll discover that wealth creation isn’t just a distant dream; it can be your reality. Are you ready to turn your ambitions into achievements? Let’s seize the opportunity together and make it happen!