00:00:00You aren't making as much money as you want because you don't know how to get it from the people who've got it.
00:00:04My name is Alex Ramozzi. I run a portfolio of companies at acquisition.com that donate over 250 million dollars per year.
00:00:10I did a book launch 12 weeks ago
00:00:11that did 106 million dollars in sales in a weekend and broke a Guinness World Record for the fastest selling non-fiction book of all time.
00:00:16In this video, I'm going to explain a core shift in my understanding of how
00:00:19getting money actually works and why the rich do in fact get richer.
00:00:24And I'm going to show you the math behind it and most importantly, how you can gain access to it.
00:00:28The first reason that you aren't making as much as you want is because you're selling to people who don't have the money to give you.
00:00:33So think about it like this and this is really important. Imagine this pyramid as a representation of earning in the United States.
00:00:40What percentage of the people do you think earn 40% of the income?
00:00:44The top 10% earn 40% of the income in the entire US. Now that's income and that's pretty extreme.
00:00:54But it's not even close to the difference when you look at
00:00:57wealth.
00:00:58So
00:00:59US household net worth. Okay, this is the value of their assets.
00:01:03Last year was one hundred
00:01:07and sixty
00:01:10three
00:01:11trillion dollars. And you're like man, how am I gonna pay rent? I'm like, let's get some of that 163 trillion.
00:01:17So this is going to blow your mind.
00:01:19So I want you to imagine that you had a hundred dollars.
00:01:22Okay, so I'm going to equate this 163 trillion is now one hundred dollars. Okay, and we're going to spread it out.
00:01:27Relative to how it actually is spread within the United States.
00:01:32So this is a hundred people to represent a hundred percentiles in terms of net worth the United States.
00:01:37This 163 trillion dollars, what would they have if there was a hundred people to represent this hundred dollars?
00:01:43They would have two dollars and fifty cents. I'm just going to use bills because I don't feel like I haven't changed.
00:01:48So two dollars out of that hundred.
00:01:50The bottom fifty. So the next forty percent, what do you think they would have? They're going to have twenty
00:01:57twenty-five,
00:01:59twenty-eight bucks.
00:02:01That's the next forty. Remember, we got a hundred dollars to distribute here.
00:02:04So the next nine percent. So now we're getting the top ten, the top decile of net worth the United States.
00:02:09How much do you think they got? They got twenty.
00:02:12They got thirty.
00:02:15They got thirty-five.
00:02:16That's thirty-eight. All right, thirty-eight dollars
00:02:19in just this nine percent.
00:02:22Now,
00:02:24you ready for the the drum roll?
00:02:27How much do you think the top one percent has?
00:02:29I mean it's one tenth, right? So like it can't be more than the other nine, right? I mean you'd think that.
00:02:39The top one, just the one guy
00:02:43would have thirty
00:02:47two dollars.
00:02:49One guy. Now this means
00:02:51that this one guy
00:02:54has more
00:02:56than the bottom ninety percent combined.
00:02:58This is very important because it has implications for how you do business.
00:03:03So when you hear me say sell to the rich they pay better, it's not some pithy statement.
00:03:09It's reality and it takes people a very long time to learn this and people
00:03:12often take years before they actually start to figure this out. Usually there's belief issues.
00:03:16They're like no one else could do this and part of the reason is because everyone they know is poor
00:03:20and they're like there's no way I could sell something for that price and so they make stuff
00:03:25against all the other small businesses to compete for these two dollars.
00:03:28Think about that for a second. You're putting all the resources because you see all these people.
00:03:33They're the ones that you're brushing shoulders with. They're the ones that you see in the street every single day
00:03:36and you're trying to compete and slice these two dollars a hundred different ways.
00:03:40Right?
00:03:43If you want to make money go where the money is.
00:03:47So let's put this concept on steroids now and actually apply this to doing business.
00:03:54This is how big companies get big. They go where the money's at
00:03:57and this is a breakdown of something called Pareto's principle. You might have heard of it 80/20.
00:04:02It's one of the most powerful concepts in business and most people still don't understand how to actually apply it.
00:04:06All right. So I want you to freeze this idea in your head. Just look at the money here. Two dollars here.
00:04:1028 bucks here. 38 here. Now we're in the top 10% right? And we have another
00:04:1532 here. So I said earlier that this one guy is more than the bottom 90.
00:04:21But 69% of all the wealth is just in these 10 people.
00:04:26If this doesn't change how you do business
00:04:32you are missing
00:04:34the plot. So the idea of 80/20 is that Pareto, who was Italian economist, realized that there was this, you know,
00:04:4020% of customers created 80% of the revenue.
00:04:42And you just notice this 80/20, you know, kind of issue that continued to occur within all different types of data sets.
00:04:49And so that became his principle. Now, here's where this gets really interesting.
00:04:52So within business, it totally remains true, where 20% of your customers
00:04:57will be responsible for 80% of your profits. And then here's where people miss the next point. Is that within this 80,
00:05:05within this 80%
00:05:0864% of the aggregate profit, right, comes from just 4%
00:05:17of the, there you go, I'll just do that, of the people in there. 4 customers if you had 100. And then of this 64
00:05:2551% of the profit comes from just the top 1%.
00:05:34Now doesn't that all of a sudden start to make sense when you look at how the wealth is distributed?
00:05:40That the wealth is distributed in a way that also makes sense that the business would get in its profits in that way.
00:05:47And so we repeat this process and this is kind of power law within business. This is how you do less and make more.
00:05:54Profit takes into account the fact that a single person, even with more service, often doesn't cost that much more to handle than the other 99.
00:06:02So it's more work, but significantly more profitable. Now, this is only true under one very important condition
00:06:09that you actually have a business model that allows them to pay more.
00:06:13Right, if you just only charge ten dollars for your thing,
00:06:17like this is one of my favorite sayings is the only thing worse than offering a thousand dollar thing to somebody who's got a hundred dollar budget
00:06:25is offering a hundred dollar thing to somebody who's got a thousand dollar budget.
00:06:28In the first scenario, you lose 100 bucks. In the second, you lose 900.
00:06:32Big difference.
00:06:35And so here's the important thing.
00:06:36If you have a model that allows for that, you have to understand that 99 out of 100 people are not the top 1%.
00:06:41Right, if we're pulling back here,
00:06:44all these people are not the top 1%. So you should expect them to say no to your expensive products and services.
00:06:51But when that will comes,
00:06:53you should want to Captain Ahab that bitch and get it done.
00:06:56Real quick, I'm going to show you the exact 10 stage roadmap from zero to 100 million plus
00:07:02that less than 1% of companies finish, I've now done multiple times.
00:07:05And so I can say with a lot of confidence that these are the stages, as headcount increases, that you need to get through.
00:07:11And I broke each of these down by eight different functions of the business, what the constraint feels like,
00:07:16like what are the symptoms of it when you're going through it, and then what steps we actually took to graduate.
00:07:20And we've done this across software, physical products, service businesses, brick and mortar, all of this.
00:07:26And it works. And it's my gift to you. It's absolutely free. And so the link's in the description.
00:07:30But you just go acquisition.com/roadmap, just enter your info and it'll spit it right back to you, all free.
00:07:35And so the reason that I talk about
00:07:37selling to these the top 1% is that
00:07:42one of the most effective ways to build a business is from the top down.
00:07:46So what do I mean by that? Like think about like Tesla, right?
00:07:49We started with a $250,000 roadster and he had a very limited production. Very few people, more profitability per.
00:07:55What then happens? Well, then he was able to make the, you know, Model S and that was the next car.
00:08:00And then he made the Model 3 or Model Y, whatever. So he kept working his way down.
00:08:05But what's interesting about this is that when you anchor high,
00:08:08it makes sense. Think about it from a branding narrative perspective. If I say, "Hey, I've got this really expensive car.
00:08:13It's amazing. It's super fast." And then I say, "Hey guys, many of you couldn't afford this.
00:08:16So I made another car that's similar but more affordable for you."
00:08:19That brand narrative works because you anchored high. Now think about the reverse.
00:08:24"Hey, I'm a budget discounter and I'm going to now sell a really expensive car."
00:08:28It doesn't hit the same, right?
00:08:31And so I love the top-down approach because you have a brand reinforcer, but also from an operational perspective,
00:08:39being able to ship the amount of cars he has to ship for the the Model 3 compared to the amount that he had to
00:08:42do for the Roadster, it made more sense to start here because you can handle the volume, right?
00:08:46You might not have the operations to handle the amount of work that it requires to serve the masses. Like for sure,
00:08:51there is money, right? At the bottom, there is. But you have to be doing it at very small, razor-thin margins with
00:08:57extraordinary volume. And unless you have the capital to create something that truly scales to that mass,
00:09:03you will probably just end up trying to squeeze the two dollars for more than what they're worth.
00:09:08And so how do we actually translate this into pricing our products and services? This is super important.
00:09:14So here's my rule of thumb for upsells, taking into account that
00:09:1920% of customers
00:09:21have far more spending power than the ones below. Now remember, we had two dollars here and the next level had 28.
00:09:26So it's 14 times more wealth between just the bottom 50 and the next 40.
00:09:31But just using the Pareto principle in terms of how we can apply this to pricing,
00:09:35like you not understanding this is why your business is not making as much profit as you want.
00:09:39All right. So my rule of thumb is that for every new tier
00:09:42is that
00:09:44you want to 5 to 10x your price
00:09:46and expect 20% of people to take it. Okay?
00:09:52So here's how it works. So let's say that you sell 10 customers. Okay, so you tell 10 customers to do. Let's do it again.
00:10:05Okay.
00:10:07Okay, now if you have eight of these customers at $10 per month
00:10:14and you've got two of them at $50 per month,
00:10:20how much am I making on these guys? I'm making $80 per month in total
00:10:26on the bottom $80. And then I'm making $100 per month
00:10:31on my top 20% or my top two. And so by serving these two customers differently,
00:10:37we doubled the revenue of the business, which by the way again is my rule of thumb. I want each tier
00:10:43to bring me another double, like another full amount of revenue. Otherwise, I'm like, I don't know if it's worth creating the actual extra constraint of operations, right?
00:10:52But here's where it gets even nastier.
00:10:55Let's say that this covers the majority of our overhead.
00:10:58That means that this extra $100 might contribute 10 to 1
00:11:02compared to this to our bottom line.
00:11:04And so sometimes when you make a move like this, if you were here and you had $80 and you were living your life on this $80,
00:11:10right? It's like well, maybe your cost is $70 or you're taking $10 home.
00:11:14If you add this $100 in and maybe the cost on this is $20, you've got $80 left over, we 5x the profit.
00:11:21So let's say our profit before this was $10 a month.
00:11:25And then we add this in and we get $80 a month in profit from this $100, right?
00:11:29Look at the difference in profit. We go from $10
00:11:33to $90
00:11:36just by adding this tier.
00:11:39And so the reason your business is not making this money and you're not making as much money as you want
00:11:43is because you're not priced appropriately for the people who actually have the money to give you.
00:11:48And so this is what everyone messes up. They say, hey, this is going to be my three pricing tiers, right?
00:11:53I'm going to have a $100 a month thing and I'm going to have a $129 a month thing and I'm going to have a
00:12:00$139 a month thing.
00:12:03Okay, great.
00:12:06This is all the same price.
00:12:08It's a lot for a normie and just not a lot for everyone in the top 10%.
00:12:12And so to maximize revenue, you can think of it with four tiers of pricing. And to be clear,
00:12:18you don't need to serve everyone and the first product you have may not be your base tier.
00:12:22All right, so you might start here. I don't know yet. I don't know your business.
00:12:25But this is what you can walk through in terms of thinking through the pricing for your products and services.
00:12:31So let's assume that we have a thousand customers, all right?
00:12:33So on our base tier, all right, so this is the lowest.
00:12:38$10 per month and let's say we've got 800 customers at this level, okay?
00:12:43Now our second tier, we might have it $100 per month. So 10 times that price with 20% taking it, all right?
00:12:50So that means we're going to get somewhere in the neighborhood of 200-ish people who would qualify for this tier, okay?
00:12:57And the next year,
00:12:59we still have to follow our rule, 5 to 10x.
00:13:01So that means we're going to be at 500 to 1,000 a month for this next year. Just to keep it simple,
00:13:05I'm going to just do 10x because it's
00:13:07nice and clean, all right? And so here we're going to have maybe
00:13:11around 40. Now you're like, wait, I thought we had 1,000 customers. This would be 160.
00:13:15I'll redo the math again so you can see it, all right? Now our next tier might be, again,
00:13:215 to 10 times this and so we might be somewhere in this $5,000 to $10,000 a month, all right? And so
00:13:26times around 8 people, okay?
00:13:33And so if you're looking at this, you're like, holy cow, those are very big differences in price.
00:13:39Yes, but so they reflect how different the spending power that exists within customers is, all right?
00:13:46And so the main takeaway from this is that if you're going to have an upsell,
00:13:51a very small percentage of people are going to take it. And so you have to make it worth it.
00:13:54And so people will have these, I'll go 100 and 129. It's like it's the same pitch. It's the same
00:13:59price. The willingness to pay for that customer is the same. Let me show you how I've actually
00:14:04translated this into my own business, all right? Well, this, and you can ignore the actual numbers
00:14:10of customers, but what do we have here? Ah, we have school. And then at $100 a month, what else do we
00:14:17have? We have school. This is our hobby plan. This is our pro plan. And so for me, the next number
00:14:23is $5,000, which is L1. And what's the next number after that? $35,000. Huh, almost like it's between
00:14:36five to 10 times the price, which is L2. And then what do we have after that? We have something that's
00:14:42$135,000. So that's four times the price, right? And this is L3. And what do I have underneath of
00:14:49that? No money because it's a portfolio company. And so the thing is, is it may take some time to
00:14:56build out this entire thing. I didn't start with school. I started building our brand. This is,
00:15:02to be clear, just our advisory practice that we have at acquisition.com. And so I'm just saying,
00:15:08knowing this doesn't mean you need to do all of this at once. It takes years, and it does take
00:15:12operational chops to pull this off, right? You want to add tiers one at a time. My tip, though,
00:15:16is to start as high up as you can on this ladder for a few reasons, right? So the Tesla example
00:15:22I gave earlier, the branding from top down versus bottom up is much stronger. Like Honda making a
00:15:26better car is tough versus Rolls Royce making a Rolls Royce light. It would be easier play
00:15:31for them from brand position. The next reason is that I prefer to start with the unscalable.
00:15:35Why? Because it's easier to operationalize it serving these people because one, they actually,
00:15:40believe it or not, as a percentage of net worth, this is actually lower than what this is for
00:15:44somebody who's poor, right? If you have $10 million, $100 grand is 1% of what you've got.
00:15:52If you've got $1,000, $100 is 10% of what you got. And so for you, you will actually be more demanding
00:16:01for that 10% or that $100 reasonably so than somebody who's giving 1%. But from a business
00:16:07perspective, the 100 bucks versus the 100 grand, it's a gigantic difference. So you have an easier
00:16:12customer to deal with that has lower demandingness, but it requires, and to be clear, to get that $100
00:16:17to equal 100,000 is you've got to get 1,000 of those people. So is serving the one customer for
00:16:22100,000 easier than serving 1,000 at 100 as somebody who used to sell $100 gym memberships? For sure.
00:16:28And if we were to look at this from a profit contribution perspective, like what is actually
00:16:32dropping to the bottom line, it would look like this. All the profit is here, just like all the
00:16:41wealth is at the top. So you have to do more and charge more for it to people who can afford it.
00:16:49And the amount you do for a few people is almost always worth it for the far greater price for those
00:16:54people who are willing to pay it. Now you might ask, well, wait a second. I thought you said sell the
00:16:58rich. Like why do you have this $10, this $100 a month thing? The only way to serve the poor masses,
00:17:04right? And I say this to be a little bit more like, you know, jarring, but to serve people with lower
00:17:10budgets is to have tons of money and then find a way to serve them in an automated manner at a low
00:17:16price. And if you do that, you can also make a lot of money, but via volume. But it takes a lot of
00:17:22money. It takes a lot of time. And the reason that Tesla has almost gone bankrupt multiple times is
00:17:26because it's incredibly hard. The reason most software companies like Netflix and Spotify,
00:17:31and some of these big consumer companies who charge $13 to give you, think about how hard that is.
00:17:38Think about how hard that business is. They have to make world-class entertainment for all the
00:17:43different genres that someone might like just to earn their $13, right? Just to earn the equivalent
00:17:49of like a Chipotle bowl. And again, I bring this up because some people come in and say, oh, I'm
00:17:55going to do that. It's like, you're going to do that bootstrapped? No, these companies that you're
00:17:58looking to model literally got artificially inflated with outside capital to prop the
00:18:04business up until it would get to the point where it actually could make money. So, to do something
00:18:08like this costs a fortune. And so, the way that I'm trying to walk you through this is that 80% of
00:18:13businesses in the US, or 78, are service-based businesses. And so, you don't have an automated
00:18:19way to serve these masses. You likely don't. And so, if you don't have an automated way,
00:18:23then you want to go in the complete other direction, which is I want to serve the best
00:18:26customer at the highest possible price, but people misprice their products and services. They say,
00:18:31okay, my current core thing is $1,000. I'll make the next thing $1,500. It doesn't work that way.
00:18:36That's not how the buyer works. The buyer is at $5,000, $10,000 from the $1,000 thing. That's the
00:18:42next tier. That's the next rung on the ladder, all right? And so, this hopefully should shift your
00:18:47perspective in terms of how pricing really works. A disproportionate amount of profit is here. We have
00:18:52to make gigantic jumps with the assumption that very small percentages are going to take it,
00:18:56but still be okay with it because even a small number of people at a gigantic price is still a
00:19:01lot of money. So, how do you actually translate this and put this into practice? Number one,
00:19:06stop selling from your own wallet, especially if you're one of the people who you're in that $2
00:19:11category, right? You're that bottom 50% right now. I get it. I've been there. You have to forever
00:19:16imagine, this is a gift, forever imagine that everyone is rich. So, here's the reality that
00:19:21will shock you. That top 10%, top 10% of Americans have a million dollar plus net worth, one in 10
00:19:27people, one in 10 people, million dollar net worth. They've got the money. You just aren't
00:19:33selling them something that they want. And you might even be, and this happens a lot,
00:19:37especially for newer business owners, you might even be too cheap for them to even believe that
00:19:41you're good. We had a company that was in the health space a while back and looking at all
00:19:47the research. It was a doctor and all the stuff. And I just fundamentally believed that they were
00:19:53mispriced. And so, what I did was I wanted to raise the price by double. You fought me back and forth
00:19:59forever. And I was able to finally get a 50% price race through. But guess what happened? We raised
00:20:04the price by 50%. That's a lot. What do you think it did to the close rates? They went up. They were
00:20:11so cheap compared to the promise and what they were delivering that people didn't even believe
00:20:16that it worked. And so, some of you guys are so cheap because you're selling out of your own
00:20:20wallet. You're selling based on what your friends and family who might also be in that $2 bottom 50%
00:20:26are telling you. But why would you listen to the people who don't have money on how to get money?
00:20:31They don't know where it is. They don't know how to get it. And more specifically, they don't know
00:20:35how to serve the people who've got it. So, that's the first thing. The second thing is that if you're
00:20:41gonna do this, listen to me on this. Whatever your upsell is, 5 to 10x the price. And then just make
00:20:49sure it's something that you'd be happy to deliver for 5 to 10 times the price. Sometimes I'll get
00:20:53pushback from people who are like, "Oh, that would be so much work." And I'm like, "Cool. We have value
00:20:59and we have price." Move one of them. Either do less or charge more. I would encourage you to just
00:21:04charge more. Right? And so, if I were to say, "Hey, I want you to 10 times the current price of your
00:21:09upsell," what would you do that would absolutely blow people away? How much does that actually cost
00:21:15you? When you look at the cost compared to that 10 times bigger price with a zero on the end of whatever
00:21:19your core offer is, you might find it's like, "Actually, it's only like, you know, 5% of that price."
00:21:24It's like, "Right. Really high margin." So, as long as you're happy making more money, serving fewer people,
00:21:32go do that. The third one is that you should expect only 1 in 5 or 1 in 10 people to say yes.
00:21:37Expect more no's. And this is the sweet spot of making money. Right? The sweet spot isn't the most
00:21:44yeses. It's the most money. And that is never with the most yeses. So, if you pitch your 10 times bigger
00:21:51price to this bottom 50%, none of them are going to say yes. And you're going to mistakenly believe that
00:21:56this is a bad idea. But the reality is that you're just not talking to the people who have the money.
00:22:01And so, you should expect that if you have a representative amount of people that you speak with,
00:22:051 in 10, maybe even 1 in 100, is the person who is the correct avatar. And for that person,
00:22:11you might also find they'll just say like, "Yeah, that sounds good." You'll be like, "Oh my God."
00:22:14And I only say this to somebody who's had it happen for the first time. I'm like, "I can't even believe
00:22:17this is possible. I can't believe this person would give me this much money." It's because to them,
00:22:20it's not that much money. It's only that much money to you because you still live here.
00:22:24If you sell to rich people long enough, they will make you one of them.
00:22:31And so, with your upsell, make it crazy. And this is called an anchor for a reason. If no one buys
00:22:37it, no big deal. Or most don't, no big deal. But the good news is that it'll still help you sell
00:22:42the rest of everyone else at a higher percentage and even at a higher rate because it'll look like
00:22:47a good deal in comparison. And I said this before, but I'll say this again. The next reason is the
00:22:55only thing worse than selling a $1,000 thing to a $100 buyer is selling a $100 thing to a $1,000
00:23:00buyer. In the first, you lose $100. In the second, you lose $900. And not only that, that $900 is
00:23:05probably disproportionately profit. And this is what no one understands. This is why most
00:23:10businesses don't make money. They just try and sell to these people who are the biggest pain in the
00:23:14butt. And the thing is, is you see so many of them that you're like, "Oh, this must be how it works."
00:23:18No, it's not how it works. It's just how you're working. This is how the average business works,
00:23:22which why the average business doesn't make money. They don't go to where the money's at.
00:23:27The next reason is you have to think about absolute profit rather than relative profit,
00:23:31and you'll be blown away. So a single person paying $10,000 for something that costs $2,000,
00:23:38a single person, right? One, right? Buying a $10,000 thing that costs $2,000 is the same
00:23:51as 400 people buying a $50 thing that costs $25. These are the same.
00:24:02So do not underestimate the power of large prices in small quantities. And so the reason that
00:24:10entrepreneurship is such almost like a spiritual journey is that you earn the right to charge more
00:24:15because you no longer think the smaller amount of money is worth your time. The reason that rich
00:24:20people get richer is less because there's some magic behind anything, but there's only two real
00:24:25forces in my opinion that make the rich get richer. The first is math, which is that compounding is a
00:24:30thing. When you have a billion dollars, next year it's 1.1 billion if you do nothing. A hundred
00:24:35million dollars is made because the assets went up. Very difficult to outwork compounding over a longer
00:24:40period of time. That's a reality. And as that capital aggregates, which it does in capitalism,
00:24:46which is a system for allocating capital, that's the point of capitalism, is that it will always
00:24:50shift to the people who are the best at allocating it. And so in time, if everybody starts at EVID
00:24:55on enough generations, eventually the capital pools. It's how all capitalism has worked out
00:25:00since the dawn of time. And so that's what creates this great divide. The second thing,
00:25:06which you can do something about, which is why I'm making videos like this, is that there are beliefs
00:25:10that people who have money have, which translate to behaviors, that poor people don't have and
00:25:16translate to different behaviors. So what does that mean? A rich kid will choose not to pursue
00:25:24a lower leverage opportunity because it's not worth their time, because they were taught it wasn't
00:25:29worth their time. The career paths that they'll have to choose from will be significantly skewed
00:25:34towards things where they'll get disproportionate returns. And a lot of that is just knowledge about
00:25:39it, not even knowledge how to do it. I remember when I first found out I'd never heard of management
00:25:43consulting. I'd never heard of private equity. I'd never heard of investment banking. I'd never heard
00:25:47of any of this stuff when I went to college because where I was from in Baltimore, a rich person was a
00:25:52doctor. That was a rich person. And so, and to be fair, my dad's a doctor. So I felt, I was like,
00:25:58okay, cool. When I went to Vanderbilt, I felt like one of the poorest people there because I'd never
00:26:04seen what New York money was. I'd never seen what California money was. I'd seen what Baltimore rich
00:26:09was, which is that you have, you know, my dad has a business with two secretaries and, you know,
00:26:12we always had food. I never had to worry about it. I still have the immigrant mentality of like,
00:26:16we don't use, you know, paper towels because they're expensive. But like, that's just because
00:26:20he came here with a thousand bucks that I, that still got transmitted. In some ways you almost
00:26:25have to, you almost have to bat above, you have to hit above your weight class, right? Which is,
00:26:30even though it sounds un, like, and the story of when I actually made my first high ticket sale in
00:26:36my life was when I actually said a number that I wanted the person to say no to. And then they said
00:26:42yes. That was how that actually, that belief was broken for me. So as much as I want to say, like,
00:26:46this is what you have to do. I'm this guy, you know, guy on YouTube that you just saw or whatever,
00:26:50like Layla and I were selling, we started doing these gym launches. We would sell memberships
00:26:56through gyms. We would collect the money. And that was the model. We'd fly around the country.
00:27:00That's what we did. There were some issues with that model, which I've talked about in other
00:27:03videos. And so then all of a sudden Layla started selling weight loss directly, made a little brand
00:27:08for her called Queen Transformation. We started selling these $500 online training packages
00:27:12over the phone and that started working. And so I had these gyms that I was supposed to do these
00:27:17launches at that I had decided I wasn't going to do them anymore. And so I had eight gyms I was
00:27:21supposed to call up and like basically cancel on them. And so on the first phone call, the guy was
00:27:26actually a referral and he was like, dude, you saved my, my friend's gym. Like, I know you can do this.
00:27:29And I, I was so beat down at this point. I was like, dude, I'm not, like, I'm not doing it. And
00:27:34he kept asking for it. And then finally I was like, all right, dude, like I'll show you what I do. But
00:27:39I'm not flying out there to help you if you can't close. And mind you, I come from the done for you
00:27:43world of like, I literally did everything. I fronted the money. I fronted the cash. I built, you know,
00:27:47I literally buy the tables. I print the contracts out. I'd run the ads. We'd work the leads and we'd
00:27:51sell them straight in the gym. So I did everything. So me saying that was just a hope that he would
00:27:54just like say, screw off. And he was like, no, I get it. I get it. And he was like, well, how much?
00:27:58And so I said, remember, I'm used to selling $500 16 week training packages where you have to show up
00:28:03like every, you know, three times a week to do stuff. I said $6,000. So for me, it was a 12X
00:28:11compared to the price that I was used to selling that. And I just said it. So I was like, he's just
00:28:14going to say, nope. And then I can just hang up and just move on to my next call. And he said 6K.
00:28:19And I was like, yeah, $6,000. And he was like, done. And I remember like floating out of my
00:28:29body in this moment being like, holy shit, six grand from one call. And I didn't even have the
00:28:39thing. I didn't even have the thing that I had sold him yet. Cause I just didn't think he was going to
00:28:42say yes. I didn't think to have to build it. Right. And so I was like, holy shit. And so then the next,
00:28:47so I had seven more calls. So I called the next guy, same conversation. Well, I was like, now I
00:28:50got to build this thing, but it went really smooth. And I was like, he was like, how much? I was like
00:28:55eight grand. And he was like, yeah, done. And I was like eight grand. I was like, I'm up $14,000 in a,
00:29:02I'm not even in a day. It's in a morning. So then I had six more calls. And by the end of the,
00:29:06you know, the next call, same thing, how much? 10K. Next call. And by the end of the day,
00:29:11I'd done $60,000 in, in collected. And I was like, what the fuck just happened?
00:29:19I had no idea what was going on. And so Layla came back after she was selling the $500 memberships.
00:29:26And I was like, babe, I was like, I just made 60 grand. And she was like, what? She was like,
00:29:32she was like, I thought we were doing the weight loss thing. I was like, no, I think we're still
00:29:35doing the gym thing. I think we were just doing it wrong. And this is why I'm telling you this.
00:29:39Cause like that moment of all the moments in my entire career, that was the moment where I
00:29:44elevated. That was the moment where my life really changed. And so I bring this up because you might
00:29:51be like, well, what, at what price point should I start? Right? It's going to be relative whether
00:29:54you're selling to consumers, you're selling to businesses. And this is just a couple of rules
00:29:58of thumb that I'll just tell you that I've kind of worked around. I'd say that for, for a consumer
00:30:03impulse purchase is five or $600. A higher ticket purchase is usually gonna be somewhere between
00:30:08three and $10,000. All right. Typically. And that's again for services. If you're looking at like
00:30:13assets, the different game, you're buying houses and cars, a different game, right? But if you're
00:30:16selling just like pure, I'm going to help you do some stuff. I'm gonna help fix some stuff.
00:30:19That's usually a price one that's called higher ticket business. It really depends on the size
00:30:24business. If you're selling a Disney, you can sell a billion dollar thing, right? If you're selling to
00:30:27just small business on main street, remember some of them are poor too, right? And so for them though,
00:30:33a more normal price for something will probably be somewhere in the neighborhood of like,
00:30:37I'd say like a mid tier is probably, you know, two to $3,000 a month. A cheaper price for a business
00:30:42owner would be somewhere in the neighborhood of like 400 to 800 a month. Maybe, maybe just call,
00:30:47call it closer to 500 bucks a month as like a, a cheaper number for a business. And you're like,
00:30:52$500 a month is cheap for a business. And I get super expensive for a consumer,
00:30:56pretty cheap for a business. Right. And so if you're like, well, where, where do I start? Well,
00:31:00if you're currently not making money out of zero and then think, what would I deliver for that?
00:31:04That's a great place to start. All right. And the thing is, is I know that part of you is fighting
00:31:08this. Like in your head, you're like, there's no fucking way anyone's going to buy that.
00:31:11No, there's no way the 50 poorest people, you know, could buy it. But for sure, the people above that
00:31:17line can. And part of the reason that you'd never close a hundred percent of prospects is because
00:31:21you're going to talk to some of these people. And the price point that you have to get an 80% close
00:31:26rate on, for example, is a price point that this person can spend five to 10 times more than the,
00:31:32than the bottom 50. That is why the tiered pricing is so important is that, and then you might find
00:31:38that you might just not want to sell to the bottom 50% until you have enough capital to actually build
00:31:42infrastructure. So you can do it in an automated fashion. One of the big issues I would say that
00:31:47poor people think about compared to rich people is that poor people will think in terms of cost. And I
00:31:52would say rich people will think in terms of the ratio, the return cost versus value. So if I were
00:32:00to say, Hey, I've got this thing. That's let's say it's, let's say it's $20,000. A poor person
00:32:07just hearing the price would say that's expensive. But if I said a rich person, if I said, Hey,
00:32:13my thing is $20,000, they wouldn't then say that's expensive. They'd say for what? And if I said,
00:32:19uh, share a class, a share of Berkshire Hathaway, which is an $800,000 stock for $20,000. That would
00:32:28be the deal of the century, right? If I said it was $20,000 for a brand new Lamborghini,
00:32:33they would say that's a great deal. So even though it costs a lot of money, it's great value. And this
00:32:39is what I did. I struggled for such a long time to understand because it was like, I almost had
00:32:44this emotional reaction to zeros. It's like, if I saw zeros, I was like, Oh my God, so much. Right.
00:32:48And, and so I know where you're coming from because you almost want to, you almost choke on the price.
00:32:53So I'll give you a couple of little tactics for this to like, get around it. So one is if you're
00:32:57in person, you can write down the price and then turn it and slide it to them. Or you can use a
00:33:01calculator and turn it to them if you like literally choke on the price. Cause some people do do that.
00:33:05The second thing that you can do, and this is a really good little, little pricing hack for,
00:33:10for selling is before you say the price, you say, Hey, fortunately the price it's super expensive.
00:33:16And so what's beautiful about telling someone it's expensive before we tell them the price
00:33:21is that if someone's rich, they're going to immediately think what's expensive for them.
00:33:26And so they're going to think a number and then you're going to say the number and they're going
00:33:29to, they're going to literally be like, Oh, fine. If they're poor and you say it's expensive,
00:33:34they're going to brace themselves for a number that's big. And then when you give them that
00:33:37number, they were at least braced for it. And so in either way, you actually create what I would
00:33:41consider an emotional anchor. That's perfectly accommodating to the buying power of the prospect.
00:33:47And most salespeople get choked up right at that point. So it's like give yourself a breather. It's
00:33:51going to be expensive. You take a breath, they take a breath, then you deliver. Right. So just
00:33:56a little tactic that works and also can help increase sales. So a good way to know if you're
00:34:01actually underpriced is to actually look at your close rates. All right. And so if your close rates
00:34:07are 80% or let's say 60 to 80, I'll put this in tiers for you. 50 to 60, 40 to 50, and then 30
00:34:19to 40 and then 30. Okay. So let's say these are your close rates.
00:34:25So that means if you talk to 10 people here, you close eight, right? If you're closing 80%,
00:34:32you probably right now have it a two to three X in pricing, sorry, a three to four X in pricing,
00:34:38excuse me, a three to four X in pricing, just sitting there. I know that sounds absurd,
00:34:43but think about it. You're going to get the 80% are not going to say yes anymore. I want
00:34:47to be very clear. You might drop to like 35%, but if 35% of people are paying four times more,
00:34:54you're making 120% of the revenue they were making before. All right. And so like you're making way
00:34:59more money now at 60, 80, you probably have a two to three X that you have sitting there in price.
00:35:06If you're between 50 and 60, you probably have a 1.5 X to two X sitting there. If you're at 40 to
00:35:1150%, you're probably at 1.25 to 1.5 X. All right. If you're here, I consider this to be appropriately
00:35:17priced. If you're closing 30 to 40%, you're priced about right. If you're below 30, I would say get
00:35:22better at selling. Which part of getting better at selling can be make the offer better or talk to
00:35:30better customers. All right. And so sometimes you will try and pitch a high ticket thing,
00:35:36but not have your core offer, which might be lower. So you have an anchor offer. But the people that
00:35:41you're speaking with, you didn't qualify them. So if I want to say, Hey, I'm talking to a million
00:35:46dollar plus business owners, I will have a significantly higher close rate if I'm only
00:35:50talking to them. And so most times you will dramatically change the feeling of your life.
00:35:54If you just say, we only deal with customers above this and of, remember all that money that was
00:36:00sitting on the table. So if you're looking at figuring out who you want to serve, look at this,
00:36:07look at these people. Where do you think you'd draw your line? If you say, I would like to make money.
00:36:13Do you want to talk to these people all day? Do you want to talk to these people all day?
00:36:19Or do you want to talk to these people all day? If you want to make money, go where the money is.
00:36:29And these people speak differently than these people. And so part of what many of y'all's
00:36:36marketing is and your price point actually tell these people, this isn't for us.
00:36:41So I, as somebody who is one of these people now, so I feel like I'm like calling back and telling
00:36:51you what it's like on the other side, right? Is that if I see somebody who sells B2B services and
00:36:58they sell something that's $1,500 a month, I know it's not for me. I don't need to know anything
00:37:03else because I know they're not advanced enough as a business to know how to cater to a company of my
00:37:07size. They just can't handle it. And so I have to deal with an entrepreneur who's got a $20,000 a
00:37:13month, $50,000 a month subscription for whatever their services are because I would believe that
00:37:19they could actually deliver. If you've got $69 here, 28 here, and two here, and think about the amount
00:37:25of conversations you've got to have here. You've got to have 10 conversations to have access to $69.
00:37:29Or you have to have 90 conversations to have access to 28 plus two, 30 bucks.
00:37:34Which would you rather have? Your price will signal to rich people that this is for them.
00:37:44And your marketing, if you're running flash sales and discounts and all of that kind of stuff,
00:37:50you're telling these people who have money, this isn't for you. I'm inexperienced. I'm
00:37:54a low level business owner, or I'm a business that purposely, I might be a higher level business
00:37:59owner, but I've truly made this to cater to the masses. So all of what I described is something
00:38:04called lead scoring or lead qualification. And so what that means is that there's a certain type
00:38:09of customer that's more likely to buy your thing, right? Somebody who has more money is more likely
00:38:14to buy your more expensive thing. And so if we know that the people who have the money are the ones that
00:38:19buy our expensive thing, then we should try and just tell the world we only cater to these people.
00:38:24So what will happen is your marketing, the volume will go down. The cost per call, the cost per lead
00:38:30will go down. But the amount you make will go way up. And so let me give you a real life scenario.
00:38:37When we optimized for leads for my book launch, we paid about five bucks a lead when we optimized
00:38:43just for leads, which is volume, all right? And we had another campaign that optimized for purchases.
00:38:50And those leads cost $17. The question is, which one would you go with? Now the poor business owner
00:38:59would say, well, $5 leads are better than $17 leads. The rich business owner would say, well,
00:39:03what kind of leads do I get? And so these $5 leads, after we finished the campaign, were worth $20.
00:39:10Okay, 4x return, there's something there. The $17 leads were worth $189. I don't know about you,
00:39:21I'd rather spend $17 to make $189 than $5 to make $20. And so one of the things that will change when
00:39:27you start serving the upper class, if you will, is that your cost per unit will go up. Your cost
00:39:32to deliver, your cost per sale will go up, but not proportional to the amount of money you will make.
00:39:38So I had to pay 3 1/2 times more for something that was worth 6 1/2 times the... Is it 6? No,
00:39:45that's 9. 9 1/2 times. So I had to pay 3 1/2 times as much for something that was worth 9 1/2 times
00:39:52the value. Which one's the better deal? This is an 11x. This is a 4x. This is what the lesser affluent
00:40:01do not understand. And this is why their businesses do not make more money. Now, the next thing that
00:40:07will come up is people will say, "Hey, I would sell for a really expensive thing, but no one will buy
00:40:13it." Because there's guys down the street who will sell for less because they're brokies selling to
00:40:17brokies. You're right. And that's because you can't sell the same thing. You got to sell something
00:40:24different, which is why I wrote my first book on this. Which is the first chapter is you're selling
00:40:29a commodity. You're selling something that someone could reasonably hold your thing and their thing
00:40:34up and say, "These two things are the same, so I'll pick the cheaper one." And that's reasonable for
00:40:39them to do it. The idea is that we want to price our things so high and be in such a clearly different
00:40:44category that people say, "These two things must be different. I have to analyze these independently."
00:40:48And so within the context of what do I get for my money, the rich person wants three things.
00:40:53They want it to be fast. They want it to be easy. They want it to be guaranteed. And so everything
00:40:58that you do that is more difficult for these people, you have to make easier and these people will be
00:41:03willing to pay for it. And so you pre-do some of that work for them. You pre-choose some of
00:41:08the food. You go ahead of time. You drive ahead. You scout the location. You drive into the door,
00:41:12whatever it is. But when you look at what does it cost for me to drive this thing to the door?
00:41:15It cost me 10 bucks, but they're willing to pay 100 for it. Whereas this person is nagging me on
00:41:20the last five bucks. It's a different game, but this is where all the money's at. And as you get
00:41:26further and further in business, you'll find out that it might be 40-year-old moms with at least
00:41:30two kids that live in these neighborhoods or these zip codes. That's the ones that are the best
00:41:34customers for your B2C thing. It might be if you're in home services, we only deal with homes over a
00:41:38million dollar value, which you can check their address and pull it up on Zillow or any other
00:41:43website before you even talk to the leads. You know what kind of house value you're getting into.
00:41:47Having those options available will show you in your CRM or whatever way you track data that some
00:41:52customers spend more. Then you want to take all that time and effort and look at those customers
00:41:57and say, "What makes these people different from everyone else?" And then that becomes your
00:42:00front-end marketing. And also talking to those customers and saying, "Hey, what about my thing
00:42:05attracts you to my service or my product?" They will tell you the things that these people value,
00:42:11which will be different than what these people value. And these people almost exclusively value
00:42:15price, as in they want the cheapest thing. They don't even want to hear because the same reason.
00:42:19They're traumatized by zeros, right? And so you can't judge whether you're priced appropriately
00:42:25by people who can never pay it to be in with. So in past videos, I've also talked about how
00:42:29when you start, you should start for free. I have a Chick-fil-A approach to pricing,
00:42:35which is I want you to start. It's either free or it's full price, right? Now I want to keep
00:42:42doing free until I feel a thousand percent confident that I can deliver. And then I go full
00:42:47price. Now within my leads book, which by the way, you can grab all three of the books for free hard
00:42:54back. I think five or six bucks each. Just cover the shipping. You can get all three. It's a special
00:42:59we have right now. If it runs out, apologies. The last time I did it ran out a couple of weeks.
00:43:02I break down how to go from zero to hero in terms of pricing inside of this book. Now part of that
00:43:10is me having to deal with the psychology of people who are beginners, right? And so my preference is
00:43:15to have kind of an algorithmic approach to somebody who like, "I'm telling you this so that you can
00:43:19jump the line." If you just cannot wrap your head around it, start for free. And then whatever your
00:43:23price was going to be, charge 20% of that, right? And you're like, "Great." And then do that for the
00:43:30next five customers. And then after that, bump it by 20%, and then bump it by 20%, and then bump it
00:43:35by 20%, five and 20, five and 20, five and 20, until eventually you're closing one out of three
00:43:39people. When you're at one out of three people, you're priced appropriately. And at that point,
00:43:44what do we do? We want to keep raising price over time because the reality of how services work is
00:43:50that you can tell how advanced the service business owner is by how expensive their product is.
00:43:54Because if you're actually good, you have more demand than you have supply. If you have more
00:43:57demand than you have supply, what should you do? Raise price. That's how the supply-demand curve
00:44:01works. And so you continue to raise your price until you're at a point where you're at equilibrium,
00:44:06where you can handle the amount of demand that you have. If you're still good, you still get more
00:44:10demand because word of mouth continues, and you keep going up. And that becomes the virtuous cycle
00:44:15of price and services. Because when you have a higher price, you have higher gross margins. We
00:44:19have higher gross margins, you can hire better talent. When you have better talent, you can
00:44:22deliver better services. When you have better services, you get better reputation. When you
00:44:24have better reputation, what does that do? It drives demand, which then drives price.
00:44:28And so this is the cycle that every business has to go through. And you signal to the marketplace,
00:44:34you communicate to the marketplace. Pricing is a two-way communication. You tell them what you're
00:44:38about, and then they will self-select as the correct customers for you. And so you can see where
00:44:44someone's at in their business journey by how high they are priced compared to people who sell
00:44:48comparable services. Because people will very much take price as an indication of value.
00:44:53They just do. Because in general, things that are priced higher are better. Not always, but often.
00:45:00It's a good enough rule of thumb that people in general will do that. Like this might blow
00:45:05your mind if you've like not met people with money. When they go to shop at a store, they price from
00:45:11high to low. They literally look at the most expensive stuff first, because that's probably
00:45:16the stuff that's for them. They don't want to save money anymore. They want to get better value.
00:45:22They want better stuff. They want to skip the line. They want to get it faster. They want it better.
00:45:27They want it to be a higher quality, you know, higher quality ingredients. They want it to be
00:45:32more made by somebody who's more noteworthy. All of these things. And fundamentally, that is what
00:45:37this book goes into tremendous detail talking about, which is the offers book. All right.
00:45:42So with that being said, sell to the rich. They pay better. It's better to sell fewer expensive
00:45:48customers than many broke customers. And if you sell to rich people for long enough,
00:45:54they will make you one of them.