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If you can sell something that you truly believe in, you'll make a lot more money.

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Welcome to the game where we talk about how to get more customers, how to make more

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customers, how to keep them longer, and the many failures and lessons we have learned

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along the way. I hope you enjoy and subscribe. I want to say but one of the scariest

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institutions I ever made my entire life, which was when I had my gyms, I was selling a boot camp

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at the time. This is before I knew a lot about pricing and I was charging $99 a month.

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And I got really fed up at one point and I was like, I don't think I'm helping people. I want

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to have semi-private because this is where people are really going to transform their bodies

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and I want to sell with conviction, right? So just keynote, side note, pro tip, life hack.

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If you can sell something that you truly believe in, you'll make a lot more money. And so I had

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gotten to the point where I didn't really believe in boot camp as a vehicle for personal transformation

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in terms of body wise. And so I was so convicted about our semi-private program because clients

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were getting way better results there that I wanted to switch all my clients over that.

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Now, I couldn't do that in $99 a month. And so I sent a mass letter out to my customers,

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all right, that said we were going to go from $99 a month to $299 per month. So I was going to

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triple my prices. Add more value, but I was going to triple my prices, all right? And at the end of

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this video, I'll tell you what happened when I sent that email out, all right? Now, what I want

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to do is tell you a secondary story of a similar situation that happened later on in my business

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career, all right? And it was, we were selling our program at $42,000 per year, all right,

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at the time. And that was being built at $800 a week, roughly, all right? And I wanted to

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decrease our turn. And so I was trying to figure out a way to decrease our turn so we could extend,

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you know, increase our lifetime value per customer. And I kept, you know, all my team and all that

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stuff. They're like, we have to lower our price. We have to lower our price. And I, and I hate,

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I hate lowering prices. I don't like lowering prices. It just generally doesn't mean you make

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more money. And so after a long time, I said, you know what? Fine, we're going to add more.

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And we're going to go to $600 per week, all right? That's what we're going to do, all right? Which

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if you're doing the math, it's like 31K, all right? That's what, that's what I decided to do,

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all right? And so let me tell you what happened in each of these scenarios, all right?

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So as soon as I made this change right here, all right? So what I did was I bid this big announcement.

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I said, we're going to roll out this new additional services program. And I did this huge

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presentation, this huge pitch. And then I, I, I stacked it and stacked it and then I was like,

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and you're going to get all this stuff. And you're all going to get a discount. And that's what I

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said. And everyone was like, yay, I actually did have one person complained to me. They said, why

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are you doing this now? You should have been discounting us before, which just goes to show you

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that no one will ever be happy with what you're doing. I was literally saying that they can pay

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less and I got somebody upset with me, all right? And so anyways, I decreased the price. And

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though, this is what ended up happening. My turn remained completely unchanged. And I lost

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$5 million per year in profit. One decision, $5 million a year I lost as a result of this.

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And so I can tell you firsthand, most times when you lower your prices, you make a lot less money.

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And so what happened to me is that my overhead stayed the same. It actually went up a little bit.

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So I added about a hundred K a month in overhead to my business so that I could add for this,

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this new service, all right? And then I decreased my price by 25%. So imagine cutting top line by

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25%, which is literally what I did. And by making this little beautiful combination, so I increased

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my cost by $1 million and I decreased my top line by $400,000 per month at the time for that

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business, all right? And it sucked because here's the beautiful thing. I thought, hey, if I

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decreased this price, if I can cut our turn by half, right? Which is what I thought I was going to be

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able to do. If I could cut my turn in half, let's say from 10% to 5%, right? I would still 2x

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LTV, right? So I'd rather decrease by 25%, right? But then 2x LTV, I'll take that trade every time,

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right? Aha, but that's not what happened. Turn stayed the same. And I just lost 25% at

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top line, which if we were running a 50% margin business, right? I just lost half my profit,

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which we weren't. We were actually running a 70% margin business at the time, right? And so I

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actually cut my income by a third, which sucked for that business. It was not fun. I highly recommend

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not doing it. And so that was the first thing that happened. So let me tell you the story that I

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started with this puppy, all right? Where I had my clients and I told them all, hey, this is what we're

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going to do. I'm going to give you two weeks for free. So I did have to front this labor, two

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weeks free of this new service. It's much better. You're going to get way more personalized attention,

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you're going to be lifting weights, you're going to learn form, all the stuff and stuff. And I said

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after those two weeks, you were going to automatically all be enrolled at $299 per month. Let me know

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if this is going to materially affect your life and you won't be able to buy groceries as a result

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of this decision, all right? So here's what happened.

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Hey, most of the nation, quick break just to let you know that we've been starting to post

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on LinkedIn and want to connect with you. All right, so send me a connection request and note,

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let me know that you listen to the show and I will accept it. There's anyone you think that we

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should be connected with, tag them in one of my relay list posts and I will give you all the love

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in the world. All right, so let's get back to the show.

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One third of my customers left. They said, Alex, you suck. I can't believe you're raising prices

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on us. Bob, Bob, Bob. Two thirds of them stayed at three times the price. What happened?

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I two exed the revenue of my business and I serviced only two thirds of my customers,

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which means my cost of fulfillment went down and my revenue went up. Excellent combination.

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And so by doing that one thing, I was able to more than two ex the profit of my business.

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And so I tell both of these cautionary tales as I was petrified to make both of these decisions.

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One of them dramatically increased the profit of my business. The other one dramatically

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decreased the profit of my business. In most cases, providing more value and charging a higher price

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in order to provide the higher value will make you more money because you will service fewer people

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at higher prices. The reverse of trying to service more people at lower prices by also providing more

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things, most times will make you less money, especially in a service-based business. And so I tell

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this cautionary tale because it makes me sick to think about it, but hopefully it makes you sick to

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think about it. And if you're contemplating what should I do with my prices because I would like

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to increase my LTV, the LTV can be increased in six ways. All right? Number one, you increase your

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price. Number two, you decrease your costs. And then number three, four, five, six,

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are resells, get people to buy more times, upsells, get them to buy more of the stuff they're currently

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buying, cross sells, get them to buy different things, downsells, get people who are not going to buy

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to buy something. All right? So this is your buying burgers once a week. Now I want you to buy burgers

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twice a week. This is, you go from a small burger to a big burger. This is, would you like fries

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with your burger? This is, would you like a junior burger instead of your current burger so that you

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buy more or buy something instead of buying nothing? So these are the six ways that you increase

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LTV. You'll notice what I was trying to do was get more people to do this. And I cut this

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and I lost. And so I tell the story to hopefully get more people to not make the terrible mistake

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that I did. And I have learned that painstakingly. And most times I would say 99 times out of 100

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when you lower the price, you make less money. Sometimes you make more, but the vast majority

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of the time you make less. So, and I'll tell you one final thing to illustrate this concept that

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I think everyone should understand. All right. So let's say you've got a hundred dollar thing here.

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And let's say your profit is 40 bucks. If you decrease your price to 80 bucks, right, on this

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product, you would have to sell two times as many people at this lower price because you have half

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the profit, right? Say this is cost. Most times if you make this kind of change, you're not going

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to 2x your sales. But you will make half the money. And that sucks. All right. So make sure that

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when you're making these changes, and here's the flip side, if you were to take this and go to 150

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dollars, right? Now you're making, let's say we're now making 90 dollars. So we more than 2x to our

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profit. You probably won't sell half as many customers. You might just sell three quarters as many

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customers and make two times the money, which means more than what you're making now. Small tweaks,

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big changes, lots of impact, think through these decisions. My name's Alex Mosey. I'm an acquisition

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.com. We have a portfolio company of 85 million dollars. In revenue, yearly, my goal is that for

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everybody in this channel, there's a lot of people who have broken. I don't want to be one of them.

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If you enjoyed this, you found value in this in your own business. Hit the subscribe button so we

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can give you more bids like this. And if you did not, I love you either way, keep being awesome.

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I'll catch you guys next week. Bye.