WEBVTT 1 00:00:00.000 --> 00:00:03.840 If you sell something for twice as much money and you get one-third fewer sales, 2 00:00:03.840 --> 00:00:07.200 so you have two-thirds of what you used to sell in terms of units, it might freak you out. 3 00:00:07.200 --> 00:00:10.080 But if you sell it twice the price, you make more money. 4 00:00:10.080 --> 00:00:12.400 And so you got to be able to just let the math do the talking. 5 00:00:13.840 --> 00:00:17.280 Welcome to the game where we talk about how to sell more stuff to more people in more ways 6 00:00:17.280 --> 00:00:21.520 and build businesses worth owning. I'm trying to build a billion-dollar thing with acquisition.com. 7 00:00:21.520 --> 00:00:24.480 I always wish pesos, musk, and Buffett had documented their journey. 8 00:00:24.480 --> 00:00:26.640 So I'm doing it for the rest of us. Please share and enjoy. 9 00:00:27.040 --> 00:00:31.840 We doubled the profits of one of our portfolio companies in less than eight weeks, 10 00:00:31.840 --> 00:00:38.480 and we made one single change. And we went from making $250,000 a month in profit 11 00:00:39.040 --> 00:00:42.880 to making over $500,000 a month in profit from one single change. 12 00:00:42.880 --> 00:00:45.520 All right? And so what I want to do is break down what that change was, 13 00:00:45.520 --> 00:00:47.360 and how you can apply it to your business. 14 00:00:47.360 --> 00:00:50.240 First, I'll give you a hypothetical story that you can apply this to. 15 00:00:50.240 --> 00:00:53.520 Second, I'll tell you the service that we ran in exactly how to do it in your business. 16 00:00:53.520 --> 00:00:55.680 Third, I'll tell you how you can communicate it to your team, 17 00:00:55.680 --> 00:00:58.000 so you can have the highest uptake rate in your team. 18 00:00:58.000 --> 00:01:01.760 And then finally, I'll walk you through how to communicate it publicly. 19 00:01:01.760 --> 00:01:04.640 Then I'll walk you through a hypothetical example of a cab's business, 20 00:01:04.640 --> 00:01:05.680 because that would be the best business. 21 00:01:05.680 --> 00:01:09.120 That taught people how to grow their cabs and sold a cab program, 22 00:01:09.120 --> 00:01:11.840 and walk through the hypothetical example end-to-end, 23 00:01:11.840 --> 00:01:14.560 so you can apply it to your business using the same process. 24 00:01:14.560 --> 00:01:18.320 And so what I want to do is take you through an exercise that I've done on stages 25 00:01:18.320 --> 00:01:20.400 and at conferences and at workshops, 26 00:01:20.400 --> 00:01:22.720 and it usually shifts the audience in a significant way. 27 00:01:22.720 --> 00:01:24.400 And so I want to just deliver that to you directly. 28 00:01:25.040 --> 00:01:27.200 So I want you to imagine a hypothetical business. 29 00:01:27.200 --> 00:01:28.320 It might be like the one you have now, 30 00:01:28.320 --> 00:01:30.640 but if yours isn't exactly like this, 31 00:01:30.640 --> 00:01:31.920 you can still apply the principles. 32 00:01:31.920 --> 00:01:32.800 Don't be one of those people. 33 00:01:32.800 --> 00:01:34.400 So I want you to imagine that you have a business, 34 00:01:34.400 --> 00:01:37.280 or you'd like to start a business that has 100 customers 35 00:01:37.840 --> 00:01:39.520 that pay $100 a month. 36 00:01:39.520 --> 00:01:41.440 All right, so I'm trying to use the simplest math possible. 37 00:01:41.440 --> 00:01:43.680 So 100 customers $100 a month. 38 00:01:43.680 --> 00:01:47.520 So that means it's doing $10,000 a month in revenue, okay? 39 00:01:47.520 --> 00:01:50.800 Now, let's assume that in order to fulfill those customers, 40 00:01:50.800 --> 00:01:54.160 we have $8,000 a month in costs, okay? 41 00:01:54.160 --> 00:01:56.480 So we're making $2,000 a month in profit. 42 00:01:56.480 --> 00:02:02.000 So $10,000 to offline, $2,000 bottom line, $8,000 of cost, all right? 43 00:02:02.000 --> 00:02:02.960 That's the business. 44 00:02:02.960 --> 00:02:05.360 You got 100 customers doing $100 a month. 45 00:02:05.360 --> 00:02:08.160 Now, you rub a magic iPad. 46 00:02:10.240 --> 00:02:12.080 And a genie appears. 47 00:02:12.080 --> 00:02:13.440 And this is not any kind of genie. 48 00:02:13.440 --> 00:02:14.960 This is a business genie. 49 00:02:14.960 --> 00:02:16.560 All right, so it's a very specific type of genie. 50 00:02:16.560 --> 00:02:17.760 It's a niche genie. 51 00:02:17.760 --> 00:02:20.720 And this niche genie has one wish that he can grant you. 52 00:02:20.720 --> 00:02:22.560 I thought he's very, very nuanced genie. 53 00:02:22.560 --> 00:02:27.360 And so he says, I can grant you one wish in one of three ways. 54 00:02:27.360 --> 00:02:30.400 And you're like, okay, genie, I guess you're giving me the terms now. 55 00:02:30.400 --> 00:02:34.160 He says, I will double your business in one of three ways. 56 00:02:34.160 --> 00:02:36.160 You need to tell me which way you want me to do. 57 00:02:36.160 --> 00:02:38.240 And so you're like, okay, how do I do it? 58 00:02:38.240 --> 00:02:39.760 He's like, I will snap my fingers and it will happen. 59 00:02:39.760 --> 00:02:41.200 Oh, this is exciting. 60 00:02:41.200 --> 00:02:45.520 So he said door number one or wish grants number one is, 61 00:02:45.520 --> 00:02:49.840 I will double the amount of customers that you bring in every month, okay? 62 00:02:51.040 --> 00:02:52.080 That's number one. 63 00:02:52.080 --> 00:02:53.600 First way I can double your business. 64 00:02:53.600 --> 00:02:58.480 Now, with this business, let's assume that your turn is not that good. 65 00:02:58.480 --> 00:03:00.880 Okay, so people stay for an average three months. 66 00:03:00.880 --> 00:03:02.880 Okay, so that's 33% turn. 67 00:03:02.880 --> 00:03:04.080 They stay month one, month two, month three. 68 00:03:04.080 --> 00:03:05.120 And then they cancel. 69 00:03:05.120 --> 00:03:06.480 All right, that's the way this goes. 70 00:03:07.120 --> 00:03:11.040 Number two is he says, I will double your price. 71 00:03:11.040 --> 00:03:12.560 So you have the same amount of customers. 72 00:03:12.560 --> 00:03:15.120 And I'll double how much they pay you every single month. 73 00:03:15.120 --> 00:03:16.320 Nothing else will change. 74 00:03:16.320 --> 00:03:17.680 You're like, okay, got it. 75 00:03:18.720 --> 00:03:24.320 Door number three, he says, okay, now what I'll do is I'll double how long they stay. 76 00:03:24.320 --> 00:03:25.760 So instead of staying for three months, 77 00:03:25.760 --> 00:03:26.800 they'll stay for six months. 78 00:03:27.760 --> 00:03:31.040 Okay, so you're the business owner. 79 00:03:31.040 --> 00:03:33.200 You're contemplating which of the three wishes, 80 00:03:33.200 --> 00:03:36.240 which is really just one way of accomplishing a goal. 81 00:03:36.240 --> 00:03:39.440 Which of the wishes do you take the genie up on? 82 00:03:39.440 --> 00:03:41.360 So I'll let you jeopardy listen to this for a second. 83 00:03:42.000 --> 00:03:44.240 All right, now really, be honest. 84 00:03:44.320 --> 00:03:46.480 Tell me what your first guest was going to be. 85 00:03:46.480 --> 00:03:48.160 A, B or C, okay? 86 00:03:48.800 --> 00:03:53.040 So with door A or wish number one, whatever I said, all right. 87 00:03:53.760 --> 00:03:56.560 If he doubled, because this is a male genie, obviously, 88 00:03:56.560 --> 00:03:58.720 I haven't seen any female genies, weird note. 89 00:03:58.720 --> 00:04:01.200 So the business genie says he doubles it. 90 00:04:01.200 --> 00:04:04.880 So now we have 200 customers a month, okay? 91 00:04:04.880 --> 00:04:06.720 Now what happens? 92 00:04:06.720 --> 00:04:08.480 Well, if we have 200 customers a month, 93 00:04:08.480 --> 00:04:09.760 sorry 200 customers paying us a month, 94 00:04:09.760 --> 00:04:13.040 we now are making $20,000 in top line revenue. 95 00:04:13.120 --> 00:04:15.360 And assuming everything scaled proportionally, 96 00:04:15.360 --> 00:04:17.920 we would have $4,000 a month in profit, 97 00:04:17.920 --> 00:04:20.880 and $16,000 a month in cost, okay? 98 00:04:20.880 --> 00:04:22.720 So double the number of customers, 99 00:04:22.720 --> 00:04:25.280 we double the amount of profit, double our business. 100 00:04:25.280 --> 00:04:27.280 Awesome, thank you, business genie. 101 00:04:27.280 --> 00:04:29.680 Cool, and if that was you, great sauce. 102 00:04:29.680 --> 00:04:32.320 Now, let's go to door three. 103 00:04:32.320 --> 00:04:33.920 I tricked you, you already know where this is going. 104 00:04:33.920 --> 00:04:37.040 Door three, he doubled how long the people went, 105 00:04:37.040 --> 00:04:38.880 or stayed with you and continued to pay. 106 00:04:38.880 --> 00:04:41.920 Now in this instance, because people are staying twice as long, 107 00:04:42.080 --> 00:04:44.960 but you're getting the same amount of customers per month, 108 00:04:44.960 --> 00:04:48.000 eventually you will get to the same equilibrium point 109 00:04:48.000 --> 00:04:49.200 as the first one. 110 00:04:49.200 --> 00:04:52.880 The exception is that that wish accomplished 111 00:04:52.880 --> 00:04:54.000 does something more powerful, 112 00:04:54.000 --> 00:04:55.920 which is it increases your LTV. 113 00:04:55.920 --> 00:04:57.280 Now, because of that, 114 00:04:57.280 --> 00:04:59.440 and the additional months that they pay you, 115 00:04:59.440 --> 00:05:01.120 most businesses, it's more profitable 116 00:05:01.120 --> 00:05:02.960 the last month someone pays than the first month. 117 00:05:02.960 --> 00:05:04.480 Usually it costs a acquisition, 118 00:05:04.480 --> 00:05:06.440 cost of onboarding, there's more cost associated 119 00:05:06.440 --> 00:05:08.240 with getting a new customer than keeping someone. 120 00:05:08.240 --> 00:05:10.720 And so if you can double the lifetime 121 00:05:10.720 --> 00:05:13.360 or as profit per customer, that's what that does, 122 00:05:13.360 --> 00:05:16.320 then your cost of acquisition can be bigger 123 00:05:16.320 --> 00:05:17.440 than it could in the first example, 124 00:05:17.440 --> 00:05:19.840 because I didn't change how much a customer was worth to me here. 125 00:05:19.840 --> 00:05:21.920 I doubled it here, which means that I now have 126 00:05:21.920 --> 00:05:23.440 a much more valuable customer, 127 00:05:23.440 --> 00:05:26.800 which then gives me the capacity to scale in a much bigger way. 128 00:05:26.800 --> 00:05:29.440 And because of that, I still realistically 129 00:05:29.440 --> 00:05:31.440 would probably have more profit in this business, 130 00:05:31.440 --> 00:05:32.960 because I'm spending the same amount of money 131 00:05:32.960 --> 00:05:34.560 to acquire the customers, whereas this one, 132 00:05:34.560 --> 00:05:36.240 I have to double the cost of marketing 133 00:05:36.240 --> 00:05:37.360 to get the new customers. 134 00:05:37.360 --> 00:05:39.760 Here, I eventually get to the same top line, 135 00:05:39.760 --> 00:05:40.800 but I have more bottom line, 136 00:05:40.800 --> 00:05:42.720 because I didn't have to spend as much of a marketing. 137 00:05:42.720 --> 00:05:44.320 Does that make sense between these two? 138 00:05:44.320 --> 00:05:47.120 So between A and C, you pick C, 139 00:05:47.120 --> 00:05:49.120 you double how long the customer stays with you. 140 00:05:49.120 --> 00:05:50.480 All right, if you can do that. 141 00:05:50.480 --> 00:05:53.120 Now you're like, all right, well, what about door B, 142 00:05:53.120 --> 00:05:55.760 or wish two, or whatever it was that I said? 143 00:05:55.760 --> 00:05:57.360 Well, let's do the math. 144 00:05:57.360 --> 00:05:59.360 So let's say we had the same 100 customers, 145 00:05:59.360 --> 00:06:01.280 but now instead of paying $100 a month, 146 00:06:01.280 --> 00:06:02.640 they're paying $200 a month. 147 00:06:04.080 --> 00:06:06.320 Well, we still have the same cost of fulfilling them, 148 00:06:06.320 --> 00:06:07.680 say $8,000. 149 00:06:07.680 --> 00:06:10.640 And our profit went from $2,000 a month. 150 00:06:10.640 --> 00:06:14.480 To now, we have literally the extra $100 a month 151 00:06:14.480 --> 00:06:15.840 that's pure profit. 152 00:06:15.840 --> 00:06:17.760 So we get the 20, and then another 20, 153 00:06:17.760 --> 00:06:19.360 and then another 20, and then another 20, 154 00:06:19.360 --> 00:06:21.760 and then another 20, and then another 20. 155 00:06:21.760 --> 00:06:26.160 So we six X'd the profit of the business with one change. 156 00:06:26.160 --> 00:06:28.720 Now, for those in the audience who are thinking, 157 00:06:28.720 --> 00:06:30.000 but not as many people would buy. 158 00:06:30.960 --> 00:06:32.480 That story that I told you about, 159 00:06:32.480 --> 00:06:35.680 I told you that we increased how much profit the business made. 160 00:06:35.680 --> 00:06:37.360 I'll tell you the one change that we did was, 161 00:06:37.520 --> 00:06:38.880 we looked at the entire marketplace 162 00:06:38.880 --> 00:06:40.800 that we're selling a similar service to theirs. 163 00:06:40.800 --> 00:06:42.400 And it was based on our research, 164 00:06:42.400 --> 00:06:45.440 we felt that the market could support a 50% higher price. 165 00:06:45.440 --> 00:06:49.280 And so we literally, and this is already a pretty expensive thing, 166 00:06:49.280 --> 00:06:52.800 we literally did nothing, but add 50% to the price 167 00:06:52.800 --> 00:06:55.040 and changed nothing about the product. 168 00:06:55.040 --> 00:06:55.960 Literally nothing. 169 00:06:55.960 --> 00:06:57.800 We changed nothing about the product. 170 00:06:57.800 --> 00:06:59.160 And guess what happened? 171 00:06:59.160 --> 00:07:00.680 More people bought. 172 00:07:00.680 --> 00:07:01.760 Why? 173 00:07:01.760 --> 00:07:03.520 Because when something becomes more expensive, 174 00:07:03.520 --> 00:07:05.840 people perceive its value in a higher way. 175 00:07:05.920 --> 00:07:08.600 And because of the brand that the person had, 176 00:07:08.600 --> 00:07:11.080 it was our belief that it was more aligned 177 00:07:11.080 --> 00:07:13.440 with the person to have a higher price tag. 178 00:07:13.440 --> 00:07:16.360 And so people, it actually felt more aligned 179 00:07:16.360 --> 00:07:18.640 with what the expectation of the prospect was. 180 00:07:18.640 --> 00:07:21.080 And I'll also bet, because we're talking to the CEO, 181 00:07:21.080 --> 00:07:22.440 we're gonna do another bump 182 00:07:22.440 --> 00:07:24.120 because we think the market can support it. 183 00:07:24.120 --> 00:07:26.760 Now, most times in most markets, you have supply and demand. 184 00:07:26.760 --> 00:07:29.720 And when the price goes up, demand goes down in most markets. 185 00:07:29.720 --> 00:07:32.240 Now, not all markets, and more times than not, 186 00:07:32.240 --> 00:07:34.520 it doesn't drop by the same proportion. 187 00:07:34.520 --> 00:07:37.480 So if you double the price, sometimes you sell a third fewer. 188 00:07:37.480 --> 00:07:41.400 But if you double the price, and you've six X the profit, 189 00:07:41.400 --> 00:07:42.760 potential on a customer, 190 00:07:42.760 --> 00:07:45.200 if I six X my profit on a potential customer, 191 00:07:45.200 --> 00:07:47.560 and I do it at two thirds the price, 192 00:07:47.560 --> 00:07:49.800 then I tripled the profit of the business still. 193 00:07:49.800 --> 00:07:51.680 You still make way more money. 194 00:07:51.680 --> 00:07:55.520 And so finding the absolute perfect point of profit 195 00:07:55.520 --> 00:07:58.480 many times comes from raising the price, not always, 196 00:07:58.480 --> 00:08:01.440 but many times there are pricing levers that you can move 197 00:08:01.440 --> 00:08:02.520 within the context of the business 198 00:08:02.520 --> 00:08:03.600 that will make you more money. 199 00:08:03.600 --> 00:08:05.640 And pricing is one of those very interesting things 200 00:08:05.640 --> 00:08:07.400 because it's very tied to emotions. 201 00:08:07.400 --> 00:08:09.360 A lot of people are very afraid of raising the price 202 00:08:09.360 --> 00:08:10.760 because they don't wanna break it. 203 00:08:10.760 --> 00:08:13.520 And so, the last part of this is I wanna talk to you 204 00:08:13.520 --> 00:08:15.920 about how to raise the price if that is your goal. 205 00:08:15.920 --> 00:08:17.320 Now, hopefully you thought this was cool 206 00:08:17.320 --> 00:08:19.280 because we just six X the profit of the business 207 00:08:19.280 --> 00:08:20.480 by doubling one component. 208 00:08:20.480 --> 00:08:23.240 We could double the customers and go to two to four thousand a month. 209 00:08:23.240 --> 00:08:25.120 We could double the out-of-be and go from two, 210 00:08:25.120 --> 00:08:26.520 to probably like five-ish a month 211 00:08:26.520 --> 00:08:28.800 because we save some money on the marketing, right? 212 00:08:28.800 --> 00:08:30.600 And we have a much stronger business overall. 213 00:08:30.600 --> 00:08:32.000 But when you double the price, 214 00:08:32.000 --> 00:08:34.760 and if you assume that the same amount of customers would buy, 215 00:08:34.760 --> 00:08:37.480 you six X the profit, how much you take home. 216 00:08:37.480 --> 00:08:38.800 That is powerful. 217 00:08:38.800 --> 00:08:40.000 And a lot of people don't know that, 218 00:08:40.000 --> 00:08:42.040 which is why the number one lever that you have on profits 219 00:08:42.040 --> 00:08:43.440 is pricing and constantly testing. 220 00:08:43.440 --> 00:08:45.320 A lot of people test split test their pages, 221 00:08:45.320 --> 00:08:46.640 they split test their scripts, 222 00:08:46.640 --> 00:08:47.640 they split test their offers, 223 00:08:47.640 --> 00:08:49.640 but the thing that they forget to test is their price. 224 00:08:49.640 --> 00:08:52.000 And it's the strongest lever of all three levers 225 00:08:52.000 --> 00:08:53.800 of getting people to buy more times, 226 00:08:53.800 --> 00:08:56.080 getting more customers versus just charging more 227 00:08:56.080 --> 00:08:57.120 for the same thing. 228 00:08:57.120 --> 00:08:59.320 That's where positioning how you charge 229 00:08:59.320 --> 00:09:00.880 can actually influence the price a lot. 230 00:09:00.880 --> 00:09:03.880 Now, a good where you increase the price 231 00:09:03.880 --> 00:09:06.520 and the demand goes up is called a vebbling good. 232 00:09:06.520 --> 00:09:08.560 It is a type of good where the price itself 233 00:09:08.560 --> 00:09:10.040 confers value to the product. 234 00:09:10.040 --> 00:09:11.280 As in the higher the price, 235 00:09:11.280 --> 00:09:14.240 the higher the perceived value people ascribed to it, 236 00:09:14.240 --> 00:09:16.680 and are more likely to buy because it went up. 237 00:09:16.680 --> 00:09:19.240 And when you have that, you have a huge amount 238 00:09:19.240 --> 00:09:21.120 of profit that can be made, all right? 239 00:09:21.120 --> 00:09:23.520 So that's for example, like Chanel can take a bag 240 00:09:23.520 --> 00:09:25.440 and go from 2000 to 10,000, 241 00:09:25.440 --> 00:09:27.480 and all of a sudden more people want to buy it. 242 00:09:27.480 --> 00:09:29.200 Their cost on the bag is the same, 243 00:09:29.200 --> 00:09:31.080 but imagine they have twice the demand 244 00:09:31.080 --> 00:09:33.840 at five times the price with the same fixed cost. 245 00:09:33.840 --> 00:09:36.720 They can 20x how much money they make. 246 00:09:36.720 --> 00:09:38.200 And if you're like, that's crazy, 247 00:09:38.200 --> 00:09:40.120 that's how crazy wealth is built. 248 00:09:40.120 --> 00:09:43.240 Okay, so if you're in this integer like Alex, I'm sold, 249 00:09:43.240 --> 00:09:45.000 I'm not gonna focus necessarily on getting more customers 250 00:09:45.000 --> 00:09:46.320 or I'm not gonna necessarily focus on getting them 251 00:09:46.320 --> 00:09:47.600 by more because the biggest lever 252 00:09:47.600 --> 00:09:48.560 is getting the pricing right. 253 00:09:48.560 --> 00:09:50.080 Agreed, how do I do that? 254 00:09:50.080 --> 00:09:52.040 So the first thing I would recommend doing 255 00:09:52.040 --> 00:09:54.080 is not necessarily changing your existing audience 256 00:09:54.080 --> 00:09:56.200 because changing expectations on people can be tough, 257 00:09:56.200 --> 00:09:57.040 all right? 258 00:09:57.040 --> 00:09:59.440 So what you wanna do is grandfather them in for now, 259 00:09:59.440 --> 00:10:01.160 and when you bring new people in, 260 00:10:01.160 --> 00:10:02.680 you can present the new price. 261 00:10:02.680 --> 00:10:05.640 Now, what happens if people who just bought last week 262 00:10:05.640 --> 00:10:09.520 find out that the people who are buying now get it for more, 263 00:10:09.520 --> 00:10:11.360 or the flip side, the people who buy it for more find out 264 00:10:11.360 --> 00:10:12.840 that last week somebody got it for less? 265 00:10:12.840 --> 00:10:13.840 Well, you market it. 266 00:10:13.840 --> 00:10:16.440 And so what you do is you advertise the price, 267 00:10:16.440 --> 00:10:17.560 the fact that you're gonna change the price 268 00:10:17.560 --> 00:10:18.440 is about to increase. 269 00:10:18.440 --> 00:10:21.160 And so you clear the pipeline whenever that happens. 270 00:10:21.160 --> 00:10:23.280 Now, what you have to expect is that if you clear 271 00:10:23.280 --> 00:10:25.760 your entire sales pipeline because you put some urgency 272 00:10:25.760 --> 00:10:27.480 on people to make a buying decision, 273 00:10:27.480 --> 00:10:29.000 that you're automatically gonna have a different sales 274 00:10:29.000 --> 00:10:30.680 the next month because you clear the pipeline. 275 00:10:30.680 --> 00:10:33.840 So you have to give at least two months of adjustment time, 276 00:10:33.840 --> 00:10:35.880 unless you're absolutely bombing on the phone, 277 00:10:35.880 --> 00:10:36.880 which then you're like, all right, 278 00:10:36.880 --> 00:10:38.120 we need to really look at this. 279 00:10:38.120 --> 00:10:40.400 But the jump should make sense. 280 00:10:40.400 --> 00:10:42.640 Now, that is the first way you test. 281 00:10:42.640 --> 00:10:44.640 Now, let's say that you make that test, 282 00:10:44.640 --> 00:10:45.840 and you need to go back. 283 00:10:45.840 --> 00:10:48.440 So what you do is, and honestly, 284 00:10:48.440 --> 00:10:49.280 I'm trying to think of a time 285 00:10:49.280 --> 00:10:50.440 where we've had to do this. 286 00:10:50.440 --> 00:10:51.440 It's not often. 287 00:10:51.440 --> 00:10:53.640 I actually can't remember a time where we have increased 288 00:10:53.640 --> 00:10:55.280 the price because we're usually pretty judicious about 289 00:10:55.360 --> 00:10:56.800 when we do the research of whether we think 290 00:10:56.800 --> 00:10:57.960 the price can be supported. 291 00:10:57.960 --> 00:11:00.440 There are things called pricing surveys that you can run. 292 00:11:00.440 --> 00:11:03.080 And so what we do before we do a pricing increase 293 00:11:03.080 --> 00:11:05.200 is we run something called a Van West or a pricing survey. 294 00:11:05.200 --> 00:11:06.840 And so it works like this. 295 00:11:06.840 --> 00:11:08.760 You send a survey to your customers, 296 00:11:08.760 --> 00:11:12.000 and you say, hey, you asked four questions. 297 00:11:12.000 --> 00:11:13.600 The first question you ask is, 298 00:11:13.600 --> 00:11:16.040 at what price point would this service that you have now received, 299 00:11:16.040 --> 00:11:17.440 these are customers, remember? 300 00:11:17.440 --> 00:11:20.080 Would the price be so high that you would even consider it? 301 00:11:20.080 --> 00:11:21.760 All right, first question. 302 00:11:21.760 --> 00:11:24.360 Second question is, at what price point 303 00:11:24.360 --> 00:11:26.560 would this product need to be for it to be so low 304 00:11:26.560 --> 00:11:27.840 that you would never believe it could actually 305 00:11:27.840 --> 00:11:29.200 fulfill the promise we have? 306 00:11:29.200 --> 00:11:32.920 The third one, you say, at what price point would you say, 307 00:11:32.920 --> 00:11:35.600 it's really expensive, and you have to think about it, 308 00:11:35.600 --> 00:11:37.480 but you'd ultimately make the decision to buy. 309 00:11:37.480 --> 00:11:39.080 It would be a stretch, but you'd do it, 310 00:11:39.080 --> 00:11:40.800 and it would hurt a little bit. 311 00:11:40.800 --> 00:11:44.000 The fourth question is, at what price point would you say, 312 00:11:44.000 --> 00:11:46.440 this is a steal or this was a bargain? 313 00:11:46.440 --> 00:11:47.880 But you'd believe it could fulfill the promise, 314 00:11:47.880 --> 00:11:51.240 but you just thought it was really, really well priced. 315 00:11:51.240 --> 00:11:53.520 So when you have those four data points, 316 00:11:53.600 --> 00:11:54.880 you then can graph those, 317 00:11:54.880 --> 00:11:57.640 and you actually get the edges of something called WTP, 318 00:11:57.640 --> 00:11:59.080 which is willingness to pay. 319 00:11:59.080 --> 00:12:00.680 And so when you have those edges, you see, 320 00:12:00.680 --> 00:12:03.440 at this price point, it's going to be a band. 321 00:12:03.440 --> 00:12:06.080 So you have four bands on this thing, 322 00:12:06.080 --> 00:12:07.880 and if you want to get really advanced with it, 323 00:12:07.880 --> 00:12:10.560 you ask for other pieces of data about the person, 324 00:12:10.560 --> 00:12:11.640 what's your current revenue level, 325 00:12:11.640 --> 00:12:13.920 how many employees do you have, what industry are you in, 326 00:12:13.920 --> 00:12:16.160 and so then you find out that some industries 327 00:12:16.160 --> 00:12:17.920 might value your same thing more. 328 00:12:17.920 --> 00:12:20.080 So then what happens is you create a product suite 329 00:12:20.080 --> 00:12:22.480 that's appropriate to the right customers. 330 00:12:22.640 --> 00:12:25.080 And so from there, you're able to price appropriately 331 00:12:25.080 --> 00:12:27.800 to the needs or the value that a certain person's getting. 332 00:12:27.800 --> 00:12:30.360 So for example, if I'm very wealthy 333 00:12:30.360 --> 00:12:34.560 and someone can give me 5% more on my money, 334 00:12:34.560 --> 00:12:37.760 to me it might be worth $5 million a year, right? 335 00:12:37.760 --> 00:12:41.440 To somebody else, it might only be worth $100,000 a year. 336 00:12:41.440 --> 00:12:44.160 And so that discrepancy, we want to see if we can capture 337 00:12:44.160 --> 00:12:46.920 that in pricing by simply adding a couple of little features 338 00:12:46.920 --> 00:12:49.720 and making it specific to that avatar. 339 00:12:49.720 --> 00:12:51.960 Now, if you want to go the third step on this survey, 340 00:12:51.960 --> 00:12:53.600 that makes it even more powerful, 341 00:12:53.600 --> 00:12:56.720 is that you ask for two more questions. 342 00:12:56.720 --> 00:13:00.200 The next question is, of all the services that we offer, 343 00:13:00.200 --> 00:13:01.720 all the things, all the value that we provide, 344 00:13:01.720 --> 00:13:02.720 and you want to list everything out. 345 00:13:02.720 --> 00:13:05.200 So you're like, you might have 24 hour support, 346 00:13:05.200 --> 00:13:06.640 you might have a Facebook group, 347 00:13:06.640 --> 00:13:08.360 you might have calls that you attend, 348 00:13:08.360 --> 00:13:11.320 you might have a promise of some sort that you make, 349 00:13:11.320 --> 00:13:14.800 you might have, try and splinter out every little individual 350 00:13:14.800 --> 00:13:16.360 outcome that you have that you deliver 351 00:13:16.360 --> 00:13:18.240 with a service or product that you sell. 352 00:13:18.240 --> 00:13:20.320 And you list all of them out, might be 20 things. 353 00:13:21.320 --> 00:13:25.320 And you say, if tomorrow we were to eliminate everything 354 00:13:25.320 --> 00:13:27.040 from our service, except for one thing, 355 00:13:27.040 --> 00:13:28.920 which would you want us to keep? 356 00:13:28.920 --> 00:13:30.600 And then the second question is, 357 00:13:30.600 --> 00:13:33.280 if tomorrow, you had to eliminate one thing 358 00:13:33.280 --> 00:13:35.560 of all of these 20 things, which would it be 359 00:13:35.560 --> 00:13:37.240 that it wouldn't affect your decision to stay 360 00:13:37.240 --> 00:13:38.120 with us no matter what? 361 00:13:39.080 --> 00:13:41.640 And so there you get the most valuable thing 362 00:13:41.640 --> 00:13:43.280 and you get the least valuable thing. 363 00:13:43.280 --> 00:13:45.080 And when you have 100 people or 200 people 364 00:13:45.080 --> 00:13:47.800 take that survey, you get to see clusters 365 00:13:47.800 --> 00:13:49.480 of lots of people value this thing, 366 00:13:49.560 --> 00:13:51.640 not a lot of people value this thing. 367 00:13:51.640 --> 00:13:54.160 This is what most people are willing to pay on the high end. 368 00:13:54.160 --> 00:13:56.320 This is what most people are willing to pay on the low end. 369 00:13:56.320 --> 00:13:58.120 This is way too low and people won't believe 370 00:13:58.120 --> 00:14:00.600 that that's valuable and this is way too high. 371 00:14:00.600 --> 00:14:03.520 And so then you can actually plot those on a demand curve 372 00:14:03.520 --> 00:14:06.200 and say, okay, if we raise to here, 373 00:14:06.200 --> 00:14:08.240 this percentage of customers would buy. 374 00:14:08.240 --> 00:14:09.640 So you multiply a number of customers 375 00:14:09.640 --> 00:14:11.600 by number of people willing to pay the price 376 00:14:11.600 --> 00:14:13.160 and that will give you the gross revenue 377 00:14:13.160 --> 00:14:14.800 and you should know your cost of fulfilling 378 00:14:14.800 --> 00:14:17.600 and that will give you the maximum profit point. 379 00:14:17.600 --> 00:14:21.600 On the flip side, if you say what is the lowest bargain price 380 00:14:21.600 --> 00:14:24.280 perspective, you multiply the number of customers 381 00:14:24.280 --> 00:14:26.800 by the number of people willing to buy that lowest price. 382 00:14:26.800 --> 00:14:28.760 And again, you multiply by the gross margin. 383 00:14:28.760 --> 00:14:30.040 And so in those two instances, 384 00:14:30.040 --> 00:14:32.600 you'll be able to triangulate where I have the price point 385 00:14:32.600 --> 00:14:34.120 where I'll gain the most market share 386 00:14:34.120 --> 00:14:35.440 and where the price point is exists 387 00:14:35.440 --> 00:14:36.640 that I gain the most profit. 388 00:14:36.640 --> 00:14:38.240 And then strategically within your business, 389 00:14:38.240 --> 00:14:41.400 you find the sweet spot with your strategy of growth 390 00:14:41.400 --> 00:14:42.560 where it makes the most sense. 391 00:14:42.560 --> 00:14:45.000 If I were a platform, I might have a loss leader product 392 00:14:45.000 --> 00:14:47.240 that just tries to gain as much market share as possible. 393 00:14:47.240 --> 00:14:49.520 On the flip side, if I'm trying to build an enterprise business 394 00:14:49.520 --> 00:14:52.000 that pays me over time and cash flows 395 00:14:52.000 --> 00:14:53.520 because it's an asset I want to keep for a long time, 396 00:14:53.520 --> 00:14:54.840 that I might find this profit thing 397 00:14:54.840 --> 00:14:58.040 and kind of slow grow my way to enterprise value. 398 00:14:58.040 --> 00:15:00.720 And so when you run a pricing survey like this, 399 00:15:00.720 --> 00:15:04.160 you no longer make guesses at how to price, 400 00:15:04.160 --> 00:15:07.360 there's a science to pricing so that you can optimize 401 00:15:07.360 --> 00:15:09.240 for the right customers, the right price, 402 00:15:09.240 --> 00:15:11.560 the right profit for your business right now. 403 00:15:11.560 --> 00:15:13.520 And so if you don't know how to do that stuff, 404 00:15:13.520 --> 00:15:15.840 it's normal, you can Google more about it, 405 00:15:15.840 --> 00:15:17.840 but that is generally how we approach pricing 406 00:15:17.840 --> 00:15:20.000 and acquisition.com with our portfolio companies 407 00:15:20.000 --> 00:15:22.680 so that we can make the best pricing decisions, 408 00:15:22.680 --> 00:15:24.960 make the most profit and ultimately grow the business 409 00:15:24.960 --> 00:15:27.480 in the way that we deem most effective for the strategy. 410 00:15:27.480 --> 00:15:29.440 And it's why we're able to triple profits 411 00:15:29.440 --> 00:15:32.640 for on average for the businesses that we work within the 12 months 412 00:15:32.640 --> 00:15:34.920 simply by reconfiguring the product suite 413 00:15:34.920 --> 00:15:37.440 and the pricing associated with the avatars that we serve. 414 00:15:37.440 --> 00:15:40.160 We'll go guys, you guys already know 415 00:15:40.160 --> 00:15:43.400 that I don't run any ads on this and I don't sell anything. 416 00:15:43.400 --> 00:15:45.320 And so the only ask that I can ever have it 417 00:15:45.320 --> 00:15:46.680 you guys is that you help me spread the words, 418 00:15:46.680 --> 00:15:48.840 we can out more entrepreneurs, make more money, 419 00:15:48.840 --> 00:15:50.840 feed their families, make better products 420 00:15:50.840 --> 00:15:52.960 and have better experiences for their employees 421 00:15:52.960 --> 00:15:53.880 and customers. 422 00:15:53.880 --> 00:15:56.120 And the only way we do that is if you can rate 423 00:15:56.120 --> 00:15:58.320 and review and share this podcast. 424 00:15:58.320 --> 00:16:00.920 So the single thing that I have to do is you can just leave review 425 00:16:00.920 --> 00:16:02.840 but take 10 seconds or one type of the thug 426 00:16:02.840 --> 00:16:04.120 that it means the absolute will to me 427 00:16:04.120 --> 00:16:06.960 and more importantly, it may change the world for someone else. 428 00:16:08.800 --> 00:16:10.360 So because we were coming in 429 00:16:10.360 --> 00:16:12.600 and we hadn't done pricing surveys yet for that business, 430 00:16:12.600 --> 00:16:14.960 but we really thought it was underpriced 431 00:16:14.960 --> 00:16:16.400 based on what we knew. 432 00:16:16.400 --> 00:16:17.760 And so you're like, well, what did you know? 433 00:16:17.760 --> 00:16:19.760 Well, there were two other players in the marketplace 434 00:16:19.760 --> 00:16:22.200 that were both bigger, which is a great indicator by the ways. 435 00:16:22.200 --> 00:16:24.400 If you look at the people who are the biggest in that space, 436 00:16:24.400 --> 00:16:25.960 they probably run a couple pricing surveys. 437 00:16:25.960 --> 00:16:28.200 And when I say big, I'm really looking at businesses 438 00:16:28.200 --> 00:16:30.120 that are probably doing 30 million or more, 439 00:16:30.120 --> 00:16:32.800 below that people usually don't take pricing as seriously. 440 00:16:32.800 --> 00:16:35.000 And so maybe a 10 million, but like still, 441 00:16:35.000 --> 00:16:36.920 like multiple millions of dollars a year. 442 00:16:36.920 --> 00:16:40.040 And so both of the businesses had significantly higher price points 443 00:16:40.040 --> 00:16:41.880 and had similar value propositions. 444 00:16:41.880 --> 00:16:43.640 And so we felt really confident 445 00:16:43.640 --> 00:16:45.600 that we actually wanted to double the price. 446 00:16:45.600 --> 00:16:48.440 The CEO in particular was really hesitant. 447 00:16:48.440 --> 00:16:50.360 As you can imagine, this is an emotional choice. 448 00:16:50.360 --> 00:16:52.600 And you know, the fear that people aren't gonna buy, 449 00:16:52.600 --> 00:16:55.160 but this is a really important point. 450 00:16:55.160 --> 00:16:58.000 If you, the founder and your team is not sold 451 00:16:58.000 --> 00:17:00.600 on the price point, it will not work. 452 00:17:00.600 --> 00:17:03.160 Because the psychology still matters more than the math. 453 00:17:03.160 --> 00:17:05.880 And I mean that like, you have to be super sold. 454 00:17:05.880 --> 00:17:08.320 And so the way that we would communicate this to the team 455 00:17:08.320 --> 00:17:10.760 is I would ask them to sell me on why it's worth 456 00:17:10.760 --> 00:17:12.360 more than the price that I want to increase it to. 457 00:17:12.360 --> 00:17:13.960 So before you tell them the new price, 458 00:17:13.960 --> 00:17:16.200 have them sell you on why it's worth 50% more 459 00:17:16.200 --> 00:17:17.640 than the price you're gonna change it to. 460 00:17:17.640 --> 00:17:20.200 So let's say we had a $5,000 product that we're selling. 461 00:17:20.200 --> 00:17:22.320 I would say, hey, and we're gonna bump it to $7,500. 462 00:17:22.320 --> 00:17:26.160 For example, I would say, hey, sell me on why this is worth $10,000. 463 00:17:26.160 --> 00:17:28.600 Okay, because like guys, there's a price change coming. 464 00:17:28.600 --> 00:17:31.040 So I need you to sell me why this is worth $10,000. 465 00:17:31.040 --> 00:17:33.200 Every single reason why it's worth $10,000, right? 466 00:17:33.200 --> 00:17:35.280 And they're gonna sell it and read testimonials, et cetera. 467 00:17:35.280 --> 00:17:37.880 So they're gonna be amped up also, by the way. 468 00:17:37.880 --> 00:17:39.440 So let's guys make more money when the price goes up 469 00:17:39.480 --> 00:17:41.000 because the percentage of what they're making goes up. 470 00:17:41.000 --> 00:17:41.960 So they make more money. 471 00:17:41.960 --> 00:17:43.560 So they should be usually pretty light. 472 00:17:43.560 --> 00:17:45.600 And if you're sales seem very resistant, 473 00:17:45.600 --> 00:17:46.840 it might be the wrong culture to sell something. 474 00:17:46.840 --> 00:17:48.720 Because any sales seem that I've run always was like, 475 00:17:48.720 --> 00:17:49.600 dude, when can we raise a price? 476 00:17:49.600 --> 00:17:50.440 When can we raise a price? 477 00:17:50.440 --> 00:17:52.560 Because every time we raise a price, they got to pay them. 478 00:17:52.560 --> 00:17:55.080 Right, they're like getting themselves pay raises. 479 00:17:55.080 --> 00:17:57.480 So like they should want to do this, right? 480 00:17:57.480 --> 00:17:59.400 So communicating the team and making sure 481 00:17:59.400 --> 00:18:01.080 that you the founder are super bought in on this, 482 00:18:01.080 --> 00:18:04.160 like you need to pitch them, like you need to sell hard 483 00:18:04.160 --> 00:18:06.800 or why this makes sense, why it's good for the business, 484 00:18:06.800 --> 00:18:08.080 why it's good for the customer, 485 00:18:08.080 --> 00:18:11.560 why a more invested customer will actually get better results, 486 00:18:11.560 --> 00:18:13.760 why this will actually help the back end team 487 00:18:13.760 --> 00:18:16.120 fulfill in a better way, it'll give us more gross profit 488 00:18:16.120 --> 00:18:18.080 to actually deliver at a higher level 489 00:18:18.080 --> 00:18:19.920 and talk about that virtuous cycle of pricing, 490 00:18:19.920 --> 00:18:22.240 which is in the 100 million offers book, it's one page, 491 00:18:22.240 --> 00:18:23.880 virtuous cycle of price, you can read it, 492 00:18:23.880 --> 00:18:26.280 and basically you can say that pitch to them. 493 00:18:26.280 --> 00:18:27.120 The book's not in sense. 494 00:18:27.120 --> 00:18:29.400 So like hopefully it doesn't break even as well. 495 00:18:29.400 --> 00:18:31.320 So how do you communicate the price increase 496 00:18:31.320 --> 00:18:32.160 to current customers? 497 00:18:32.160 --> 00:18:33.480 So there's two scenarios. 498 00:18:33.480 --> 00:18:35.320 Either you're increasing the price on current customers 499 00:18:35.320 --> 00:18:37.000 or you're not increasing. 500 00:18:37.000 --> 00:18:39.480 So if they're grandfathered in, you can let them know 501 00:18:39.480 --> 00:18:41.680 that they're got grandfathered in and to chill 502 00:18:41.680 --> 00:18:43.400 and to be like double down on the fact 503 00:18:43.400 --> 00:18:44.360 that they're getting even more value 504 00:18:44.360 --> 00:18:46.000 than they thought they were, all right? 505 00:18:46.000 --> 00:18:49.160 Now, I have never really liked doing that 506 00:18:49.160 --> 00:18:50.720 because I like always having the card 507 00:18:50.720 --> 00:18:52.560 if I want to raise the price on them in the future, 508 00:18:52.560 --> 00:18:54.560 I can, which is why I don't like lifetime deals, 509 00:18:54.560 --> 00:18:55.880 lifetime pricing, any of that stuff 510 00:18:55.880 --> 00:18:58.000 because I just don't know what the future's gonna hold. 511 00:18:58.000 --> 00:18:59.680 What if inflation doubles, right? 512 00:18:59.680 --> 00:19:01.640 That's why I don't like lifetime deals. 513 00:19:01.640 --> 00:19:03.440 So I don't normally do that. 514 00:19:03.440 --> 00:19:04.920 If you wanna do that, you can and that's what you should do. 515 00:19:05.000 --> 00:19:06.560 But that's not my wreck. 516 00:19:07.800 --> 00:19:09.480 And so normally to the existing audience, 517 00:19:09.480 --> 00:19:10.320 I just won't say anything 518 00:19:10.320 --> 00:19:12.160 because it's not really a concern of theirs 519 00:19:12.160 --> 00:19:13.120 because they've already paid and they've, 520 00:19:13.120 --> 00:19:14.920 we've already agreed to fill out this price 521 00:19:14.920 --> 00:19:15.920 and they've agreed to pay that price 522 00:19:15.920 --> 00:19:19.320 and so expectations have been set and done. 523 00:19:19.320 --> 00:19:21.960 For the new customers that are coming in, 524 00:19:21.960 --> 00:19:23.760 we communicate externally that we're going to change 525 00:19:23.760 --> 00:19:25.200 the price so that we're gonna raise the price 526 00:19:25.200 --> 00:19:26.320 so we can generate more sales 527 00:19:26.320 --> 00:19:28.360 and get people who are on the ledge to close. 528 00:19:28.360 --> 00:19:30.680 But beyond that, that is the communication. 529 00:19:30.680 --> 00:19:32.600 It says, hey, we've dialed in our processes. 530 00:19:32.600 --> 00:19:34.480 We've doubled our number of success stories. 531 00:19:35.000 --> 00:19:37.080 You talk about all the things that you've invested, 532 00:19:37.080 --> 00:19:38.800 the time taken and the effort spent 533 00:19:38.800 --> 00:19:41.040 to improve the quality of products and services 534 00:19:41.040 --> 00:19:42.480 and you're saying because of that, 535 00:19:42.480 --> 00:19:44.280 we are going to raise the price and it's so that 536 00:19:44.280 --> 00:19:45.720 we can further invest in the business, 537 00:19:45.720 --> 00:19:48.080 further invest in hiring team and talent. 538 00:19:48.080 --> 00:19:50.240 My Jim Won't Secret book actually has a letter, 539 00:19:50.240 --> 00:19:52.440 but that's that I have the exact, 540 00:19:52.440 --> 00:19:53.880 it's the Jim Won't Secret book. 541 00:19:53.880 --> 00:19:54.960 But inside of the letter, 542 00:19:54.960 --> 00:19:56.520 you basically just wanna show that you're not, 543 00:19:56.520 --> 00:19:58.160 you're not just taking it put in your pocket, right? 544 00:19:58.160 --> 00:20:00.080 Now, certain percentage of that you are gonna do. 545 00:20:00.080 --> 00:20:01.840 But you're taking that 546 00:20:01.840 --> 00:20:03.800 because you wanna build the infrastructure of the business. 547 00:20:03.840 --> 00:20:05.960 And so, you talk about the things in the past 548 00:20:05.960 --> 00:20:08.200 that you've done to further invest 549 00:20:08.200 --> 00:20:10.000 and the things that you would like to do, 550 00:20:10.000 --> 00:20:11.000 that you're going to do, 551 00:20:11.000 --> 00:20:12.440 things that you'd like to do in the future 552 00:20:12.440 --> 00:20:14.200 to further improve the quality of the thing 553 00:20:14.200 --> 00:20:15.280 that you're selling, all right? 554 00:20:15.280 --> 00:20:16.880 And so that's why you communicate. 555 00:20:16.880 --> 00:20:18.920 Now, if you are going to raise prices 556 00:20:18.920 --> 00:20:21.280 on your existing clients, which is the hardest thing to do. 557 00:20:21.280 --> 00:20:22.320 But if you are gonna do it 558 00:20:22.320 --> 00:20:24.520 and we've taken many, many, many, many, many, many, 559 00:20:24.520 --> 00:20:25.840 many businesses through this process, 560 00:20:25.840 --> 00:20:28.040 especially on the gym side because we had to do it a lot. 561 00:20:28.040 --> 00:20:30.680 You have to really take it seriously 562 00:20:30.680 --> 00:20:32.160 and you need to write a letter 563 00:20:32.200 --> 00:20:33.480 and you wanna hand sign it 564 00:20:33.480 --> 00:20:34.760 and it's been so many customers you have. 565 00:20:34.760 --> 00:20:35.760 But if you're a small business, 566 00:20:35.760 --> 00:20:37.760 I would recommend like hand signing the thing 567 00:20:37.760 --> 00:20:39.320 to start showing that you take it seriously. 568 00:20:39.320 --> 00:20:41.360 And after explaining all the pros 569 00:20:41.360 --> 00:20:43.720 of the things that you have done to improve the quality 570 00:20:43.720 --> 00:20:45.400 and the things that you would like to do 571 00:20:45.400 --> 00:20:47.320 to improve the quality, 572 00:20:47.320 --> 00:20:48.680 then at the very end, 573 00:20:48.680 --> 00:20:50.680 this is a tiny human nuance. 574 00:20:50.680 --> 00:20:53.280 I say, PS, if this is gonna materially affect your life 575 00:20:53.280 --> 00:20:55.520 is in like you won't be able to buy groceries 576 00:20:55.520 --> 00:20:57.680 or pay your rent, please let me know 577 00:20:57.680 --> 00:20:59.480 and I'll see if I can figure something out. 578 00:20:59.480 --> 00:21:01.000 And so what happens is most people read that 579 00:21:01.000 --> 00:21:02.440 they're like, no, that's not gonna happen. 580 00:21:02.440 --> 00:21:03.520 And so then it doesn't happen. 581 00:21:03.520 --> 00:21:04.760 And then if they do reach out, 582 00:21:04.760 --> 00:21:05.760 then you ask the question, 583 00:21:05.760 --> 00:21:07.520 it's like, are you not gonna be able to pay your mortgage? 584 00:21:07.520 --> 00:21:08.680 Are you not gonna be able to buy food? 585 00:21:08.680 --> 00:21:10.920 That's really important because we will figure it out. 586 00:21:10.920 --> 00:21:12.320 But they're like, well, no, it's like, all right, 587 00:21:12.320 --> 00:21:14.160 well then is it just that you'd like to pay less? 588 00:21:14.160 --> 00:21:15.840 Cause me too, you know what I mean? 589 00:21:15.840 --> 00:21:18.400 But I have to think long-term about this business, 590 00:21:18.400 --> 00:21:20.160 which is when you ask me to pay less, 591 00:21:20.160 --> 00:21:21.840 you're asking me to deliver less 592 00:21:21.840 --> 00:21:23.960 and you're asking me to not invest in the business. 593 00:21:23.960 --> 00:21:25.880 So is that what you're asking me to do? 594 00:21:25.880 --> 00:21:26.720 And then usually the person's like, 595 00:21:26.720 --> 00:21:27.720 well, no, I'm not saying that. 596 00:21:27.760 --> 00:21:29.120 It's like, okay, cool. 597 00:21:29.120 --> 00:21:30.680 And so you usually resolve the situation. 598 00:21:30.680 --> 00:21:32.520 So that is how I approach price changing 599 00:21:32.520 --> 00:21:34.120 in each of those scenarios. 600 00:21:34.120 --> 00:21:36.040 Okay, so let's walk through a hypothetical business 601 00:21:36.040 --> 00:21:37.720 and the steps that we would need to take 602 00:21:37.720 --> 00:21:39.040 in order to increase the price 603 00:21:39.040 --> 00:21:40.880 if that's what we decided was the right call. 604 00:21:40.880 --> 00:21:41.760 So the first thing we would do 605 00:21:41.760 --> 00:21:43.920 is we'd survey the existing audience using the Venn West 606 00:21:43.920 --> 00:21:44.840 or our pricing survey. 607 00:21:44.840 --> 00:21:46.520 We'd add in the segmentations 608 00:21:46.520 --> 00:21:48.400 and let's say this business sold a 12 week 609 00:21:48.400 --> 00:21:49.760 grow your calves program. 610 00:21:49.760 --> 00:21:52.000 And let's say it was $1,200 or 12 weeks very simple. 611 00:21:52.000 --> 00:21:53.880 All right, so that's what the program was. 612 00:21:53.880 --> 00:21:55.640 And on the first third of the survey, 613 00:21:55.640 --> 00:21:57.080 we're trying to find out more about the customer. 614 00:21:57.080 --> 00:21:58.280 So we're like, hey, you know, 615 00:21:58.280 --> 00:21:59.920 what was the main reason that you bought this? 616 00:21:59.920 --> 00:22:01.560 Was there an event that was coming up 617 00:22:01.560 --> 00:22:02.920 that incentivized you to do it? 618 00:22:02.920 --> 00:22:03.680 What's your income level? 619 00:22:03.680 --> 00:22:04.880 What's your job? 620 00:22:04.880 --> 00:22:06.720 What was the primary way that you found out about us, right? 621 00:22:06.720 --> 00:22:08.280 So it's like, okay, these are the things 622 00:22:08.280 --> 00:22:10.160 that we know about the avatar. 623 00:22:10.160 --> 00:22:11.000 All right, cool. 624 00:22:11.000 --> 00:22:12.880 And probably age, yeah, age and gender 625 00:22:12.880 --> 00:22:14.200 is probably, probably you guys, 626 00:22:14.200 --> 00:22:15.040 but you know what, ladies, 627 00:22:15.040 --> 00:22:16.080 you probably want the calves too, 628 00:22:16.080 --> 00:22:17.440 because who doesn't want calves? 629 00:22:17.440 --> 00:22:20.960 And so we've got those client demographics, okay. 630 00:22:20.960 --> 00:22:23.400 Second part is the four questions of the Venn Westrup. 631 00:22:23.400 --> 00:22:24.600 What if it was super expensive? 632 00:22:24.600 --> 00:22:25.760 What if it were way too cheap? 633 00:22:25.760 --> 00:22:26.840 What if it were a stretch? 634 00:22:26.840 --> 00:22:28.560 And then what if it were a bargain, right? 635 00:22:28.560 --> 00:22:29.880 Those are the four questions, cool. 636 00:22:29.880 --> 00:22:31.200 Now we say of all the things 637 00:22:31.200 --> 00:22:32.040 that we do in our calves bargain, 638 00:22:32.040 --> 00:22:34.240 which is the book, the training, the nutrition, 639 00:22:34.240 --> 00:22:35.680 the stretching thing that we have, 640 00:22:35.680 --> 00:22:37.520 the one-on-one calls for accountability, 641 00:22:37.520 --> 00:22:39.320 the buddy system that we've put together 642 00:22:39.320 --> 00:22:40.480 so you have an accountability buddy, 643 00:22:40.480 --> 00:22:42.800 the small groups that we have you guys training together, 644 00:22:42.800 --> 00:22:44.880 the cohorts, the intensifier exercise 645 00:22:44.880 --> 00:22:46.120 that we drop every Saturday, 646 00:22:46.120 --> 00:22:48.200 like all of these things that we do in our value stack, 647 00:22:48.200 --> 00:22:50.040 which of these, if we only had one of them, 648 00:22:50.040 --> 00:22:51.520 you would keep and which of these 649 00:22:51.520 --> 00:22:53.920 if we got rid of one, you would lose and not care. 650 00:22:53.920 --> 00:22:54.760 Cool. 651 00:22:54.760 --> 00:22:56.560 That's just good data for us in the future, 652 00:22:56.560 --> 00:22:57.640 because also in our messaging, 653 00:22:57.640 --> 00:22:59.480 we'll talk more about this stuff and less about this stuff. 654 00:22:59.480 --> 00:23:02.120 And if it doesn't add value and it costs us a lot of money, 655 00:23:02.120 --> 00:23:02.960 in one of our businesses, 656 00:23:02.960 --> 00:23:04.400 we eliminated in the sound cerebral, 657 00:23:04.400 --> 00:23:06.280 but customer support in that business 658 00:23:06.280 --> 00:23:07.560 was not deemed valuable. 659 00:23:07.560 --> 00:23:10.640 And it was the second biggest apartment of the whole company. 660 00:23:10.640 --> 00:23:13.080 So we actually, as unfortunate as may sound, 661 00:23:13.080 --> 00:23:15.400 we got rid of that entire department 662 00:23:15.400 --> 00:23:16.720 and nothing changed. 663 00:23:16.720 --> 00:23:18.640 No one left, it didn't change anything. 664 00:23:18.640 --> 00:23:19.760 And so it just was not valuable. 665 00:23:19.760 --> 00:23:20.720 It was literally an appendage 666 00:23:20.720 --> 00:23:22.400 that we thought was providing value that wasn't. 667 00:23:22.400 --> 00:23:23.800 Anyways, that being said, 668 00:23:23.800 --> 00:23:25.360 you take that data, number one. 669 00:23:25.360 --> 00:23:28.920 Number two, now we communicate it internally first. 670 00:23:28.920 --> 00:23:30.320 All right, so we got to communicate to the team, 671 00:23:30.320 --> 00:23:31.440 got to communicate to the sales team, 672 00:23:31.440 --> 00:23:32.640 security to the marketing team, 673 00:23:32.640 --> 00:23:34.000 talk about how this pricing change 674 00:23:34.000 --> 00:23:35.600 that we've determined is the right change, 675 00:23:35.600 --> 00:23:37.320 why it's the right change, exciting, exciting. 676 00:23:37.320 --> 00:23:38.160 Cool. 677 00:23:38.160 --> 00:23:40.280 Now, then we communicate it internally 678 00:23:40.280 --> 00:23:42.400 to our customers and our lists, right? 679 00:23:42.400 --> 00:23:44.160 So we say, hey, this is what's happening, 680 00:23:44.160 --> 00:23:46.080 this is why it's happening, past, present, future, 681 00:23:46.080 --> 00:23:47.240 this is what we did to get here, 682 00:23:47.240 --> 00:23:48.080 this is why it's important. 683 00:23:48.080 --> 00:23:49.840 Now, this is what we're trying to do later. 684 00:23:49.840 --> 00:23:50.720 We're investing in the business 685 00:23:50.720 --> 00:23:51.840 because we want to fulfill our promises, 686 00:23:51.840 --> 00:23:53.200 which is a point that I forgot to mention, 687 00:23:53.240 --> 00:23:54.240 that I will say right now, 688 00:23:54.240 --> 00:23:56.360 which is the strongest argument position 689 00:23:56.360 --> 00:23:59.360 is always the moral high ground in any negotiation, 690 00:23:59.360 --> 00:24:00.560 the moral high ground. 691 00:24:00.560 --> 00:24:03.280 And so if someone says, I don't think you should raise your price, 692 00:24:03.280 --> 00:24:04.800 you ask them, do you feel like 693 00:24:04.800 --> 00:24:07.280 I shouldn't fulfill my promises to people? 694 00:24:07.280 --> 00:24:08.120 Is that what you're telling me? 695 00:24:08.120 --> 00:24:09.720 Because out of integrity, 696 00:24:09.720 --> 00:24:13.360 I can't, I can no longer provide the service that I have now 697 00:24:13.360 --> 00:24:15.960 because I know what a better service looks like, 698 00:24:15.960 --> 00:24:18.160 and I will fulfill the promises that I make to people. 699 00:24:18.160 --> 00:24:19.520 So is what you're asking me to do, 700 00:24:19.520 --> 00:24:22.840 not fulfill promises and be out of integrity made us honest? 701 00:24:22.880 --> 00:24:24.880 The person's like, well, no, I'm not asking you to do that. 702 00:24:24.880 --> 00:24:27.280 And like the moral high ground is unimpeachable. 703 00:24:27.280 --> 00:24:29.760 It's, you can't counter it, right? 704 00:24:29.760 --> 00:24:30.680 And I was like, if you can't afford it, 705 00:24:30.680 --> 00:24:31.520 that's fine, I understand that. 706 00:24:31.520 --> 00:24:33.320 But if I'm making this promise to the public 707 00:24:33.320 --> 00:24:35.200 that I'm going to solve this problem this way, 708 00:24:35.200 --> 00:24:36.120 then I'm going to do that. 709 00:24:36.120 --> 00:24:37.880 And if this is the pricing change that's required in order 710 00:24:37.880 --> 00:24:39.520 for me to fulfill that promise in the fullest degree, 711 00:24:39.520 --> 00:24:41.400 I will do that, period. 712 00:24:41.400 --> 00:24:42.800 And it gives you a moral high ground 713 00:24:42.800 --> 00:24:44.160 that I'll have this conversation. 714 00:24:44.160 --> 00:24:46.720 Okay, so once we've done the survey, 715 00:24:46.720 --> 00:24:47.680 we made the decision. 716 00:24:47.680 --> 00:24:49.680 We've communicated internally to our team, 717 00:24:49.680 --> 00:24:51.880 then we communicated to our existing customer base, 718 00:24:51.880 --> 00:24:54.960 and then finally, now we bring it up 719 00:24:54.960 --> 00:24:56.960 to the new customers we're coming in. 720 00:24:56.960 --> 00:24:58.760 So we hit our list up to let them notice 721 00:24:58.760 --> 00:25:00.080 we had the urgency in step four, 722 00:25:00.080 --> 00:25:01.440 and then the last step is now, 723 00:25:01.440 --> 00:25:02.920 we officially have this new price. 724 00:25:02.920 --> 00:25:04.960 Now, what we want to do now is expect the fact 725 00:25:04.960 --> 00:25:07.040 that the change in price will probably result 726 00:25:07.040 --> 00:25:09.520 in fewer sales by total volume. 727 00:25:09.520 --> 00:25:11.760 And the reason for that is because we cleared the pipeline 728 00:25:11.760 --> 00:25:13.440 before the price change, it happens. 729 00:25:13.440 --> 00:25:16.200 Now, once you have that, you have to let it shake out, 730 00:25:16.200 --> 00:25:18.040 you have to let it settle, and it's really trying. 731 00:25:18.040 --> 00:25:20.560 It's very difficult to do that because it takes guts. 732 00:25:20.560 --> 00:25:22.200 Well, once you make that, and you let it settle, 733 00:25:22.200 --> 00:25:24.840 then you just do the math and let the math do the talking. 734 00:25:24.840 --> 00:25:27.320 All right, which is, we sold this many people 735 00:25:27.320 --> 00:25:29.160 at this much profit per unit. 736 00:25:29.160 --> 00:25:31.080 Will we make more profit at this new price? 737 00:25:31.080 --> 00:25:33.560 Because if you sell something for twice as much money, 738 00:25:33.560 --> 00:25:35.520 and you get one third fewer sales, 739 00:25:35.520 --> 00:25:37.000 so you have two thirds of what you used to sell 740 00:25:37.000 --> 00:25:38.920 in terms of units, it might freak you out. 741 00:25:38.920 --> 00:25:42.160 But if you sell it twice the price, you make more money. 742 00:25:42.160 --> 00:25:44.600 And so you gotta be able to just let the math do the talking. 743 00:25:44.600 --> 00:25:47.720 All right, so in our hypothetical cap scenario, 744 00:25:47.720 --> 00:25:50.120 let's say we bumped into $2,000 or $3,000, 745 00:25:50.160 --> 00:25:51.760 because we found out that that was the price, 746 00:25:51.760 --> 00:25:53.760 that was right at that sweet spot. 747 00:25:53.760 --> 00:25:55.720 That was the stretch, but they'd still do it. 748 00:25:55.720 --> 00:25:57.240 We might have just two or three acts 749 00:25:57.240 --> 00:26:00.200 the profit of the business by making that one change. 750 00:26:00.200 --> 00:26:03.360 And maybe, because calves are the coolest thing ever, 751 00:26:03.360 --> 00:26:04.400 got even more people to buy it, 752 00:26:04.400 --> 00:26:06.200 because they thought they really could get the results 753 00:26:06.200 --> 00:26:08.160 that we said we were gonna help them experience. 754 00:26:08.160 --> 00:26:10.880 If this was interesting, you go to acquisition.com, 755 00:26:10.880 --> 00:26:13.400 and I think the third video is on pricing. 756 00:26:13.400 --> 00:26:17.680 So if you go books, courses, and then you pick the pricing 757 00:26:17.680 --> 00:26:19.400 video, which is the third video on the site, 758 00:26:19.400 --> 00:26:21.320 you can watch more about pricing 759 00:26:21.320 --> 00:26:22.520 as it applies to your business. 760 00:26:22.520 --> 00:26:23.400 It's absolutely free. 761 00:26:23.400 --> 00:26:24.320 You don't need to opt in or anything. 762 00:26:24.320 --> 00:26:25.000 You can just watch it. 763 00:26:25.000 --> 00:26:26.480 All right, so go check that out.