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What's going on everyone? Welcome back to the game. I have a audio first episode for you guys

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today. This has been something that's been kind of top of mind for me. But it's about some things

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that you can immediately sell to make a lot more money in the business. And I think this is something

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that's wildly underused. And so, I want to say a month ago, I had a business that came out

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to our headquarters. It's an advisory practice customer. And the gentleman had a very large business

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that had many automobile shops. And in talking to him more, it was a very razor thin margin

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business as, you know, he was detailing it. And one of the things that he had was a certain

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niche type of customer that had tremendous costs incurred for the amount of time that their

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trucker cars were off the road. Something to the tune of like 10 to 20 thousand dollars a day

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in lost income. And what was interesting is I said, okay, I'm guessing these guys are not

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price sensitive. And he was like, no, and I said, well, do you price it differently for them? He said,

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no, I said, but you have other customers or the vast majority of your customers that if it took

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a week to get there, you know, cars or trucks back, it wouldn't really make a difference to them.

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He said, right, it's like, okay. So what you're missing is basically a surge price or said

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differently, a speed pass. And so what I want to talk about is a couple different ways you can

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implement this in any business. And what's really cool about this type of kind of offer or value

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consideration is that it's 100% margin. So think about it. Like if you deliver anything, let's

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say you build decks for a living, it doesn't matter. And you have your standard, let's say you have

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a 30% margin in the business after everything, okay, fine, great. If you build that in three months

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cool, and maybe you can only take on a certain amount of projects, so you build them, let's say

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in sequence, so you build, you know, customer A and then customer B and the customer C. Well,

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it makes basically no difference to cost for you if you do ABC or CAB, right? Like it wouldn't

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actually change anything for you. You're going to have the same number of people and you're going

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to deliver of the same time period. But the thing is, is that customer C might be willing to pay two

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times more to get it done faster. And so for us as business owners, having the offer available for

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people to get what they want faster, I mean, and you think about this from the commerce world,

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like you can obviously always pay for faster shipping. It's almost like a, it's an obvious thing,

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but for some reason, in the services businesses, people don't do this. And I'm still always lost to

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why. And maybe it's because they don't think about it, which is why I'm making this podcast. But

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for this individual, when I was talking about the, the auto shop thing, it just felt like such an

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obvious thing. Well, okay, well, if it takes you normally a week to get the stuff back in the vast

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majority of customers don't care, but a small percentage customers do care very much about time

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and they're losing thousands of dollars every, you know, every day or tens of thousands of dollars,

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then it would follow to have a speed pass that would allow them to get priority, right? Because

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somebody else doesn't really care if it adds a day to their service. And so they're willing to pay

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the standard rate. Whereas somebody else, it does matter a lot. And so they're paying for fast

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shipping, right? Fundamentally, that's all we're doing here. I would say that for me, fundamentally,

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and I'll talk about the second way that you can use this in a second. But for me, fundamentally,

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I've really shifted, I mean, a lot of my thinking around creating products and services,

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I mean, I go back to the value equation because it's so core to how I do everything. But like,

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you've got the impact or outcome, you've got risk, you've got speed, and you've got ease. Like,

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these are the elements of value. Like, I have yet to find anything else that are not those four

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elements. The thing is that each of these elements can be traded in and out. In the services space,

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it's very common for people to add features or remove features of services in order to have

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different prices. That makes sense for a lot of people. But what they don't do is they don't

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actually change prices on speed or risk, right? And that sounds odd because those are huge

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elements of value. Just since I'm going to keep this conversation focused on speed for today,

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I think a lot about like, what can I do to do something faster? And sometimes to do something

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faster will cost you more. Like, if you're in home services, for example, and let's say you do

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kitchen remodels, it's like, okay, I could, you know, do your kitchen first. And so either I use,

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you basically have two options. You're either using resources from another customer and deprioritizing

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somebody else who doesn't care about speed as much, which is the simplest option operationally.

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You just change the sequence of delivery, but your actual kind of like fixed costs say more or

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less the same, you're just changing orders up. So that's pure profit, which is awesome.

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The second way of doing this is that you have surge support, right? So you say, okay, well,

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what would it take if I were to try and get this person who normally I deliver this in three months

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to deliver in one month? And let's say for that person, they're willing to pay two times the

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three times as much. Now, you may be surprised by this. And I want to encourage you to not sell

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out of your own wallet, which is a pretty common thing for business owners is they say, well, I would

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never pay for something like that. Well, good thing that you're not your customer because you

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probably already know how to fix cars or you probably already know how to fix, you know, our

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build decks or make or you know, make do a kitchen remodel or provide whatever service you have.

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And that makes you not your customer because your customer doesn't know how to do those things,

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which is why they're paying you, right? And for them, the value may be really big if it comes

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really fast. Let's just use a hypothetical here. Let's say that for you to build out a kitchen,

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right? It's going to cost you, if you wanted to rush, right? And say, hey, you know, Mr.

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marble supplier, Mr. granite supplier or Mr. cabinet supplier, whatever, I need these things by,

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you know, next week or by two weeks from now. What would it take? That's the question you ask.

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What would it take? What would I have to pay in order for that to happen? I have a customer who's

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willing to pay whatever price I can do it within reason to make it worth your while. And so then

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it's back to them. And so what you might find interesting is that they might say, well, you know,

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I could rush it and it probably cost about 20% more. It might cost 50% more. And you might say,

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cool, done. Because guess what? If you have to pay 50% more for your cost of goods and let's say

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you also pay 50% more for labor. Fine. Okay. But if you charge double or triple the price,

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not only do you make more absolute profit, if you try to charge triple the price, you're going to

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make more gross margin percentage too. So like you're going to make more money by percentage and

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absolute with this offer. And to make matters even better, you're going to be able to deliver

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something way faster than normal. And guess what happens then? You get more word of mouth. People

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are like, holy cow, this guy can deliver fast. And I'm telling you, having been, you know, I mean,

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I would say having been in business for so long, it's not true. I haven't been in business that

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long. I've been, you know, 13, 14 years, whatever it is at this point. I should have might be longer

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than that. Anyways, point is is that speed trumps so much. Like when Spotify was competing with

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the internet of online downloads, which were free. Spotify beat free because it was fast. Think

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about how crazy that is. Like if you're, I remember, like I remember another time, another example of

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this. For Halloween, Chipotle does the like if you, if you wear tin foil or you dress up like a

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burrito, they give you a free beer. They do it every year. I don't know if they still do it, but

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they used to do it when I was younger. And I remember thinking to myself, I went to it as a

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business owner later on in my life and it happened to be Halloween. For me, it was just whatever day of

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the week. Halloween fell on and I just needed to eat lunch. And I saw this line out the door and I was

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like, my God. And I thought to myself, I was like, man, if I could just pay $30 to have my burrito now,

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I would. So I don't have to wait in the slime. But then it just got me thinking yet again of like how

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valuable speed is because fast beats free. And so the thing is, is that delays the thing that people

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hate most, like think about how Amazon one and Netflix one, they won because of speed. Like,

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you want to look at movies. It's like instead of getting in your car and doing all that stuff,

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you just turn on your television. You can browse it on limited selection. It was fast. It was right

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there and obviously convenience and ease kind of factor into play there as well. It's immediately

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available. And so if you can try and sell speed. Now, I told you there was two comp, two types of

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speed that are rather search pricing that I wanted to talk about. The second is a little bit different.

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Okay. So the second here is, and now all of these are based on demand, right? So to be clear,

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like you have some people who want things faster. And so you give it to them faster in exchange for

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more money. Everybody's happy. Another situation is where you have uneven demand cycles. So a very

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common example, this is like restaurants. And so I just did a cash guys episode this week. And if

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you don't know what cash guys is, it's the new kind of pseudo TV show that we've been producing.

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It's on my YouTube channel. I've been waiting to do this for like over, it's been more than a year.

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It's been probably almost two years now that I've been kind of like wanting to do this. And it

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just takes a huge amount of resources for every one of the episodes. But their first two episodes

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are out. Basically, I kind of do like a mini shark tank, except I don't buy the business. I just

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help grow it. So it's way more tactical. Like it's the most positive feedback I've gotten on anything

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I've ever made. And this is specifically for business owners. So it's hardcore business content.

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I think you'll really like it. Anyways, I think some of you guys have heard that the podcast

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version of it. But if you haven't seen the video version, I think the video is even better.

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Anyways, so we have a cash guys episodes coming out. And it's my show so I can spoil whatever I want.

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The restaurant owners came in and there's a number of things we did to the business. But one of them

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was they had a lot of people come on weekends and not as many people come during the week. And

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this is pretty common for restaurants, right? Is that they get more demand on Friday, Saturday,

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sometimes Sunday. Then they do, you know, the rest of the week. I said, well, do you have the same

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menu on weekends? And they said, yeah. I was like, well, have you considered just taking

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just reprinting the menus and having a weekend menu that has, you know, 10 or 20% higher prices?

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And they're like, huh, I was like, if you have a line out the door that lasts an hour, right? And you

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can't even service the demand. Then when when price and demand, so when demand goes up on a price

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curve, and you can surpass the supply, you shift price up. Like that's just that's fairly standard.

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But I say this, you know, quote, fairly standard, but the vast majority of businesses don't do it.

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So very standard from a theoretical perspective, less so from a, from a practice angle. And the

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thing is, is in a business that's like food, where you're running usually paper thin margins, you

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know, if you have 104 days a year, so two days, you know, you're two weekend days per year. And

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let's say that on those days, you do half your volume, all right? Remember you're doing more volume

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in those days than you do the other five days the week. So 50% of your volume, if we can add 10 or

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20% if a business is running 10% margins, then us running just a 10% price premium on those days

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adds 5% to the absolute margin. And so what does that mean to the business? It's a 50% increase in

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profit. If we had a 20% increase in price, then it would be a 10% absolute increase because it's

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50% of the revenues coming on weekends, which would double the profit of the business. And so the

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thing is, is that there's all these tiny little levers that exist in a business that I think a

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lot of business owners under appreciate, or they're honestly just too afraid to implement. They're

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so afraid of, you know, what happens if someone says, no, it's like, well, are you offended when

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you buy a physical product and it says fast shipping for an extra $2.99. No, if you don't want to

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just don't take it, right? Like if you're at the mechanic shop, he says, hey, how important is this

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for you? To, you know, how fast do you need this done? Because we can, basically we can prioritize

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your thing and do it like literally we can make yours next in line as in like it's the first thing

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we worked on. Or we have our standard turnaround, which is, you know, your fifth in line right now,

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and we'll probably get it to you by a end of day tomorrow or whatever, right? If someone says

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end of day tomorrow is fine, then you say, cool, that's great. But if it's, if someone's like, no,

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I really need it back because I got to pick my kid up in the ceiling car I have, then it's like,

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okay, well then here's the fast pass price. And they might be like, great, because I don't want

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to have to pay somebody else to do this and this actually saves me money. And so again, this is where

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like you just don't want to sell out of the wall to the customer and assume that you know what they

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want, that you know what's best for them. I could say the vast majority of human error that exists,

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you know, from a politics perspective is people making rules for other people and assuming that

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they're the same. People are very, very good at allocating their own capital and their own time

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for their own benefits, like capitalism is built on this idea, like we're pretty good at getting

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what we want for ourselves. And most people are very bad at determining what everyone else in a

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wide population that doesn't represent them do want, right? This is why I'm an advocate of

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smaller government personally. Anyways, every business, so zooming back out, whether you're in physical

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products, whether you're in SaaS, whether you're in services, you should consider two different lenses

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for search pricing. One is the fast pass, which we talked about first, which is is there some way

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that we can either reorder our delivery for customers or drag our customer delivery up faster

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and be willing to pay maybe a small premium in cost in order to get a big premium in price.

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That would immediately drop to our bottom line because speed is 100% profit. Think about that.

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Speed is 100% incremental margin, especially if you just do the reordering of customers. If it

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makes no difference for some, it makes a big difference for others, all profit. If you have to do

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search support in terms of added cost, then sure, you eat a little bit of margin there, but you

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still can make more absolute money. And you serve those customers better. And I think you'll get

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more word of mouth. And then obviously on the search pricing side, if you have uneven demand,

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or you're seasonal in the nature of how your business runs, or it's end of the month first

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or the beginning of the month, things like that, every business is different. Consider having

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pricing that affects that. And I'll give you a different example. So it can also be on a

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micro level from a day to day perspective. So in the gym space, the 5 p.m. class or 6 p.m. class

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is usually those two classes are some of the most packed sessions, as you might imagine.

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But it was never crowded, 7 a.m. It was the deadest time that we had. And so when I think about

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that, I think, okay, well, then maybe there should be two memberships. We should have peak hours,

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pricing, and off peak hours. And so for people who do care about, I can only come in this time,

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then they can pay the premium. And for other people who have more flexible schedules or work

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from home, or work for themselves, or they have shift work, or whatever it is, then they might be

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willing, they might be happy to get a discount to come to the less packed times, which is good for

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use of business center, because think about like this. Let's say your 6 p.m. class is oversubscribed,

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right? So you only have, let's say, 30 bikes, you know, and so you can only fit 30 customers there.

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But let's say that if you had availability there, you could fit up to 40 people, all right? Well,

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the thing is, is that there might be people who are in that class who could otherwise come at

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different times, they just have no incentive to. But if you gave them the incentive, then you would

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be able to service more customers, because the 10 who can't make any other time go to another gym,

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because it's not convenient for them. And so you make it convenient for the most amount of people

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by appropriately pricing your supply to meet the demand. And so again, this literally works

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in any business, if you're a hair salon girl, like everyone is listening to this and it's like,

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well, this doesn't work for me, it works in every business, like stop. Speed is always a component

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of purchasing, period. If you're a hair salon girl, I'm going to bet that your Friday and Saturday

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probably is more busy for cuts and colors than Wednesday afternoons. And guess what that means?

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Your cutting color on Fridays and Saturday should probably be 20% higher. And for people who

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doesn't matter, or they're not doing it because they're going out that night, but they're doing it

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because they just need to get their monthly cutting color, then you charge normal. And you charge

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surge pricing for Fridays and Saturdays. And for those of you who have this weird issue with

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thinking that, what will my customers say? It's like, well, your demand will go down on those days.

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And then that means that you will not have to turn customers away. And then you can adequately serve

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everybody. You can literally, like the perfect pricing model, which is very difficult to do in

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reality, is that every single person would pay what their maximum willingness to pay is. Now,

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that is theoretically great, but practically impossible. And so this is where data is useful,

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so we can just get our best pockets where we know that these are indicators of high demand,

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like weekends or like, you know, peak hours at the gym. There's always these types of pockets

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that exist in any business. And we just try to, and you think Facebook doesn't, for example,

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when you're running ads, what do they do? Surge pricing is during Q4 when all the

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crystal shopping happens, cost for impression skyrockets. If you're in Uber, like if you order

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in Uber at Friday night at 10, you're going to pay two and a half, three times more. So like,

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are you offended? I mean, if you are, then you don't understand how capitalism works, but maybe

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you're offended, but you still buy and you still don't use anything else, right? And so I would

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encourage you to one, if you're a chicken about it, just change it for new customers. And then it'll

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slowly, like new customers, old customers will slowly over time cycle out. And then new customers

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will cycle in at the higher price. But I would encourage you to just say, like, listen, you can always

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like, you can blame it on inflation if you want. So you can blame it on costs of goods going up.

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You can say that you only have, you know, your rent got raised, blame it on whatever you want.

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If you want, you can put it to an outside power because you're afraid of just saying, I decided

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that I wanted to charge more. But if you want to blame it on something else, you can't.

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Fundamentally, I think that if you have more demand than you have supply at given times in your

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business, then it means that you were mispriced. And so you should consider maybe just raising

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prices at those times. So at that being said, I hope this found value. If you are a business

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owner and you like this type of stuff, we have our advisory practice, which is set up last year,

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which is honestly been really amazing. The reception has been exceptional. I've been

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really stoked about it. It's one of the, one of the business I've been most excited about

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starting. But yeah, we have business owners out here. I think the last time, I think I took a

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looked at the data from four consecutive days. And it was the average person in the room was 4.1

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million. Median was 1.2 to give you an idea. So we do have big businesses in the room as well.

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And so if you're a business owner and you like these types of kind of profit driving tactics,

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you know, this is a podcast. But if we do two days and we know what your business is, we can

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probably help you out a little more. I'm sure you can find it online at acquisition.com. Just

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click around. If you can't figure it out, then it's not for you. I hope you guys have an amazing

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day. Share this with your friends. It's the only way that this podcast grows. And so thank you.

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Love you all and talk soon.