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Three most important lines that you need to draw in your business that you probably are not.

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

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

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along the way. I hope you enjoy and subscribe. Welcome to Mosination. In this video,

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I'm going to be sharing with you the three most important lines that you need to draw in your

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business that you probably are not. And I want to show you some different combinations of these

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lines and how dramatically it will impact how much money you make and ultimately the value of

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the company that you ultimately built. So if you don't know my name is my name is Alex

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Ramozi, I own acquisition.com. We do about $85 million a year. This is a bonus sponsored episode,

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so if I'm less chipper than normal, that is why we think our sponsors as always. And so these are

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the three lines that I think everyone needs to understand. All right, so line number one,

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right here. I'm going to make sure that you guess, so if you can, guess right now,

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we'd each of these lines are going to represent. You have price, you have value, and you have

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cost of goods. All right, so every line has every business has these three lines within everything

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that they sell. You have how much you sell it for, you have how much value the person gets,

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and you have what it costs you. And what I want to show you is a mental framework in the interplay

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between these things and how dramatically it can shift your business. So this is the value line.

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This is what they are getting. This is the price line. This is how much you charge. This is the

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cost of goods line, which is how much it costs you to fulfill on this value, right? Right? Okay,

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so here's where it gets kind of cool. If we move our price up, see how little value we have here?

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This means that we have a low customer surplus. Customer surplus is the excess between what they pay

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and what they get. The higher the surplus, the greater the distance between these two things here,

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the more value they will perceive that they have gotten from your services. The bigger this

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discrepancy is, the more viral your business will be. Imagine there was a day years and years ago

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where you could have access to everything in the entire blockbuster store on demand from the comfort

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of your home and you could do it for less than it costs to do a new release and to run a new release.

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Wouldn't that be amazing? Well, they did create that and that was called Netflix. And so what they

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did was they priced it so low, but their cost of goods was still low or because the cost of,

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the incremental cost of adding a single customer is basically nothing, right? And so their gross margins,

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here is still very high because for them, they can still lower these things even more.

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And so what I'm going to tell you at the end of this video is that the trick to how you actually

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can build a fortune simply understanding the interplay between these three lines. If I have one

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takeaway for everybody who's watching this is that if you can think about your business just using

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these three lines, then you will be able to build a fortune. If we have here our cost of goods at

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the bottom and we raise this all the way to here and we have a, you know, a ton of customer surplus,

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what kind of business is this? This is going to be a business that probably doesn't need a market

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very much. This is going to be a business that is probably operationally difficult, probably a

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service-based business and probably runs on very thin margins. Many businesses run like this. These

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are a lot of old-school businesses that grow consistently every year by, you know, 10%, 15%,

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per year. And they don't have a ton of money to reinvest in resources. They're very operationally

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efficient in order to run a business like this. That's business scenario one. Let's see if you can

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guess what type of business this would be. Hey guys, real quick, if you're new to the podcast,

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I have a book on Amazon called $100 million dollars offers that over 8,000 five-star reviews

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has almost a perfect score. You can get it for 99 cents on Kindle. The reason I bring it up is

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that I put over a thousand hours into writing that book and it's my biggest gift for our community.

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So it's my very shameless way of trying to get to you to like me more and ultimately make more

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dollars to that later on in your business career. I can touch the bottom with you. So that's my

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gift. Go check it out. Amazon and back to the show.

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So this is most of your generic mom and pop businesses. Decent margin. Let's say this is the

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baseline here. Sorry. There's our baseline. Decent margins here. Decent margins. Decent value.

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Just kind of another run of the mill business. Nothing underwhelming or overwhelming about

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this business. And this is what most small businesses operate like. So let me tell you what type

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of business I would like to try and create. My goal is always to find a way to provide something

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that's excessively valuable. That cost me almost nothing to make. Unique expensive sticky

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air for those of you know guys who know that channel. It's one of that that video. It's one of

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my favorites. I want something that costs almost nothing. Provide tremendous value and creates a big

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customer surplus. And here's what's crazy. The bigger you do this, discrepancy,

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the more viral your business will become. For me, as I feel like I've aged in entrepreneurial

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doggie years, the more I strive for this than anything else. Because if you conquer this piece,

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you conquer the customer surplus in terms of how much value they are getting for what they are

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paying, then you will have an infinitely scalable business because you will have a quadratic

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way of expanding, which is through word of mouth, which is the antithesis of what everyone in

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the market in world will tell you. But the goal should always be to have a business that grows

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a word of mouth. The problem is most people don't have enough word of mouth because this surplus

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is not big enough. If you have the surplus big enough and you go from good to great and great

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to so good that people cannot help but tell their friends about you, remark a goal or remark

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worthy. That is how good it is. Then you will have more customers that you know what to do with

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and your cost of acquisition will be zero. And your your business will grow quadratically,

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not linearly. That is the difference between making money and building a fortune. And I thought of

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this visual with the three lines and I just thought it was really telling and so I thought I would

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keep this short in the spirit of Rona to show you this. But if you can think through how you're

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providing value and really focus because the things that you can control, you can control all three

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of these variables. But when I'm trying to diagnose a problem that I want to solve as an entrepreneur,

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I think, how can I provide the most value? Step one. Step two, how can I lower my cost of good

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sold to a crazy degree? And then once I know how I can lower my cost of good sold to a crazy degree,

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I'd rather have something that cost me a penny that I can sell for 10 cents that has the value

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of $10. And if you have that kind of value that you're able to deliver, you will make a literal F

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ton of money. And so I think this is a useful framework. You can apply your own business. You can

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probably apply your competitors business using this simple framework. And I thought I would give it to

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you because it's one of the tools that I use when I'm thinking through how valuable an enterprise

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could potentially be and how I can move these lines around to create value, create margin,

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and ultimately take home the most money and off the most people. Just like everything that we do,

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hopefully the price that you paid was the time. The value that you got was hopefully a framework

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that you can use to apply to your business. And the cost of good sold for me is the time that it

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takes me to do this and the many failures and lessons I've learned and suffered the hard

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cost of failure to make these little frameworks for you. So anyways, most of you nation. I love

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you guys. The reason I make this stuff is because a lot of people are broken. I don't want you to do

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one of them. As always, I have nothing to sell you. Keep being awesome. If you enjoyed this hit

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subscribe. If you didn't, love you anyway. Catch you guys next video. Bye!