Alex Hormozi: $100M Offers; How To Make Offers So Good People Feel Stupid Saying No

Offers

As entrepreneurs, we make bets everyday. We are gamblers ― gambling our hard – earned money on labor, inventory, rent, marketing, etc., all with the hopes of a higher pay out. Oftentimes, we lose. But, sometimes, we win and win BIG.

This book is about how to make profitable offers. Specifically, how to reliably turn advertising dollars into (enormous) profits using a combination of pricing, value, guarantees, and naming strategies. I call the proper combination of these components: a Grand Slam Offer.

I have a 36:1 lifetime returns on my advertising dollars over my business career.

For every $ 1 I spend on advertising I get $ 36 back, a 3600 % return.

How We Got Here

Grand Slam Offers

“Do you want to know the secret to sales?”

“Make people an offer so good they would feel stupid saying no.”

Succeeding in business means getting prospective customers to trade us money for our services.

The only way to facilitate that exchange, to transact, to literally carry out business as a business is by making the prospect an offer.

No offer? No business. No life. Bad offer? Negative profit. No business. Miserable life. Decent offer? No profit. Stagnating business. Stagnating life. Good offer? Some profit. Okay business. Okay life. Grand Slam Offer? Fantastic profit. Insane business. Freedom.

Typical models weren’t designed for profit maximization. They were designed by companies who have boatloads of funding and can operate at a loss for years. When these models are used in the real world, business owners just barely “get by.”

I’ve made my money doing this stuff, not teaching how to do this stuff, contrary to most of the marketing community at large.

Archetype I, entrepreneurs under $ 1,000,000 per year in profits.
Archetype II, entrepreneurs with a minimum of $ 1,000,000 per year in profits.

My business model is simple, just like the four-piece pyramid.

Provide value at no cost far in excess of what the rest of the marketplace charges for.
Have entrepreneurs use materials that actually work and make money helping more folks.
Earn the trust of the hyper-executor business owners who use the frameworks to scale their businesses.
Invest in those businesses to make more impact at scale while helping everyone else for free.

Einstein says, “never memorize anything you can look up.” Business is not a spectator sport.

You do work. And to work, you need tools.

Pricing

Pricing: The Commodity Problem

“Grow or Die” is a core tenet at our companies. We believe every person, every company, and every organism is either growing or dying. Maintenance is a myth.

Let me explain. The market is continuously growing. The stock market grows at 9 percent per year. If we aren’t growing at 9 percent per year, we are falling behind.

Having a Grand Slam Offer helps with all three of the requirements for growth: getting more customers, getting them to pay more, and getting them to do so more times.

A commodity, as I define it, is a product available from many places. For that reason, it’s prone to purchases based on “price” instead of “value.” If all products are “equal,” then the cheapest one is the most valuable by default.

This is a massive problem for the entrepreneur because commodities are valued at the point of market efficiency. This means that the marketplace drives the price down through competition until the margins are just enough to keep the lights on: “just enough” to become a slave to their business.

Let’s start by defining a Grand Slam Offer. It’s an offer you present to the marketplace that cannot be compared to any other product or service available, combining an attractive promotion, an unmatchable value proposition, a premium price, and an unbeatable guarantee with a money model (payment terms) that allows you to get paid to get new customers … forever removing the cash constraint on business growth.

If you pay the same amount for eyeballs but: more people respond, more of those responses buy, and they buy for higher prices, your business grows.

Grand Slam Offer: Pay one time. (No recurring fee. No retainer.) Just cover ad spend. I’ll generate leads and work your leads for you. And only pay me if people show up. And I’ll guarantee you get 20 people in your first month, or you get your next month free. I’ll also provide all the best practices from the other businesses like yours: Daily sales coaching for your staff; Tested script; Tested price points and offers to swipe and deploy; Sales recordings . . . and everything else you need to sell and fulfill your customers. I’ll give you the entire play book for (insert industry), absolutely free just for becoming a client. In a nutshell, I’m feeding people into your business, showing you, exactly, how to sell them so that you can get the highest prices, which means that you make the most money possible … sound fair enough?

A grand slam offer given to the wrong audience will fall on deaf ears. We want to avoid that at all costs. We must detour from pricing for a moment to learn what to look for in a market.

Pricing: Finding The Right Market — A Starving Crowd

There is a market in desperate need of your abilities. You need to find it. And when you do, you will capitalize, all while wondering what took you so long.

In order to sell anything, you need demand. We are not trying to create demand. We are trying to channel it. That is a very important distinction. If you don’t have a market for your offer, nothing that follows will work.

When picking markets, I look for four indicators:

Massive Pain. They must not want, but desperately need, what I am offering. Pain can be anything that frustrates people about their lives.
Purchasing Power. Your audience needs to be able to afford the service you’re charging them for. Make sure your targets have the money, or access to the amount of money, needed to buy your services at the prices you require to make it worth your time.
Easy to Target. You want to make sure you can target your ideal audience easily.
Growing. Growing markets are like a tailwind. They make everything move forward faster. Declining markers are like headwinds. They make all efforts harder.

There are three main markets that will always exist: Health, Wealth, and Relationships. The reason that those will always exist is that there is always tremendous pain when you lack them.

Senior citizens who are alone are likely suffering more pain as they are nearer their deaths (pain), have more buying power (money), and are easy to find (targeting).

Here’s the simplest illustration of the order of importance between markets, offers, and persuasion skills: Starving Crowd (market) > Offer Strength > Persuasion Skills

You must stick with whatever you pick long enough to have trial and error. You will fail. In fact, you will fail until you succeed. But you will fail far longer if you keep changing who you market to, because you must start over from the beginning each time. So, pick then commit.

The other reason to commit to the niche is because of how much more you will make. Simply put, niching down will make you far more money.

The market matters. Your niche matters. And if you can sell the same product for 100x the price, should you?

The purpose of this chapter is to reinforce two things. First, don’t pick a bad market. Normal markets are fine. Great markets are great. Second, once you pick, commit to it until you figure it out. If you try one hundred offers, I promise you will succeed. Most people never try anything. Others fail once, then give up. It takes resilience to succeed.

If you find a crazy good market, ride it, and ride it hard.

Pricing: Charge What It’s Worth

In order to understand how to make a compelling offer, you must understand value. The reason people buy anything is to get a deal. They believe what they are getting (VALUE) is worth more than what they are giving in exchange for it (PRICE). The moment the value they receive dips below what they are paying, they stop buying from you. This price to value discrepancy is what you need to avoid at all costs. After all, as Warren Buffet said, “Price is what you pay. Value is what you get.”

Getting people to buy is NOT the objective of a business. Making money is.

Most business owners are not competing on price or value. In fact, they’re not actually competing on anything at all. Their pricing process typically goes something like this:

Look at marketplace.
See what everyone else offers.
Take the average.
Go slightly below to remain “competitive”.
Provide what their competitors offers with a “little more”.
End up at a value proposition of “more for less”.

The higher the price, the more allure your product or service has. People want to buy expensive things. They just need a reason.

if you offer a service where a customer must do something in order to achieve the result, or solve the problem you say you solve, they must be invested. The more invested they are, the more likely they are to achieve a positive result.

Those who pay the most, pay the most attention.

Your product must deliver.

First and foremost, charge a premium. It will allow you to do things no one else can to make your clients successful. We were able to charge a premium because we provided more value than anyone else in the industry. In a real way, we were charging on a fraction of what our clients made using our system. This is important. Our clients still got a deal.

Value – Create Your Offer

Value Offer: The Value Equation

The goal should be to charge as much money for your products or services as humanly possible.

That being said, anyone can raise their prices, but only a select few can charge these rates and get people to say yes.

Many entrepreneurs believe that charging “too much” is bad. The reality is that, yes, you should never charge more than your product is worth. But you should charge far more for your product and services than it costs to fulfill it.

There is a repeatable formula that I have created (I’ve never seen it displayed elsewhere) to help quantify the variables that create value for any offer. I call it The Value Equation.

There are four primary drivers of value. Two of the drivers (on top), you will seek to increase. The other two (on the bottom), you will seek to decrease.

The Dream Outcome (Goal: Increase)
Perceived Likelihood of Achievement (Goal: Increase)
Perceived Time Delay Between Start and Achievement (Goal: Decrease)
Perceived Effort & Sacrifice (Goal: Decrease)

What will I make? (Dream Outcome) How will I know it’s going to happen? (Perceived Likelihood of Achievement) How long will it take? (Time Delay) What is expected of me? (Effort & Sacrifice)

The best companies in the world focus all their attention on the bottom side of the equation. Making things immediate, seamless, and effortless.

No matter how small the top side is, anything divided by zero equals infinity (which is technically undefined for the math nerds). In other words, if you can reduce your prospects’ true time delay to receiving value to zero (aka you realize your immediate dream outcome), and your effort and sacrifice is zero, you have an infinitely valuable product. If you accomplish this, you win the game.

Perception is reality.

The Grand Slam Offer only becomes valuable once the prospect perceives the increase in likelihood of achievement, perceives the decrease in time delay, and perceives the decrease in effort and sacrifice.

Dream Outcome (Goal = Increase)

People have deep, unchanging desires.

Our goal is not to create desire. It’s simply to channel that desire through our offer and monetization vehicle. The dream outcome is the expression of the feelings and experiences the prospect has envisioned in their mind. It’s the gap between their current reality and their dreams.

The dream outcome value driver is most prominently used when comparing the relative value between two different desires being satisfied. In general, the dream outcome that most directly increases a prospect’s status will be the one they value most.

Perceived Likelihood of Achievement (Goal = Increase)

People pay for certainty. They value certainty. I call this “the perceived likelihood of achievement.”

Time Delay (Goal = Decrease) Time delay is the time between a client buying and receiving the promised benefit. The shorter the distance between when they purchase and they receive value/the outcome, the more valuable your services or product is.

The thing people buy is the long – term value, aka their “dream outcome.” But the thing that makes them stay long enough to get it is the short-term experience.

They buy the dream, but they stay for the benefits they discover along the way.

Effort & Sacrifice (Goal = Decrease) This is what it “costs” people in ancillary costs, aka “other costs accrued along the way.” These can be both tangible and intangible.

Our goal as marketers and business owners is to increase the value of the dream outcome and its perceived likelihood of achievement, while decreasing the time delay of achievement and the effort and sacrifice one has to put in to get there.

You can either sit there and make “complain” posts about how people “ought” to be a certain way. Or you can take advantage of the way people are and capitalize.

Value Offer: The Thought Process

Convergent problem solving is where you take lots of variables, all known, with unchanging conditions and converge on a singular answer. Think math.

But life will pay you for your ability to solve using a divergent thought process. In other words, think of many solutions to a single problem. Not only that, convergent answers are binary.

Here’s what life presents us for divergent thinking: Multiple Variables, Known & Unknown, Dynamic Conditions, Multiple Answers.

Value Offer: Creating Your Grand Slam Offer Part I: Problems & Solutions

And as soon as I stumbled on Dan Kennedy’s books, I was hooked. In his books, he talked about making “irresistible offers.” Again, this theme of “making an offer so good people would feel stupid to say no” kept re-appearing.

Step # 1: Identify Dream Outcome. I wasn’t selling the plane flight. I was selling the vacation.

Step # 2: List Problems Next, I wrote down all the things’ people struggled with and their limiting thoughts around them. When listing out problems, think about what happens immediately before and immediately after someone uses your product/service. List out the problems from a prospect’s perspective

Now we get to the fun part: turning problems into solutions.

Step # 3: Solutions List Now that we have our dream outcome and all the obstacles that will get in someone’s way, it’s time to define our solutions and list them out. Creating the solutions list has two steps. First, we are going to first transform our problems into solutions. Second, we are going to name these solutions.

Once we have our list of solutions, we will operationalize how we are actually going to solve these problems (create value) in the next.

PROBLEM → SOLUTION

Value Offer: Creating Your Grand Slam Offer Part II: Trim & Stack

Everyone buys bargains.

Whenever you are building a business, you have a continuum between ease of fulfillment and ease of sales.

I have always lived by the mantra, “Create flow. Monetize flow. Then add friction.” This means I generate demand first. Then, with my offer, I get them to say yes. Once I have people saying yes, then, and only then, will I add friction in my marketing, or decide to offer less for the same price.

When talking to business owners about their model, I tell them to create cash flow by over-delivering like crazy at first. Then use the cash flow to fix your operations and make your business more efficient.

Now that we’ve established the importance of the fulcrum and how to approach the sales-fulfillment balance at the outset, let’s cover the last two steps of creating our Grand Slam offer.

To recap quickly, remember that we covered identifying dream outcomes (step one) , listing problems (step two), and determining solutions (step three).

Step # 4 Create Your Solutions Delivery Vehicles (“The How”). The next step is thinking about all the things you could do to solve each of these problems you’ve identified. This is the most important step in this process. This is what you are going to deliver. This is what you are going to do or provide in exchange for money.

Here are my “cheat codes” for product variation/enhancement:

What level of personal attention do I want to provide? One-on-one, small group, one to many.
What level of effort is expected from them? Do it themselves (DIY)-figure out how to do it on their own; do it with them (DWY)-you teach them how to do it; done for them (DFY)-you do it for them
If doing something live, what environment or medium do I want to deliver it in? In-person, phone support, email support, text support, Zoom support, chat support.
If doing a recording, how do I want them to consume it? Audio, video, or written.
How quickly do we want to reply? On what days? During what hours? 24/7. 9-5, within 5 minutes, within an hour, within 24 hrs.?
10x to 1/10th test. If my customers paid me 10x my price (or $ 100,000) what would I provide? If they paid me 1/10th the price and I had to make my product more valuable than it already is, how would I do that?

Step # 5: Trim & Stack Now that we have enumerated our potential solutions, we will have a gigantic list. Next, I look at the cost of providing these solutions to me (the business). I remove the ones that are high cost and low value first. Then I remove low cost, low value items.

If there’s one type of delivery vehicle to focus on, it’s creating high value, “one to many” solutions. These will be the ones that typically have the biggest discrepancy between cost and value.

These types of solutions require a high, one-time cost of creation, but infinitely low additional effort after.

Step # 1: We figured out our prospective client’s dream outcome.
Step # 2: We listed out all the obstacles they’re likely to encounter on their way (our opportunities for value).
Step # 3: We listed all those obstacles as solutions.
Step # 4: We figured out all the different ways we could deliver those solutions.
Step # 5a: We trimmed those ways down to only the things that were the highest value and lowest cost to us. All we have to do now is …
Step # 5b: Put all the bundles together into the ultimate high value deliverable.

The bundle does three core things:

Solves all the perceived problems (not just some).
Gives you the conviction that what you’re selling is one of a kind (very important).
Makes it impossible to compare or confuse your business or offering with the one down the street.

Enhancing Your Offer

Enhancing The Offer: Scarcity, Urgency, Bonuses, Guarantees, and Naming

People want what they can’t have. People want what other people want. People want things only a select few have access to.

It was a masterful display of human psychology at work in a setting where people were knowingly over-paying for products.

That’s how powerful scarcity, urgency, and bonuses are.

Fundamentally, all marketing exists to influence the supply and demand curve. We artificially increase the demand for our products and services through some sort of persuasive communication.

Desire comes from not getting what you want. In fact, I heard this quote that I love from Naval Ravikant: “Desire is a contract you make with yourself to be unhappy until you get what you want.”

Hormozi Law: The longer you delay the ask, the bigger the ask you can make.

The next variable that can make your offer more desirable is how it is presented. In other words, the outside variables that position the product in your prospect’s mind. These forces are often more powerful than your core offer.

Use scarcity to decrease supply to raise prices (and indirectly increase demand through perceived exclusiveness).
Use urgency to increase demand by decreasing the action threshold of a prospect.
Use bonuses to increase demand (and increase perceived exclusivity).
Use guarantees to increase demand by reversing risk.
Use names to re-stimulate demand and expand awareness of my offer to my target audience.

Enhancing The Offer: Scarcity

So, there are two components to the value: first, how rare the sources are; second, the actual value being provided. The value and rarity compound to create some truly breathtaking profits.

The person who needs the exchange less always has the upper hand. I always try to remember that. It’s one of the negotiating and pricing principles that has best served me in my life.

Fear of loss is stronger than desire for gain.

With services, especially if you want to consistently get customers, it can be a little trickier to use scarcity.

Total Business Cap – Only accepting … X Clients. Only accepting X clients at this level of service (on-going).

You create a waiting list for new prospects. The moment the door opens, they jump right in and price resistance disappears.

Growth Rate Cap – Only accepting X clients per week (on-going). We only accept 5 new clients per week and we already have the first 3 spots taken.

Cohort Cap – Only accepting … X clients per class or cohort. Similar to the above, except done on whatever cadence you desire.

Enhancing The Offer: Urgency

Scarcity is a function of quantity. Urgency is a function of time. This is where you only limit when people can sign up, rather than how many.

In a digital setting, having actual sign up date countdowns is very useful. But make sure they are real. If they aren’t, you’ll lose credibility and just look like every other wannabe marketer.

Enhancing The Offer: Bonuses

This is another way of creating urgency using your actual offer or promotion/pricing structure as the thing they could miss out on (kind of brilliant!). It allows businesses that sell clients year-round to still use urgency.

This creates some fear of missing out on the promotion (or discount or bonuses), rather than your actual service.

The main point I want you to take away from this is that a single offer is less valuable than the same offer broken into its component parts and stacked as bonuses.

When selling one on one, you ask for the sale first, before offering the bonuses. If they say yes, then after they have signed up, you let them know the additional bonuses they’re going to get. This creates a wow experience and reinforces their decision to buy.

There are a few key things to remember when offering bonuses:

Give them a special name that has a benefit in the title.
Always ascribe a price tag to them and justify it.
They should each address a specific concern/obstacle in the prospects mind.
The value of the bonuses should eclipse the value of the core offer.
You can also make a guarantee itself a bonus.

We have our core offer. We are presenting it in a way to increase scarcity and urgency to increase the likelihood they want it even more. We stacked the bonuses of our offer to make the price to value discrepancy out of this world and break our prospects ‘ minds. Next on our magical journey will be addressing the big elephant in the room … risk.

Enhancing The Offer: Guarantees

From an overarching perspective there are four types of guarantees:

Unconditional
Conditional
Anti-Guarantee
Implied Guarantees

While guarantees can be effective sellers, people who buy because of guarantees can become very shitty customers.

Let’s go through some different guarantee examples:

Guarantee: If you don’t achieve X, in Y time, we will [insert offer] …
[Unconditional] “No Questions Asked” Refund Guarantee.
[Unconditional] Satisfaction-Based Refund Guarantee (Expanded from above)
[Conditional] Outsized Refund Guarantee
[Conditional] Service Guarantee
[Conditional] Modified Service Guarantee
[Conditional] Credit-based Guarantee
[Conditional] Personal Service Guarantee
[Conditional] Hotel + Airfare Perks Guarantee
[Conditional] Wage-Payment Guarantee
[Conditional] Release of Service Guarantee
[Conditional] Delayed Second Payment Guarantee
[Conditional] First Outcome Guarantee
[Anti – Guarantee] All Sales Are Final

Enhancing The Offer: Naming

Make a Magnetic “Reason Why”. We start the name with a word or phrase that tells people the “reason why” we are running our promotion.
Announce Your Avatar. This component calls out your ideal avatar: who you are looking for and who you are not looking for as a client. You want to be as specific as possible, but no more.
Give Them A Goal. This is where you articulate your prospect’s dream outcome. It can be a single word or a phrase. It can be an event, a feeling, an experience, or an outcome, anything that would excite them. The more specific and tangible, the better.
Indicate a Time Interval. You’re just letting people know the duration to expect here. This gives an example of how long your results will take to achieve.
Complete With A Container Word. The container word denotes that this offer is a bundle of lots of things put together. It’s a system. It’s something that can’t be held up to a commoditized alternative.

You don’t need to do them in the M – A – G – I – C order. Do what sounds punchier to you.