39:00Alex Hormozi · Interview
If I Wanted to Build a Service Business in 2026, I'd Do This
Alex Hormozi rebuilds an event-planning company's pricing, sales team, and sales funnel live on camera, then checks the results 90 days later.
August 22ndThe argument in one line.
Wealth and profit both concentrate at the top, so businesses grow fastest by pricing in 5-to-10x tiers aimed at the small share of customers who actually hold the money.
Read if. Skip if.
READ IF YOU ARE…
- You run a service business and haven't questioned your pricing in the last year.
- You have one flat price or one small upsell instead of a real ladder of tiers.
- You get discouraged when high-ticket pitches get mostly rejected instead of raising the price further.
- You want a framework for deciding how much to charge at each tier of your business.
SKIP IF…
- Your business already has healthy 5 to 10x pricing tiers and you're optimizing conversion, not pricing structure.
- You sell physical assets like real estate or cars, where this multiplier logic doesn't map cleanly.
The full version, fast.
Most businesses stay broke because they compete for the two dollars the bottom half of the country has to spend, instead of pricing for the customers who hold the other ninety-eight. Wealth in the US follows a power law: the top 1% of net worth exceeds the bottom 90% combined, and inside almost any business the same pattern repeats, with a small fraction of customers producing the majority of profit. The fix is a pricing ladder where each new tier costs 5 to 10x the last and only about 20% of people take it, anchored top-down the way Tesla launched with the Roadster before the Model 3. Raising prices, even sharply, often raises close rates because it makes the offer credible enough to believe in.
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00:00 – 04:21
01 · The wealth pyramid
Hook and credentials, then the top 10% of Americans earn 40% of income, and US household net worth ($163T) is scaled down to $100 and split: bottom 50% get about $2, next 40% get about $28, next 9% get about $38, top 1% get about $32.
04:21 – 07:54
02 · Pareto's principle and the free roadmap
The 80/20 rule inside a business: 20% of customers make 80% of profit, 4% make 64%, the top 1% make 51%. States the pricing-mismatch rule (losing $100 vs losing $900), then pitches the free acquisition.com/roadmap 10-stage scaling guide.
07:54 – 11:49
03 · Sell top-down, then build the tier ladder
Tesla anchored high with the Roadster before the Model S and Model 3; anchoring top-down protects the brand. Introduces the 5-to-10x tier rule with a 10-customer example where adding a higher tier turns $10/month profit into $90/month.
11:49 – 18:46
04 · The four-tier ladder and his own business
A four-tier framework ($10/mo, $100/mo, $500-1,000/mo, $5,000-10,000/mo). Walks his own Acquisition.com ladder (Skool tiers, then $5K/$35K/$135K advisory levels). Explains why starting with the unscalable, highest tier is operationally easier, and why mass-market pricing (Netflix, Tesla) requires capital most service businesses don't have.
18:46 – 23:05
05 · Stop selling from your own wallet
Founders underprice because they benchmark against their own and their friends' budgets. A health-space client raised price 50% and close rates went up. States the 5-to-10x upsell rule again and reframes rejection: expect 1 in 5 or 1 in 10 yeses, since the goal is money, not yeses.
23:05 – 28:35
06 · Absolute vs. relative profit, and the $60K day
A single $10,000 sale on a $2,000 cost equals 400 sales of a $50 item costing $25. Personal story: growing up in Baltimore not knowing consulting/PE/banking existed, then the first time he quoted 12x his usual price on a gym-launch call and got a yes, followed by a $60,000 day.
28:35 – 32:06
07 · What things should cost
Rough consumer and business pricing bands (impulse buys, higher-ticket services, cheap vs mid-tier business pricing). Poor buyers think in cost, rich buyers think in value/ratio, illustrated with a $20,000 Berkshire Hathaway share vs. a $20,000 Lamborghini. Tactics for delivering a price without choking on it.
32:06 – 33:58
08 · Close rate reveals your pricing gap
A close-rate-to-price-multiplier table: 80%+ close suggests 3-4x more room, 60-80% suggests 2-3x, 50-60% suggests 1.5-2x, 30-40% is about right, under 30% means fix the offer or the leads, not the price.
33:58 – 37:37
09 · Fast, easy, guaranteed: the price-reputation cycle
Sell something different, not a commodity, so buyers can't compare on price alone. Rich buyers want fast, easy, and guaranteed. Closes on the virtuous cycle: higher price funds better talent, better talent improves service, better service builds reputation, reputation drives demand, demand supports higher price.
Lines worth screenshotting.
- The top 10% of Americans earn 40% of all income, but the top 1% of net worth holds more than the bottom 90% combined.
- If US household net worth were $100, the bottom 50% would hold about $2, the next 40% about $28, the next 9% about $38, and the top 1% about $32.
- Within a typical business, 20% of customers generate 80% of profit, 4% generate 64% of profit, and the top 1% of customers generate 51% of profit.
- The only thing worse than pitching a $1,000 product to someone with a $100 budget is pitching a $100 product to someone with a $1,000 budget: the first costs you $100, the second costs $900.
- Every new pricing tier should be 5 to 10x the previous price, with roughly 20% of qualified customers expected to take it.
- A single customer paying $10,000 for something that costs $2,000 generates the same profit as 400 customers each paying $50 for something that costs $25.
- Raising the price of a service by 50% can increase close rates rather than lower them, because a price that's too low undermines belief in the outcome.
- If your close rate is above 80%, you likely have room to raise price 3 to 4x; below 30%, the fix is a better offer or better-qualified leads, not a lower price.
- A rich prospect wants three things from an offer: fast, easy, and guaranteed.
- Anchoring a brand from the top down, selling the expensive version first and a cheaper one later, protects perceived value better than pricing from the bottom up.
- As a share of net worth, a $100 purchase is more painful for someone with $1,000 to their name than a $100,000 purchase is for someone with $10 million.
- 80% of businesses in the US are service businesses, which means most owners can't out-automate mass-market pricing and have to sell to fewer, higher-paying customers instead.
- Higher prices create a cycle: higher margins fund better talent, better talent improves the service, better service builds reputation, and reputation drives the demand that supports the next price increase.
Charge What The Rich Will Pay
PRICING LADDER
Wealth and profit both follow a power law, so the fastest way to make more money is building a pricing ladder that lets a small share of higher-budget customers pay 5 to 10 times more.
01The wealth pyramid
- The top 10% of Americans earn 40% of all income, and net worth is even more concentrated: the top 1% holds more than the bottom 90% combined.
- Scaling US household net worth down to $100 shows the real split: about $2 to the bottom half, $28 to the next 40%, $38 to the next 9%, and $32 to the single richest percentile.
02Pareto's principle and the free roadmap
- Inside a typical business, 20% of customers produce 80% of profit, and that pattern repeats inside itself: 4% of customers produce 64% of profit, and the top 1% produce 51%.
- The only thing worse than pitching a $1,000 product to a $100 budget is pitching a $100 product to a $1,000 budget: the first costs $100, the second costs $900 in disproportionately profitable revenue.
03Sell top-down, then build the tier ladder
- Anchoring a brand from the top down, launching the expensive version first and a cheaper one later, works better than the reverse because it protects how the cheaper product is perceived.
- In a 10-customer example, adding one higher tier that matches the base tier's revenue can turn $10 a month in profit into $90, because the added tier's costs are much lower relative to its price.
04The four-tier ladder and his own business
- A four-tier pricing ladder scales each step 5 to 10x the last, roughly $10/month, $100/month, $500 to $1,000/month, and $5,000 to $10,000/month, with about 20% of qualified customers moving up each tier.
- Serving high-ticket customers is often operationally easier than it looks: someone with $10 million treats a $100,000 purchase as a smaller share of net worth than someone with $1,000 treats a $100 purchase.
05Stop selling from your own wallet
- Founders often price based on what feels expensive to them and their broke friends, which usually means underpricing for a market that doesn't share their budget.
- A health-space company raised its price 50% expecting resistance and instead saw close rates go up, because the old price was too cheap to be believed.
06Absolute vs. relative profit, and the $60K day
- A single $10,000 sale on a $2,000 cost produces the identical profit as 400 separate $50 sales on a $25 cost, so large rare transactions shouldn't be dismissed in favor of chasing volume.
- The first time Hormozi quoted a price 12x higher than what he was used to charging, expecting a hang-up, the buyer said yes, and by day's end he'd collected $60,000 he hadn't thought possible that morning.
07What things should cost
- Rough consumer pricing bands: an impulse buy sits around $500 to $600, a higher-ticket service sits between $3,000 and $10,000; for businesses, cheap is $400 to $800/month and mid-tier is $2,000 to $3,000/month.
- Poor buyers evaluate price against cost; rich buyers evaluate it against value, so the same $20,000 number reads as absurd for a random item but as a steal for a discounted Berkshire Hathaway share or a Lamborghini.
08Close rate reveals your pricing gap
- Close rate is a pricing gauge: above 80% suggests 3 to 4x more room, 60 to 80% suggests 2 to 3x, 50 to 60% suggests 1.5 to 2x, and 30 to 40% is close to correctly priced.
- Below a 30% close rate, the fix isn't a lower price, it's a better offer or better-qualified leads, since talking to unqualified prospects makes any price look too high.
09Fast, easy, guaranteed: the price-reputation cycle
- Buyers with money want three things from an offer: fast, easy, and guaranteed, and sellers get paid for pre-solving friction that costs them little but the buyer would rather not deal with.
- Price and reputation reinforce each other in a cycle: higher prices fund better talent, better talent improves the service, better service builds reputation, and reputation drives the demand that supports the next price increase.
Terms worth knowing.
- Pareto's Principle (80/20 rule)
- An observation from economist Vilfredo Pareto that a small share of inputs produce a disproportionate share of outputs, e.g., 20% of a business's customers create 80% of its profit.
- Power law
- A pattern where a small number of cases account for most of a total, and the imbalance compounds again inside that small group, such as the top 20% of customers containing a top 4%, which contains a top 1%.
- Anchor pricing
- Setting an intentionally high first price or offer so that everything shown afterward looks more reasonable by comparison.
- Lead scoring / lead qualification
- Filtering prospects by how likely they are to buy, so sales effort concentrates on the people most able and willing to pay a given price.
- Net worth
- The total value of a person's assets minus their debts, distinct from income, which measures money earned in a given year.
Things they pointed at.
00:10book$100M Money Models (his book, referenced by its record-breaking launch)
34:26book$100M Offers (his first book, referenced as "the offers book")
Lines you could clip.
00:00
“You aren't making as much money as you want because you don't know how to get it from the people who've got it.”
02:48
“This one guy has more than the bottom 90% combined.”
06:14
“The only thing worse than offering a thousand dollar thing to somebody who's got a hundred dollar budget is offering a hundred dollar thing to somebody who's got a thousand dollar budget.”
21:18
“The sweet spot isn't the most yeses. It's the most money.”
28:13
“I just made 60 grand.”
21:44
“If you sell to rich people long enough, they will make you one of them.”
Word for word.
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metaphorstory
You aren't making as much money as you want because you don't know how to get it from the people who've got it. My name's Alex Ramosi. I run a portfolio of companies at Acquisition .com that earn us over $250 million per year.
I did a book launch 12 weeks ago that did $106 million in sales in a weekend and broke a Guinness World Record for the fastest selling nonfiction book of all time. In this video, I'm gonna explain a core shift in my understanding of how getting money actually works and why the rich do in fact get richer. And I'm gonna show you the math behind it.
And most importantly, how you can gain access to it. The first reason that you aren't making as much as you want is because you're selling to people who don't have the money to give you. So think about it like this, and this is really important.
Imagine this pyramid as a representation of earning in the United States. What percentage of the people do you think earn 40 % of the income? The top 10 % earn 40 % of the income in the entire US.
Now that's income and that's pretty extreme, but it's not even close to the difference when you look at wealth. So U .S.
household net worth, okay, this is the value of their assets, last year was $163 trillion. And you're like, man, how am I going to pay rent? I'm like, let's get some of that $163 trillion.
So this is going to blow your mind. So I want you to imagine that you had $100. Okay, so I'm going to equate this $163 trillion is now $100.
Okay, and we're going to spread it out relative to how it actually is spread within the United States. So this is 100 people to represent 100 percentiles in terms of net worth in the United States. This $163 trillion, what would they have if there was 100 people to represent this $100?
They would have $2 .50. I'm just going to use bills because I don't feel like I haven't changed. So $2 out of that 100.
The bottom 50. So the next 40%, what do you think they would have? They're going to have 20, 25, 28 bucks.
That's the next 40. Remember, we got $100 to distribute here. So the next 9%.
So now we're getting the top 10, the top decile of net worth in the United States. How much do you think they got? They got 20.
They got 30. They got 35. They got 38.
All right, $38 in just this 9%. Now, you ready for the drum roll? How much do you think the top 1 % has?
I mean, it's one -tenth, right? So it can't be more than the other nine, right? I mean, you'd think that.
The top one, just the one guy, would have 30.
Two dollars. One guy. Now this means that this one guy has more than the bottom 90 % combined.
This is very important because it has implications for how you do business. So when you hear me say sell to the rich they pay better. It's not some pithy statement It's reality and it takes people a very long time to learn this and people often take years before they actually start to figure this out Usually there's belief issues They're like no one else could do this and part of the reason is because everyone they know is poor and they're like There's no way I could sell something for that price And so they make stuff against all the other small businesses to compete for these two dollars Think about that for a second.
You're putting all the resources because you see all these people. They're the ones that you're brushing shoulders with. They're the ones that you see in the street every single day.
And you're trying to compete and slice these $2 a hundred different ways, right?
If you want to make money, go where the money is.
So let's put this concept on steroids now. and actually apply this to doing business. This is how big companies get big.
They go where the money's at, and this is a breakdown of something called Pareto's Principle. You might have heard of it, 80 -20. It's one of the most powerful concepts in business, and most people still don't understand how to actually apply it.
All right, so I want you to freeze this idea in your head. Just look at the money here. $2 here, 28 bucks here, 38 here.
Now we're in the top 10%, right? And we have another 32 here. So I said earlier that this one guy is more than the bottom 90.
But 69 % of all the wealth is just in these 10 people.
If this doesn't change how you do business, you are missing the plot. So the idea of 80 -20 is that Pareto, who was an Italian economist, realized that there was this, you know, 20 % of customers created 80 % of the revenue. And you just notice this 80 -20, you know, kind of issue that continued to occur within all different types of datasets.
And so that became his principle. Now, here's where this gets really interesting. So within business, it totally rings true, where 20 % of your customers will be responsible for 80 % of your profits.
And then here's where people miss the next point, is that within this 80%, 64 % of the aggregate profit comes from just 4 % of the... There you go, just do that. Of the people in there, four customers, if you had 100.
And then of this 64, 51 % of the profit comes from just the top 1%. Now, doesn't that all of a sudden start to make sense when you look at how the wealth is distributed? That the wealth is distributed in a way that also makes sense that the business would gain its profits in that way.
And so we repeat this process, and this is kind of power law within business. This is how you do less and make more. Profit takes into account the fact that a single person, even with more service, often doesn't cost that much more to handle than the other 99.
So it's more work, but significantly more profitable. Now, this is only true under one very important condition, that you actually have a business model that allows them to pay more. right?
If you just only charge $10 for your thing, like this is one of my favorite sayings is the only thing worse than offering a thousand dollar thing to somebody who's got a hundred dollar budget is offering a hundred dollar thing to somebody who's got a thousand dollar budget. In the first scenario, you lose a hundred bucks.
In the second, you lose 900. Big difference. And so here's the important thing.
If you have a model that allows for that, you have to understand that 99 out of a hundred people are not the top 1%, right? If we're pulling back here, All these people are not the top 1%.
So you should expect them to say no to your expensive products and services. But when that whale comes, you should want to and get it done. Real quick, I'm going to show you the exact 10 stage roadmap from zero to 100 million plus.
that less than 1 % of companies finish. I've now done multiple times. And so I can say with a lot of confidence that these are the stages, as headcount increases, that you need to get through.
And I broke each of these down by eight different functions of the business, what the constraint feels like, like what are the symptoms of it when you're going through it, and then what steps we actually took to graduate. And we've done this across software, physical products, service businesses, brick and mortar. all of this, and it works.
And it's my gift to you. It's absolutely free. And so the link's in the description, but you just go acquisition .com forward slash roadmap, just enter your info, and it'll spit it right back to you all free.
And so the reason that I talk about selling to the top 1 % is that one of the most effective ways to build a business is from the top down. So what do I mean by that? Think about Tesla, right?
We started with a $250 ,000 Roadster, and he had a very limited production. Very few people, more profitability per. What then happens?
Well, then he was able to make the, you know, Model S. And that was the next car. And then he made the Model 3 or Model Y, whatever.
So he kept working his way down. But what's interesting about this is that when you anchor high... It makes sense.
Think about it from a branding narrative perspective. If I say, hey, I've got this really expensive car. It's amazing.
It's super fast. And then I say, hey, guys, many of you couldn't afford this, so I made another car that's similar but more affordable for you. That brand narrative works because you've anchored high.
Now, think about the reverse. Hey, I'm a budget discounter, and I'm going to now sell a really expensive car. It doesn't hit the same, right?
And so I love the top -down approach because you have a brand reinforcer, but also from an operational perspective, being able to ship the amount of cars he has to ship for the Model 3 compared to the amount that he had to do for the Roadster, it made more sense to start here because you can handle the volume, right? You might not have the operations to handle the amount of work that it requires to serve the masses.
Like for sure, there is money, right? At the bottom, there is. But you have to be doing it at very small, raised within margins with extraordinary volume.
And unless you have the capital to create something that truly scales to that mass, you will probably just end up... trying to squeeze the $2 for more than what they're worth. And so how do we actually translate this into pricing our products and services?
This is super important. So here's my rule of thumb for upsells, taking to account that 20 % of customers have far more spending power than the ones below. Now remember, we had $2 here and the next level at 28.
So it was 14 times more wealth between just the bottom 50 and the next 40. But just using the Pareto principle in terms of how we can apply this to pricing, You not understanding this is why your business is not making as much profit as you want.
All right. So my rule of thumb is that for every new tier is that you want to five to 10 X your price and expect 20 % of people to take it. Okay.
So here's how it works. So let's say that you sell 10 customers. Okay.
So you tell 10 customers to do, let's do it again.
Okay. Now, if you have eight of these customers at $10 per month, and you've got two of them at $50 per month, how much am I making on these guys? I'm making $80 per month in total on the bottom 80.
And then I'm making $100 per month on my top 20 % or my top two. And so by serving these two customers differently, We doubled the revenue of the business, which by the way, again, is my rule of thumb.
I want each tier to bring me another double, like another full amount of revenue. Otherwise, I'm like, I don't know if it's worth creating the actual extra constraint of operations, right? But here's where it gets even nastier.
Let's say that this covers the majority of our overhead. That means that this extra $100 might contribute 10 to 1. compared to this to our bottom line.
And so sometimes when you make a move like this, if you were here and you had $80 and you were living your life on this 80, right? It's like, well, maybe your cost is 70 and you're taking 10 home. If you add this $100 in and maybe the cost on this is 20, you've got 80 left over, we 5X the profit.
So let's say our profit before this was 10 a month. And then we added this in and we had $80 a month in profit from this 100, right? Look at the difference.
In profit, we go from 10 to 90 just by adding this tier. And so the reason your business is not making as much money and you're not making as much money as you want is because you're not priced appropriately for the people who actually have the money to give you. And so to maximize revenue, you can think of it with four tiers of pricing.
And to be clear, you don't need to serve everyone. And the first product you have may not be your base tier. So you might start here.
I don't know yet. I don't know your business. But this is what you can walk through in terms of thinking through the pricing for your products and services.
So let's assume that we have 1 ,000 customers. So on our base tier, so this is the lowest. $10 per month.
And let's say we've got 800 customers at this level. Okay. Now our second tier, we might have it $100 per month.
So 10 times that price with 20 % taking it. All right. So that means we're going to get somewhere in the neighborhood of 200 -ish people who would qualify for this tier.
Okay. And the next year, we still have to follow our rule, 5 to 10x. So that means we're going to be at 500 to 1 ,000 a month for this next year.
Just to keep it simple, I'm going to just do 10x because it's nice and clean. All right. And so here we're going to have maybe around 40.
Now you're like, wait, I thought we had a thousand customers. This would be 160. I'll redo the math at the end so you can see it.
All right. Now our next year might be, again, five to 10 times this. And so we might be somewhere in this five to $10 ,000 a month.
All right. And so times around eight people. Okay.
And so if you're looking at this, you're like, holy cow. Those are very big differences in price. Yes.
But they reflect how different the spending power that exists within customers is. All right. And so the main takeaway from this is that if you're going to have an upsell, a very small percentage of people are going to take it.
And so you have to make it worth it. And so people will have these, I'll go $100 and $129. It's like, it's the same pitch.
It's the same price. The willingness to pay for that customer is the same. Let me show you how I've actually translated this into my own business, all right?
Well, this, and you can ignore the actual numbers of customers, but what do we have here? Ah, we have school. And then at $100 a month, what else do we have?
We have school. This is our hobby plan. This is our pro plan.
And so for me, the next number is $5 ,000, which is L1. And what's the next number after that? $35 ,000.
Huh. Almost like it's between five to 10 times the price, which is L2. And then what do we have after that?
We have something that's $135 ,000. So that's four times the price, right? And this is L3.
And what do I have underneath of that? No money because it's a portfolio company. And so the thing is, is it may take some time to build out this entire thing.
I didn't start. With school, I started building our brand. This is, to be clear, just our advisory practice that we have at acquisition .com.
And so I'm just saying, knowing this doesn't mean you need to do all of this at once. It takes years, and it does take operational chops to pull this off, right? You want to add tiers one at a time.
My tip, though, is to start as high up as you can on this ladder. for a few reasons, right? So the Tesla example I gave earlier, the branding from top down versus bottom up is much stronger.
Like Honda making a better car is tough versus Rolls -Royce making a Rolls -Royce Lite. It would be easier play for them from brand position. The next reason is that I prefer to start with the unscalable.
Why? Because it's easier to operationalize it serving these people because one, they actually, believe it or not, as a percentage of net worth, this is actually lower than what this is for somebody who's poor, right? If you have $10 million, a hundred grand is 1 % of what you've got.
If you've got a thousand dollars, a hundred bucks is 10 % of what you got. And so for you, you will actually be more demanding for that 10, that 10 % or that a hundred dollars, reasonably so than somebody who's giving. 1%.
But from a business perspective, the $100 versus the $100 ,000, it's a gigantic difference. So you have an easier customer to deal with that has lower demandingness, but it requires, and to be clear, to get that $100 to equal $100 ,000 is you got to get 1 ,000 of those people. So is serving the one customer for $100 ,000 easier than serving 1 ,000 at 100 as somebody who used to sell $100 gym memberships?
For sure. And if we were to look at this from a profit contribution perspective, like what is actually dropping to the bottom line? it would look like this.
All the profit is here, just like all the wealth is at the top. So you have to do more and charge more for it to people who can afford it. And the amount you do for a few people is almost always worth it for the far greater price for those people who are willing to pay it.
Now, you might ask, well, wait a second. I thought you said sell the rich. Like, why do you have this $10 and this $100 a month thing?
The only way to serve the poor masses, And I say this to be a little bit more jarring. But to serve people with lower budgets is to have tons of money and then find a way to serve them in an automated manner at a low price.
And if you do that, you can also make a lot of money, but via volume. But it takes a lot of money. It takes a lot of time.
And the reason that Tesla has almost gone bankrupt multiple times is because it's incredibly hard. The reason most software companies like... Netflix, and Spotify, and some of these big consumer companies who charge $13 to give you...
Think about how hard that is. Think about how hard that business is. They have to make world -class entertainment for all the different genres that someone might like just to earn their $13, right?
Just to earn the equivalent of a Chipotle bowl. And again, I bring this up because some people come in saying, oh, I'm going to do that. It's like, you're going to do that bootstrapped?
No, these companies that you're looking to model literally got artificially inflated with outside capital to prop the business up until it would get to the point where it actually could make money. So to do something like this costs a fortune. And so the way that I'm trying to walk you through this is that 80 % of businesses in the US are 78.
are service -based businesses. And so you don't have an automated way to serve these masses. You likely don't.
And so if you don't have an automated way, then you want to go in the complete other direction, which is I want to serve the best customer at the highest possible price, but people misprice their products and services. They say, okay, my current core thing is $1 ,000. I'll make the next thing $1 ,500.
It doesn't work that way. That's not how the buyer works. The buyer is at $5K, $10K from the $1K thing.
That's the next tier. That's the next rung on the ladder. And so this hopefully should shift your perspective in terms of how pricing really works.
A disproportionate amount of profit is here. We have to make gigantic jumps with the assumption that very small percentages are going to take it, but still be okay with it because even a small number of people at a gigantic price is still a lot of money. So how do you actually translate this and put this into practice?
Number one, stop selling from your own wallet, especially if you're one of the people who, you know, you're in that. in that $2 category, right? You're that bottom 50 % right now.
I get it. I've been there. You have to forever imagine, this is a gift, forever imagine that everyone is rich.
So here's the reality that will shock you. That top 10%, top 10 % of Americans have a million dollar plus net worth. One in 10 people, one in 10 people, million dollar net worth.
They've got the money. You just aren't selling them something that they want. And you might even be, and this happens a lot, especially for newer business owners, you might even be, too cheap for them to even believe that you're good.
We had a company that was in the health space a while back. And looking at all the research, it was a doctor and all this stuff. And I just fundamentally believed that they were mispriced.
And so what I did was I wanted to raise the price by double. You fought me back and forth forever. And I was able to finally get a 50 % price race through.
But guess what happened? We raised the price by 50%. That's a lot.
What do you think it did to the close rates? They went up. They were so cheap compared to the promise and what they were delivering that people didn't even believe that it worked.
And so some of you guys are so cheap because you're selling out of your own wallet. You're selling based on what your friends and family who might also be in that $2 bottom 50 % are telling you. But why would you listen to people who don't have money on how to get money?
They don't know where it is. They don't know how to get it. And more specifically, they don't know how to serve the people who've got it.
So that's the first thing. The second thing is that if you're going to do this, listen to me on this. Whatever your upsell is, 5 to 10x the price.
And then just make sure it's something that you'd be happy to deliver for 5 to 10 times the price. Sometimes I'll get pushback from people who are like, oh, that would be so much work. And I'm like, cool.
We have value and we have price. Move one of them. Either do less or charge more.
I would encourage you to just charge more, right? And so if I were to say, hey, I want you to 10 times the current price of your upsell, what would you do that would absolutely blow people away? How much does that actually cost you?
When you look at the cost compared to that 10 times bigger price with a zero on the end of whatever your core offer is, you might find it's like, actually, it's only like, you know, 5 % of that price. It's like, right, really high margin.
so As long as you're happy making more money serving fewer people go do that The third one is that you should expect only one in five or one in ten people to say yes Expect more nose and this is the sweet spot of making money The sweet spot isn't the most yeses. It's the most money.
And that is never with the most yeses. So if you pitch your 10 times bigger price to this bottom 50%, none of them are going to say yes. And you're going to mistakenly believe that this is a bad idea.
But the reality is that you're just not talking to the people who have the money. And so you should expect that if you have a representative amount of people that you speak with, 1 in 10, maybe even 1 in 100, is the... is the person who is the correct avatar.
And for that person, you might also find, they'll just say like, yeah, that sounds good. And you'll be like, oh my God. And I only say this as somebody who's had it happen for the first time.
You're like, I can't even believe this is possible. I can't believe this person would give me this much money. It's because to them, it's not that much money.
It's only that much money to you because you still live here. If you sell to rich people long enough, they will make you one of them.
And so with your upsell, make it crazy. And this is called an anchor for a reason, right? If no one buys it, No big deal.
Or most don't. No big deal. But the good news is that it'll still help you sell the rest of everyone else at a higher percentage and even at a higher rate because it'll look like a good deal in comparison.
And I said this before, but I'll say this again. The next reason is the only thing worse than selling a $1 ,000 thing to a $100 buyer is selling a $100 thing to a $1 ,000 buyer. In the first, you lose a hundred bucks.
In the second, you lose 900. And not only that, that 900 is probably disproportionately profit. And this is what no one understands.
This is why most businesses don't make money. They just try and sell to these people who are the biggest pain in the butt. And the thing is, is you see so many of them that you're like, oh, this must be how it works.
No, it's not how it works. It's just how you're working. This is how the average business works, which is why the average business doesn't make money.
They don't go to where the money's at. The next reason is you have to think about absolute profit rather than relative profit, and you'll be blown away.
So a single person paying $10 ,000 for something that costs $2 ,000, a single person, right? One, right? Buying a $10 ,000 thing that costs $2 ,000 is the same as 400 people buying a $50 thing That costs $25.
These are the same. So do not underestimate the power of large prices in small quantities. And so the reason that entrepreneurship is such almost like a spiritual journey is that you earn the right to charge more because you no longer think the smaller amount of money is worth your time.
There are beliefs that people who have money have, which translate to behaviors that poor people don't have and translate to different behaviors. So what does that mean?
A rich kid will choose not to pursue a lower leverage opportunity because it's not worth their time because they were taught it wasn't worth their time. career paths that they'll have to choose from will be significantly skewed towards things where they'll get disproportionate returns. And a lot of that is just knowledge about it, not even knowledge how to do it.
I remember when I first found out, I'd never heard of management consulting. I'd never heard of private equity. I'd never heard of investment banking.
I'd never heard of any of this stuff when I went to college because where I was from in Baltimore, a rich person was a doctor. That was a rich person. And so, and to be fair, My dad's a doctor.
So I felt, I was like, okay, cool. When I went to Vanderbilt, I felt like one of the poorest people there because I'd never seen what New York money was. I'd never seen what California money was.
I'd seen what Baltimore rich was, which is that you have, you know, my dad has a business with two secretaries and, you know, we always had food. I never had to worry about it. I still have the immigrant mentality of like, we don't use, you know, paper towels because they're expensive.
But like, that's just because he came here with a thousand bucks and that still got transmitted. In some ways, you almost have to, You almost have to bat above you have to hit above your weight class, right?
Which is even though it sounds un Like and in the story of when I actually made my first high ticket sale in my life Was when I I actually said a number that I wanted the person to say no to and then they said yes That was how that actually that belief was broken for me So as much as I want to say like this is what you have to do I'm this guy, you know guy on YouTube that you just saw or whatever like Layla and I were selling We started doing these gym launches.
We would sell memberships through gyms. We would collect the money. And that was the model.
We'd fly around the country. That's what we did. There were some issues with that model, which I've talked about in other videos.
And so then all of a sudden, Layla started selling weight loss directly, made a little brand for her called Queen Transformation. We started selling these $500 online training packages over the phone. And that started working.
And so I had these gyms that I was supposed to do these launches at. That I had decided I wasn't gonna do him anymore and so I had eight gyms I was supposed to call up and like basically cancel on them and so on the first phone call the guy was extra referral and he was like dude you saved my friends Jim like I know you can do this and I was so beat down at this point I was like, dude, I'm not like I'm not doing it and he kept asking for it and I finally I was like all right, dude, like I'll show you what I do.
But I'm not flying out there to help you if you can't close. And mind you, I come from the done for you world of like, I literally did everything. I fronted the money.
I fronted the cash. I built, you know, I literally buy the tables. I print the contracts out.
I'd run the ads. We'd work the leads and we'd sell them straight in the gym. So I did everything.
So me saying that was just a hope that he would just like say, screw off. And he was like, no, I get it. I get it.
And he was like, well, how much? And so I said, remember, I'm used to selling $500, 16 week training packages where you have to show up like. every, you know, three times a week to do stuff.
I said $6 ,000. So for me, it was a 12X compared to the price that I was used to selling at. And I just said it.
So I was like, he's just going to say, nope. And then I can just hang up and just move on to my next call. And he said 6K.
And I was like, yeah, $6 ,000. And he was like, done. And I remember like floating out of my body in this moment being like, holy shit, six.
8 grand from one call. And I didn't even have the thing. I didn't even have the thing that I had sold him yet because I just didn't think he was going to say yes.
I didn't think to have to build it, right? And so I was like, holy shit. And so then the next, so I had seven more calls.
I called the next guy, same conversation. Well, I was like, now I got to build this thing. But it went really smooth.
And I was like, he's like, how much? I was like, 8 grand. He was like, yeah, done.
And I was like, 8 grand. I was like, I'm up $14 ,000 in a, I'm not even in a day. It's in a morning.
So then I had six more calls. And by the end of the, you know, the next call, same thing. How much?
10K. Next call. And by the end of the day, I'd done $60 ,000 in collected.
And I was like, what the fuck just happened? I had no idea what was going on. And so Layla came back after she was selling the $500 memberships.
And I was like, babe, I was like. I just made 60 grand. And she was like, what?
She was like, I thought we were doing the weight loss thing. I was like, no, I think we're still doing the gym thing. I think we were just doing it wrong.
And this is why I'm telling you this. Because like that moment of all the moments in my entire career, that was the moment where I elevated. That was the moment where my life really changed.
And so. bring this up because you might be like well what at what price point should I start right it's gonna be relative whether you're selling to consumers you're selling to businesses and this is just a couple rules of thumb that I'll just tell you that I've kind of worked around I'd say that for for a consumer an impulse purchase is five or six hundred dollars a higher ticket purchase is usually gonna be somewhere between three and ten thousand dollars all right typically and that's again for services If you're looking at like assets, the different game, you're buying houses and cars, the different game, right?
But if you're selling just like pure, I'm going to help you do some stuff. I'm going to help fix some stuff. That's usually a price point that's quote higher ticket business.
It really depends on the size business. If you're selling to Disney, you can sell a billion dollar thing, right? If you're selling to just small business on main street, remember some of them are poor too.
And so for them, though, a more normal price for something will probably be somewhere in the neighborhood of like, I'd say like a mid -tier is probably $2 ,000 to $3 ,000 a month. A cheaper price for a business owner would be somewhere in the neighborhood of like $400 to $800 a month. Maybe just call it closer to $500 a month as like a cheaper number for a business.
And you're like, $500 a month is cheap for a business? It's like, yeah, super expensive for a consumer, pretty cheap for a business. One of the big issues, I would say that poor people think about compared to rich people is that poor people will think in terms of cost, and I would say rich people will think in terms of the ratio, the return, cost versus value.
So if I were to say, hey, I've got this thing that's, let's say it's $20 ,000. A poor person just hearing the price would say, that's expensive. But if I said, a rich person, if I said, hey, my thing is $20 ,000, they wouldn't then say that's expensive.
They'd say, For what? And if I said a class A share of Berkshire Hathaway, which is an $800 ,000 stock for $20 ,000, that would be the deal of the century, right?
If I said it was $20 ,000 for a brand new Lamborghini, they would say that's a great deal. So even though it costs a lot of money, it's great value. And this is what I did.
I struggled for such a long time to understand because it was like. I almost had this emotional reaction to zeros. It's like if I saw zeros, I was like, oh my God, it's so much, right?
And so I know where you're coming from because you almost choke on the price. So I'll give you a couple little tactics for this to like get around it. So one is if you're in person, you can write down the price and then turn it and slide it to them.
Or you can use a calculator and turn it to them if you like literally choke on the price because some people do do that. The second thing that you can do, and this is a really good little pricing hack for selling, is before you say the price, You say, hey, before I tell you the price, it's super expensive.
And so what's beautiful about telling someone it's expensive before you tell them the price is that if someone's rich, they're going to immediately think what's expensive for them. And so they're going to think a number and then you're going to say the number and they're going to literally be like, oh, fine. If they're poor and you say it's expensive, they're going to brace themselves for a number that's big.
And then when you give them that number, they were at least braced for it. And so in either way, you actually create what I would consider an emotional anchor that's perfectly accommodating to the buying power of the prospect. And most salespeople get choked up right at that point.
So it's like, give yourself a breather. It's gonna be expensive. You take a breath, they take a breath, then you deliver, right?
So just a little tactic that works and also can help increase sales. So a good way to know if you're actually underpriced is to actually look at your close rates, all right? And so if your close rates are 80%, Or let's say 60 to 80.
I'll put this in tiers for you. 50 to 60. 40 to 50.
And then 30 to 40. And then 30. Okay.
So let's say these are your close rates.
So that means if you talk to 10 people, here you close 8, right? If you're closing 80%, you probably right now have it at 2 to 3x in pricing. sorry a three to four x in pricing excuse me a three to four x in pricing just sitting there i know that sounds absurd but think about it you're gonna get the 80 are not going to say yes anymore i want to be very clear you might drop to like 35 but if 35 of people are paying four times more you're making 120 of the revenue that you were making before all right and so like you're making way more money now at 60 80 you probably have a two to three x that you have sitting there in price.
If you're between 50 and 60, you probably have a 1 .5x to 2x sitting there. If you're at 40 to 50%, you're probably at 1 .25 to 1 .5x. If you're here, I consider this to be appropriately priced.
If you're closing 30 to 40%, you're priced about right. If you're below 30, I would say get better at selling.
Which part of getting better at selling can be make the offer better or talk to better customers. Sometimes you will try and pitch a high ticket thing, but not have your core offer, which might be lower. So you have an anchor offer.
But the people that you're speaking with, you didn't qualify them. So if I want to say, hey, I'm talking to million dollar plus business owners, I will have a significantly higher close rate if I'm only talking to them. So all of what I described is something called lead scoring or lead qualification.
And so what that means is that there's a certain type of customer that's more likely to buy your thing. Right. Somebody who has more money is more likely to buy your more expensive thing.
And so if we know that the people who have the money are the ones that buy our expensive thing, then we should try and just tell the world we only cater to these people. Now, the next thing that will come up is people will say, hey, I would sell for a really expensive thing, but no one will buy it because there's guys down the street who will sell for less because they're brokies selling to brokies.
You're right.
And that's because you can't sell the same thing. You got to sell something different, which is why I wrote my first book on this, which is the first chapter is you're selling a commodity. You're selling something that someone could reasonably hold your thing and their thing up and say, these two things are the same, so I'll pick the cheaper one.
And that's reasonable for them to do it. The idea is that we want to price our things so high and be in such a clearly different category that people say, these two things must be different. I have to analyze these independently.
And so within the context of what do I get for my money, the rich person wants three things. They want it to be fast, they want it to be easy, and they want it to be guaranteed. And so everything that you do that is more difficult for these people, you have to make easier, and these people will be willing to pay for it.
And so you pre -do some of that work for them. You pre -choose some of the food. You go ahead of time.
You drive ahead. You scout the location. You drive her to the door, whatever it is.
But when you look at, well, what does it cost for me to drive this thing to the door? It cost me $10, but they're willing to pay $100 for it, whereas this person is nagging me on the last $5. It's a different game, but this is where all the money's at.
The reality of how services work is that you can tell how advanced a service business owner is by how expensive their product is. Because if you're actually good, you have more demand than you have supply. If you have more demand than you have supply, what should you do?
Raise price. That's how the supply -demand curve works. And so you continue to raise your price until you're at a point where you're at equilibrium, where you can handle the amount of demand that you have.
If you're still good... You still get more demand because word of mouth continues, and you keep going up. And that becomes the virtuous cycle of price and services.
Because when you have a higher price, you have higher gross margins. When you have higher gross margins, you can hire better talent. When you have better talent, you can deliver better services.
When you have better services, you get better reputation. When you have better reputation, what does that do? It drives demand, which then drives price.
And so this is the cycle that every business has to go through. And you signal to the marketplace. You communicate to the marketplace.
Pricing is a two -way communication. You tell them what you're about, and then they will self -select as the correct customers for you. And so you can see where someone's at in their business journey by how high they are priced compared to people who sell comparable services.
Because people will very much take price as an indication of value. They just do. Because in general, things that are priced higher are better.
Not always, but often. It's a good enough rule of thumb that people in general will do that. This might blow your mind if you've like not met people with money When they go to shop on a store they price from high to low They literally look at the most expensive stuff first because that's probably the stuff that's for them They don't want to save money anymore they want to get better value they want better stuff they want to skip the line They want to get it faster They want it better.
They want it to be higher quality ingredients. They want it to be made by somebody who's more noteworthy. All of these things.
And fundamentally, that is what this book goes into tremendous detail talking about, which is the offers book. All right. So with that being said, sell to the rich.
They pay better. It's better to sell fewer expensive customers than many broke customers. And if you sell to rich people for long enough, they will make you one of them.
The Hook
The bait, then the rug-pull.
Alex Hormozi opens with a claim that doubles as the video's title: you're stuck below your goals because you're negotiating with people who don't have the money to give you. He backs it with the actual shape of American wealth, then reverse-engineers a pricing ladder from it.
Named ideas worth stealing.
01:20model
The $100 Wealth Breakdown
- Bottom 50% -> ~$2
- Next 40% -> ~$28
- Next 9% -> ~$38
- Top 1% -> ~$32
Scales US household net worth ($163T) down to $100 to make the concentration of wealth visceral and countable.
Steal forOpening a sales conversation about who actually has budget for a premium offer
04:49concept
Pareto's Principle applied to profit
- 20% of customers = 80% of profit
- 4% of customers = 64% of profit
- 1% of customers = 51% of profit
The 80/20 split repeats inside itself, so a small number of customers matter far more than headcount suggests.
Steal forDeciding which existing customers deserve a dedicated high-touch tier
06:14concept
The pricing-mismatch rule
Pitching a $1,000 product to a $100 budget costs you $100 in lost revenue; pitching a $100 product to a $1,000 budget costs you $900, and that $900 is usually disproportionately profit.
Steal forDeciding which direction to err when unsure of a prospect's budget
10:08model
The 5-to-10x tier rule
- Each new tier = 5-10x the previous price
- Expect ~20% adoption per tier
- Each tier should roughly double total revenue to be worth the added complexity
A rule of thumb for spacing pricing tiers far enough apart to match the real gap in customer spending power.
Steal forBuilding or auditing a product/service ladder
11:49list
The four-tier pricing ladder
- ~$10/mo mass tier
- ~$100/mo (10x, ~20% take rate)
- ~$500-1,000/mo (5-10x)
- ~$5,000-10,000/mo (top tier)
A worked example scaling from a $10/month base to a $5,000-10,000/month top tier across 1,000 hypothetical customers.
Steal forSketching a first draft of a full pricing menu from low-ticket to high-ticket
32:06list
Close-rate-to-price-multiplier table
- 80%+ close -> raise 3-4x
- 60-80% -> raise 2-3x
- 50-60% -> raise 1.5-2x
- 40-50% -> raise 1.25-1.5x
- 30-40% -> correctly priced
- <30% -> fix the offer/leads, not the price
Uses close rate as a live diagnostic for whether a price is too low, correctly set, or already too high.
Steal forDeciding whether an underperforming close rate is a pricing problem or a targeting problem
How they asked for the click.
VERBAL ASK
07:26link
“It's absolutely free. And so the link's in the description, but you just go acquisition.com forward slash roadmap, just enter your info, and it'll spit it right back to you all free.”
Folded into the middle of the value delivery rather than saved for the end; positioned as reciprocity immediately after the Pareto/roadmap explanation, so it reads as a continuation of the lesson rather than a sales break.
MENTIONED ON CAMERA
FROM THE DESCRIPTION
PRIMARY CTAWhere the creator wants you to go next.
OTHER LINKSAlso linked in the description.
Visual structure at a glance.
