$100M Offers Audiobook Part 3 Ep 581

Summary Notes


In episode three of "100 Million Dollar Offers," Alex Hermosi delves into the transformative concept of the Value Equation, exploring strategies for crafting offers that customers can't refuse by maximizing value and profit. Hermosi challenges traditional notions of fairness in pricing, asserting that significant disparities between cost and price are essential for extraordinary wealth. The episode emphasizes the importance of increasing a product's perceived value through dream outcomes and perceived likelihood of success while minimizing time delay and effort from the customer's perspective. Hermosi shares real-world examples, including a case where implementing these tactics quintupled a photography business's average ticket, leading to exponential profit growth and allowing for philanthropic contributions. The episode concludes with Hermosi's call to action for listeners to share their insights and leave reviews to help spread the powerful message of the Value Equation to more entrepreneurs.

Summary Notes

Introduction to the Episode

  • The episode is the third of the series "100 million dollar offers, the audio edition."
  • It is a collaboration with the game podcast.
  • The episode covers the most famous chapter from the book, which is the Value Equation.

You welcome back to episode three of 100 million dollar offers, the audio edition. And collab with the game podcast. Today's episode is the most famous chapter that I wrote in the book, the Value Equation.

These quotes introduce the episode and its focus on the Value Equation, a significant concept from the book discussed in the podcast.

The Impact of the Value Equation

  • The Value Equation is a highly shared and influential concept.
  • It has significantly changed the speaker's life and businesses.

It's probably the most retweeted, the most. Shared, the most posted concept. This concept changed my life and changed my businesses, and I hope it does. The same for you.

The speaker emphasizes the widespread recognition and personal impact of the Value Equation concept.

Call to Action

  • The speaker expresses a desire for listeners to take action if they find value in the content.
  • A special request is mentioned that means a lot to the speaker.

And at the very end, I have a special call to action that would. Mean the world to me. If you got value from this free content, it takes a second and again. It would mean the world.

The speaker is preparing the audience for a call to action that will be presented at the end of the episode, highlighting its importance to them.

The Value Equation Explained

  • The goal is to charge as much as possible for products or services.
  • The concept of "fairness" in pricing should be abandoned.
  • Large discrepancies between cost and charge are necessary for wealth.
  • Providing value justifies charging significantly more than the cost of fulfillment.

The goal should be to charge as much money for your products or services as humanly possible. Every enormous company in the world charges you money for things that cost them nothing. You need to have a big discrepancy between what something costs you and what you charge for it.

These quotes outline the main idea of the Value Equation, suggesting that charging high prices relative to costs is a key to financial success.

Case Study: Photography Business

  • A private client in the photography space increased their average ticket price by 5x.
  • This led to a 38x increase in profit and allowed for business expansion and charitable contributions.
  • The price increase was accepted by clients, indicating better perceived value.

Over two years, implementing the tactics outlined in this book, the owner was able to increase the average ticket from $300 to one $500. A five x increase in average ticket 38 x'd the profit of the business. We were able to donate even more money to children's charities, which is something the owner and I have in common.

This case study demonstrates the practical application of the Value Equation, showing the positive outcomes of increasing prices based on perceived value.

The Value Equation Formula

  • The Value Equation is a formula to quantify the variables that create value for any offer.
  • It operates subconsciously and changes one's perspective on value.
  • The formula consists of increasing dream outcome and perceived likelihood of achievement, and decreasing time delay and effort/sacrifice.

I call it the value equation. Once you see it, you can never unsee it. There are four primary drivers to value. Two of the drivers which are the top two parts of the equation, you will seek to increase. The other two on the bottom of the equation, you will seek to decrease.

This quote introduces the Value Equation formula and its components, which are designed to increase the perceived value of an offer.

Focus on the Harder Aspects of the Equation

  • Initially, the speaker focused on dream outcomes and likelihood of achievement.
  • Realizing that reducing time delay and effort/sacrifice is more competitive, the focus shifted to these elements.
  • Companies that excel in making their offerings immediate and effortless stand out in the market.

The harder and more competitive are the time delay and effort and sacrifice. The best companies in the world focus all their attention on the bottom side of the equation, making things immediate, seamless, and effortless.

This quote highlights the strategic shift towards emphasizing the reduction of time and effort in providing value, which is seen as a competitive advantage.

The Goal of the Value Equation

  • Reducing time delay and effort/sacrifice to zero can lead to infinite value.
  • The division equation emphasizes the impact of minimizing the bottom part of the equation.
  • Achieving immediate and effortless realization of the dream outcome is the ultimate goal.

Anything divided by zero equals infinity, which is technically undefined for math nerds. If you can reduce your prospect's 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.

These quotes explain the mathematical rationale behind the Value Equation and the objective of providing instantaneous value with minimal effort for the customer.

Value of Products or Services

  • The value of products or services is considered infinitely valuable.
  • The hypothetical limit entrepreneurs should strive towards is the perceived value by the prospect.
  • Perception is the key to value, not the objective measures of success, time delay, or effort.

"How valuable would these products or services be? Infinitely valuable. And that's the point."

This quote emphasizes the concept that the perceived value of a product or service can be considered limitless, suggesting that there is always room for increasing value in the eyes of the consumer.

"Perception is reality. Perception is reality."

The repetition of "Perception is reality" underscores the importance of the consumer's perception in determining the value of a product or service.

The Grand Slam Offer

  • The true value of an offer is only realized when the prospect perceives the benefits.
  • A prime example is the London tunnel system where a simple dotted map increased rider satisfaction more than faster trains would have.

"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."

This quote explains that an offer is only considered valuable when the consumer recognizes and understands the benefits it provides.

"The biggest increase in rider satisfaction, aka value, was never from faster trains to decrease wait times."

This quote illustrates how perceived value can be enhanced through simple solutions that address psychological needs rather than more costly logical solutions.

Logical vs. Psychological Solutions

  • Entrepreneurs should focus on psychological solutions to problems because logical solutions have often been tried and failed.
  • Psychological solutions can create perceived value and are necessary to solve remaining problems.

"Pro tip logical versus psychological solutions most people naturally try and solve problems using logical solutions, but the logical solutions have already been tried because they're logical."

This quote suggests that logical solutions are often the first approach to problem-solving but may not be effective because they have been commonly attempted.

"All that remains are the psychological problems."

This quote implies that after logical solutions have been exhausted, the remaining issues are psychological in nature and require different strategies.

Communicating Value

  • Business owners must clearly communicate the value drivers to increase the prospect's perception of the product.
  • The extent to which these questions are answered will determine the value created.

"As business owners, it's up to us to communicate these value drivers with clarity."

This quote highlights the responsibility of business owners to effectively convey the benefits of their products to the consumers.

"The extent to which you answer these questions in the mind of your prospect will determine the value you are creating."

This quote means that the clarity with which a business can answer a consumer's questions and concerns will directly impact the perceived value of their offer.

Dream Outcome

  • The dream outcome is about understanding and channeling the prospect's deep desires through the offer.
  • The dream outcome is the gap between the prospect's current reality and their dreams, and the value gets enhanced by depicting this dream accurately.

"People have deep unchanging desires. This is what marriages are lost over, wars are fought over, and people willingly die for."

This quote refers to the fundamental and powerful nature of human desires, which are the driving force behind significant actions and decisions.

"The dream outcome is the expression of that feeling and experiences the prospect has envisioned in their mind."

This quote defines the dream outcome as the embodiment of the prospect's aspirations and how they imagine their ideal situation to be.

Perceived Likelihood of Achievement

  • Perceived likelihood of achievement is a crucial factor in the value equation, as people pay for certainty.
  • This variable was added to the framework to account for the consumer's desire for assured success.

"This was the last of the variables that I added when trying to think through this framework a few years ago."

This quote explains the evolution of the value framework, highlighting the addition of perceived likelihood of achievement as a key component.

"I just felt like something was missing with only the other three. Then I realized people pay for certainty."

This quote reveals the insight that certainty is a highly valued aspect for consumers, leading to the inclusion of perceived likelihood of achievement in the value framework.

Perceived Likelihood of Achievement

  • The perceived likelihood of getting what one wants increases the value of an offer.
  • Experience of the service provider plays a key role in enhancing this perception.
  • Communicating the likelihood of success through messaging, proof, and guarantees can increase an offer's value.

"The more experienced surgeon has a track record of achieving a result which incentivizes their desirability."

  • This quote highlights that a track record of success increases a provider's desirability and therefore the value of their service.

"Increasing a prospect's conviction that your offer will actually work for them will make your offer that much more valuable, even though the work remains the same on your end."

  • The quote emphasizes the importance of increasing a client's belief in the effectiveness of an offer to enhance its value, irrespective of the actual work involved.

"So, to increase value with all offers, we must communicate perceived likely of achievement through our messaging, proof what we choose to include or exclude in our offer, and our guarantees."

  • This statement outlines the strategies to enhance the perceived value of an offer by effective communication and providing proof and guarantees.

Time Delay

  • The time between a purchase and the receipt of its benefits affects the value of a service or product.
  • Shortening this time delay makes an offer more valuable.
  • Understanding both long-term outcomes and short-term experiences is vital for value creation.
  • Short-term experiences or milestones are crucial for retaining customers until they achieve the long-term value.

"The shorter the distance between when they make the purchase and when they receive value, the outcome, the more valuable your service or product is."

  • This quote stresses that reducing the time between purchase and delivery of value increases the perceived value of a service or product.

"The thing people buy is the long term value, aka the dream outcome, but the thing that makes them stay long enough to get it is the short term experience."

  • The quote distinguishes between the long-term goal that motivates a purchase and the short-term experiences that keep customers engaged.

"We try and tie as many of these as possible into any service we offer. We want clients to have a big emotional win early, as close as possible to their purchase."

  • This quote suggests that providing clients with early wins or positive experiences can reinforce their decision and encourage them to continue with the service.

Effort and Sacrifice

  • The effort and sacrifice required to achieve a result affect the perceived value of an offer.
  • Reducing effort and sacrifice or at least the perception of them can make an offer more appealing.
  • Done-for-you services are more expensive than DIY because they reduce the effort and sacrifice for the customer.

"The only thing that beats free is fast people will pay for speed many companies have entered free spaces and done exceedingly well with a speed first strategy."

  • This quote indicates that speed can be a more compelling selling point than free services, as people are willing to pay for faster results.

"Decreasing the effort and sacrifice, or at least the perceived effort and sacrifice, can massively boost the appeal of your offer."

  • The quote explains that reducing the actual or perceived effort and sacrifice involved in using a service can greatly enhance its attractiveness.

"In an ideal world, a prospect would want to simply say yes and have their dream outcome happen with no more effort on their behalf."

  • This quote conveys the ideal scenario where customers would prefer to achieve their desired outcome without any effort, which is why services that offer this are highly valued.

Interplay of Components

  • The components of value do not operate in isolation but in combination with each other.
  • A foundational understanding of these components helps in creating or detracting from the value perceived by potential clients.
  • Utilizing all four components effectively can enhance the overall value of an offer.

"My hope is that you now have a foundational understanding of the components of value and how the interplay between each of the components creates or detracts from the value someone might be willing to pay."

  • This quote summarizes the speaker's intention to provide a comprehensive understanding of value components and their interplay in determining the value of an offer.

Value Quantification

  • Effort to quantify the value of services or products.
  • Binary scale used for rating, with 0 indicating no value and 1 indicating full value.
  • Four variables are added to determine a relative value rating.
  • Goal is to enhance the perceived likelihood and value of the dream outcome while reducing time delay and effort.

In an effort to quantify the value. I'll rate them on a binary scale. Of zero or one, one being value achieved, zero being missing. Then I will add all four together to give you a relative value rating. Of a type of service.

The speakers are discussing a method to quantify the value of a service or product. The binary scale and the addition of the four variables are part of the methodology to determine the overall value rating.

Marketing Goals

  • Marketers and business owners aim to increase perceived value and likelihood of achieving the dream outcome.
  • They also strive to decrease the time and effort required to achieve the outcome.

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.

The speakers highlight the objectives of marketers and business owners in enhancing the appeal of a product or service by manipulating the perceived value and required effort.

Comparative Analysis: Meditation vs. Xanax

  • Side-by-side comparison to demonstrate how variables affect value.
  • Meditation and Xanax both aim for relaxation and well-being but differ in value due to the four variables.

To start, I will do a sidebyside. Comparison of two vehicles with identical dream outcomes. Meditation and Xanax.

The speakers are setting up a comparison between two methods of achieving relaxation and well-being to illustrate how different factors can affect their perceived value.

Meditation's Value Drivers

  • Dream outcome: relaxation, decreased anxiety, feelings of well-being.
  • Perceived likelihood of achievement is low due to distractions and lack of follow-through.
  • Time delay is long, with some immediate benefits but mainly long-term results.
  • Effort and sacrifice include physical and mental discomfort and time commitment.
  • Overall value score for meditation is low (1.5 out of 4).

Meditation dream outcome relaxation decreased anxiety, feelings of wellbeing score one out of one. Perceived likelihood of achievement low since most. People get distracted and don't actually think. They'll follow through with daily meditation, score. Zero out of one time delay long. Time to yield long term results some. Immediate benefits after ten to 20 minutes. Assuming you don't get frustrated, score zero. Five out of one. Effort and sacrifice. Physical discomfort numb body limbs often mental. Discomfort feeling like you are failing constantly time sacrifice. You have to set aside time every. Day to do this. Score zero out of one overall value score for meditation low 1.5 out of four.

The speakers are evaluating meditation based on the four value drivers, concluding that it scores low due to the perceived difficulty in achieving the desired outcome and the effort required.

Xanax's Value Drivers

  • Dream outcome: same as meditation.
  • Perceived likelihood of achievement is high due to confidence in the pill's effects.
  • Time delay is short, with effects felt within 15 minutes.
  • Effort and sacrifice are minimal, involving just swallowing a pill.
  • Overall value score for Xanax is high (4 out of 4).

Now let's look at Xanax. Dream outcome same as meditation relaxation decreased anxiety, feelings of well being score one out of one perceived likelihood of achievement. High since most people are confident that. If they take the pill, it will. Make them feel more relaxed. Score one out of one time delay. 15 minutes for effects to be felt. Score one out of one. Effort and sacrifice swallowing a pill. Score one out of one overall value. Score high four out of four.

The speakers are contrasting Xanax with meditation, noting that Xanax is perceived as having a higher value due to ease of use and quick effects, leading to a high overall value score.

Market Success and Perception

  • Xanax's high value score explains its multibillion-dollar success.
  • The comparison is not about which is better, but about perceived value.
  • The supplement industry is larger than the health club industry due to perceived ease and speed of achieving health objectives.
  • People are willing to pay more for perceived ease and convenience.

And that is why Xanax is a multibillion dollar product. While I know of almost no multibillion dollar meditation businesses value I'm not here. To argue about whether meditation is better than Xanax. Obviously it is, but that doesn't mean it's perceived as more valuable. This is also the reason that supplement. Industry 123,000,000,000, according to Grandview research is. Twice the size of the health club. Industry, 62 billion, according to HRSA. They both accomplish the same perceived objectives. Being healthy, losing weight, looking good, increasing energy, et cetera. But one is perceived as more valuable because it has lower costs. People are more willing to pay $200 for supplements than they are for a. $29 per month membership. Taking a pill or drinking a shake is so much faster and easier than. Going to the gym every day. Hence valued crazy world we live in.

The speakers discuss how the perceived value of ease and convenience leads to market success, despite not necessarily being the better option for health and well-being.

Capitalizing on Human Nature

  • The book encourages readers to capitalize on human nature rather than attempt to change it.
  • Understanding what people value can allow for monetization that also provides what they need.
  • Aim is to make a profit while making a positive impact.

And you can either sit there and. Make complaint posts about how people ought to be a certain way, or you can take advantage of the way people are and capitalize. This book is for those people who want to be victors, not victims of circumstance. You can either be right or you can be rich. This book is for getting rich. If that bothers you, you can put this down and go back to arguing against human nature. Hint you're not going to change it. Now, that being said, knowing what people. Value versus what is good for them is key. It means you can find ways to. Monetize the things that people value in order to give them what they really need. Win win. You can make your dent in the. Universe while making a profit.

The speakers emphasize the importance of leveraging human nature for success, suggesting that understanding and catering to what people value can lead to both profit and positive change.

Encouragement to Support the Book

  • The author has hand-drawn images and frameworks in the book to aid understanding.
  • Readers are encouraged to leave reviews to help reach more entrepreneurs.
  • The act of reviewing is presented as a way to contribute to others' success without cost.
  • Sharing the book is seen as a way to generate goodwill and associate value with oneself.

Hey guys, if you're struggling to keep track of this, or you like highlighting, or you like writing notes in the margin, or you like seeing the frameworks, because you might not know this, but I actually hand drew every single framework inside of this book, and I think there's at least 50 hand drawn images and frameworks inside this book that I painstakingly put together to make the consumption easier and so that it stores in more parts of your brain. And so if that sounds at all interesting, you can go to Amazon and grab the physical copy or the Kindle version of that. If you prefer either of those formats, they're available to you. Chapter seven pre goodwill he who said money can't buy happiness hasn't given enough away. Source unknown people who help others with. Zero expectation, experience higher levels of fulfillment. Live longer, and make more money. I'd like to create the opportunity to. Deliver this value to you during your. Reading or listening experience. In order to do so, I have. A simple question for you. Would you help someone you've never met if it didn't cost you money, but you never got credit for it? If so, Ivan, ask to make on. Behalf of someone you do not know. And likely never will. They are just like you or like you were a few years ago, less. Experienced, full of desire to help the. World, seeking information but unsure where to look. This is where you come in. The only way for us@acquisition.com to accomplish. Our mission of helping entrepreneurs is first by reaching them. And most people do, in fact, judge a book by its cover and its reviews. If you have found this book valuable thus far, would you please take a. Brief moment right now and leave an. Honest review of the book and its contents? It will cost you $0 in less than 60 seconds. Your review will help one more entrepreneur. Support his or her family. One more employee find work, they find. Meaningful, one more client experience a transformation they otherwise would not have encountered, one. More life change for the better. To make that happen, all you have to do is and this takes less than 60 seconds. Leave a review if you're on audible. Hit the three dots on the top right of your device, click and rate and review, and then leave a few sentences about the book with a star rating. If for some reason they have changed the functionality, you can go to the. Book page of Amazon or wherever you purchase this and leave a review right on the page. Ps if you feel good about helping a faceless entrepreneur, you are my kind of people. I'm that much more excited to help you crush it in the coming chapters. You'll love the tactics I'm about to go over. Pps life hack. If you introduce something valuable to someone. They associate that value with you. If you'd like goodwill directly from another entrepreneur, send this book their way. Thank you from the bottom of my heart.

The speakers are encouraging readers to support the book by leaving reviews and sharing it with others, suggesting that these actions can have a ripple effect in helping entrepreneurs succeed.

Sharing Knowledge and Request for Reviews

  • The podcast and book content are available for free, and sharing is encouraged.
  • Leaving a review on Amazon is requested to help reach more entrepreneurs.
  • The author expresses gratitude and emphasizes the potential impact on others' lives.

Hey guys, hope you enjoyed the value equation. I'm just going to reiterate the one thing, which is that help me share. This knowledge with people. Obviously it's on my podcast for free. You can share the actual podcast itself. The most helpful thing to do if you're sending to a friend would probably be to send the first episode so. They can listen to this in order. For the book, but to reach a stranger rather than just your friends. There's probably an entrepreneur out there who hasn't read this stuff and could absolutely change his life or her life and their family's lives as a result. And so if you could leave the book a review on Amazon. It took me two days to record this. If you could take 60 seconds to. Do it, it would just mean a. Lot to me and maybe even change someone else's life. So if you could do that, that would be awesome. And you would be awesome too. Acquisition.com volume 1100 million dollar offers how. To make offers so good people feel stupid saying no. Written and performed by Alex Hermosi Copyright 2021 Acquisition.com audio production copyright 2021 acquisition.com.

The speaker requests the audience to share the podcast and leave a review for the book on Amazon, highlighting the effort put into the content and the potential positive impact on other entrepreneurs.

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