Alex Hormozi: How I got 700 people to pay me $40,000 each...no bs..

Last updated: Jun 15, 2023

The video is about Alex Hormozi explaining how he got 700 people to pay him $40,000 each by breaking down the four components of value in the value equation.

This video by Alex Hormozi was published on Aug 23, 2021.
Video length: 18:38.

In this video, Alex Hormozi shares how he was able to get 700 people to pay him $40,000 each in less than 15 minutes over the phone.

He explains the four components of value that determine the price of a product or service: the dream outcome, the believability of the outcome, the speed of the outcome, and the ease of the outcome.

He provides examples to illustrate each component and emphasizes the importance of understanding value as an entrepreneur.

  • Alex Hormozi explains how he got 700 people to pay him $40,000 each by breaking down the four components of value in the value equation.
  • The four components of the value equation are dream outcome, perceived certainty, perceived control, and effort and sacrifice.
  • The dream outcome is what the prospect wants to achieve and defines the category of the product or service.
  • Perceived certainty is the prospect's belief that they will achieve the dream outcome, and can be increased through testimonials, case studies, and guarantees.
  • Perceived control is the prospect's belief that they have control over achieving the dream outcome, and can be increased through education, coaching, and support.
  • Time delay is the time between when the prospect pays and when they receive what they want, and decreasing it increases the perceived value of the product or service.
  • Risk is the potential downside of the purchase, and decreasing it increases the perceived value of the product or service.
  • Getting the dream outcome right and accurately expressing it to the prospect is crucial to creating value, and decreasing the bottom side of the equation creates a competitive advantage.
  • Understanding and implementing these components of value can lead to success in business and entrepreneurship.

How I got 700 people to pay me $40,000 each...no bs.. - YouTube

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Introduction

  • Alex Hormozi explains how he got 700 people to pay him $40,000 each.
  • He breaks down the four components of value in the value equation.
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Section 1: The Value Equation

  • The value equation is a way to understand what value means.
  • There are four components to the value equation.
  • The first component is the dream outcome.
  • The dream outcome is what the prospect wants to achieve.
  • The dream outcome defines the category of the product or service.
  • The remaining three variables determine what is expensive and what is not.
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Section 2: Dream Outcome

  • The dream outcome is the first component of the value equation.
  • The dream outcome is what the prospect wants to achieve.
  • The dream outcome defines the category of the product or service.
  • The dream outcome is what makes a product or service valuable.
  • For example, men value making money more than losing weight because it increases status.
  • The dream outcome determines the category of the product or service.
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How I got 700 people to pay me $40,000 each...no bs.. - YouTube

Section 3: Perceived Certainty

  • Perceived certainty is the second component of the value equation.
  • Perceived certainty is the prospect's belief that they will achieve the dream outcome.
  • The higher the perceived certainty, the more valuable the product or service.
  • Perceived certainty can be increased through testimonials, case studies, and guarantees.
  • For example, a weight loss program with before and after pictures and testimonials will have higher perceived certainty.
  • Perceived certainty is what makes a product or service more expensive.
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Section 4: Perceived Control

  • Perceived control is the third component of the value equation.
  • Perceived control is the prospect's belief that they have control over achieving the dream outcome.
  • The higher the perceived control, the more valuable the product or service.
  • Perceived control can be increased through education, coaching, and support.
  • For example, a weight loss program with a coach and support group will have higher perceived control.
  • Perceived control is what makes a product or service more expensive.
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Value Equation Components

  • The dream outcome is the experience that the prospect will have.
  • The perceived likelihood of achievement is how likely the prospect thinks they will achieve the dream outcome.
  • Time delay is the time between when the prospect pays and when they receive what they want.
  • Risk is the potential downside of the purchase.
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Dream Outcome

  • The more appealing the dream outcome, the more valuable it is perceived to be.
  • Visceral descriptions of the dream outcome increase its perceived value.
  • Marketers often promise bigger and bigger dream outcomes to increase perceived value.
  • Testimonials increase the perceived likelihood of achieving the dream outcome, making it more valuable.
  • Increasing the dream outcome and perceived likelihood of achievement increases the perceived value of the product or service.
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Perceived Likelihood of Achievement

  • The perceived likelihood of achievement is based on the prospect's belief that they will achieve the dream outcome.
  • Higher perceived likelihood of achievement increases the perceived value of the product or service.
  • Testimonials increase the perceived likelihood of achievement, making the product or service more valuable.
  • Lower perceived likelihood of achievement decreases the perceived value of the product or service.
  • Increasing the perceived likelihood of achievement and dream outcome increases the perceived value of the product or service.
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Time Delay

  • Time delay is the time between when the prospect pays and when they receive what they want.
  • Shorter time delay increases the perceived value of the product or service.
  • Speed is valuable and can make a product or service more valuable than a free alternative.
  • Longer time delay decreases the perceived value of the product or service.
  • Decreasing time delay increases the perceived value of the product or service.
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Risk

  • Risk is the potential downside of the purchase.
  • Higher risk decreases the perceived value of the product or service.
  • Lower risk increases the perceived value of the product or service.
  • Decreasing risk increases the perceived value of the product or service.
  • Offering guarantees or reducing risk in other ways can increase the perceived value of the product or service.
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Third Component of Value: Time Delay

  • The third component of value is decreasing the time delay for the prospect to experience the outcome.
  • The goal is to make it faster for the prospect to experience the outcome that is promised.
  • Decreasing the time delay increases the value of the product or service.
  • Examples of decreasing time delay include faster delivery, immediate access, and instant results.
  • The faster the prospect can experience the outcome, the more valuable the product or service becomes.
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Fourth Component of Value: Effort and Sacrifice

  • The fourth component of value has two parts: effort and sacrifice.
  • Effort is what someone must do that they don't want to do in order to achieve the outcome.
  • Sacrifice is what someone has to give up or stop doing that they enjoy doing in order to achieve the outcome.
  • The goal is to decrease the effort and sacrifice associated with achieving the outcome when they buy from you.
  • Examples of effort include counting calories, waking up early to work out, and dedicating extra time to a task.
  • Examples of sacrifice include giving up favorite foods, sleeping in, and avoiding activities that cause pain.
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Getting the Dream Outcome Right

  • The goal is to increase the top side of the value equation and decrease the bottom side.
  • Getting the dream outcome right is crucial to accurately depicting what the prospect wants.
  • Increasing the dream outcome and accurately expressing it to the prospect is extremely valuable.
  • Decreasing the bottom side of the equation to zero creates an infinitely valuable product.
  • The biggest companies decrease the downside of the equation to create a competitive advantage.
  • Examples of companies that decrease the downside include Uber, Netflix, and Amazon.
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Conclusion

  • The four components of value in the value equation are dream outcome, unique mechanism, time delay, and effort and sacrifice.
  • Decreasing the bottom side of the equation creates a competitive advantage and increases the value of the product or service.
  • Getting the dream outcome right and accurately expressing it to the prospect is crucial to creating value.
  • Decreasing the time delay and effort and sacrifice associated with achieving the outcome also increases the value of the product or service.
  • Understanding and implementing these components of value can lead to success in business and entrepreneurship.
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Decreasing Time Delay and Effort in Achieving Outcome

  • Focusing on decreasing time delay and effort in achieving the desired outcome.
  • Decreasing time delay and effort increases the perceived likelihood of achieving the prospect.
  • Personal training and liposuction are two versions of the same dream outcome.
  • Personal training has a low perceived likelihood of achievement, while liposuction has a high perceived likelihood of achievement.
  • Personal training has a long time delay, while liposuction has a short time delay.
  • Personal training requires a lot of effort and sacrifice, while liposuction requires minimal effort and sacrifice.
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The Value Equation

  • The value equation is the difference in value between two options.
  • The value equation is made up of four components: achieving the desired outcome, perceived likelihood of achievement, time delay, and effort and sacrifice.
  • Personal training has a value equation of 1 out of 4, while liposuction has a value equation of 4 out of 4.
  • The difference in value between the two options explains why clients are willing to pay $40,000 for one and not for the other.
  • The goal of the value equation is to equip entrepreneurs with the tools they need to succeed without having to buy courses on the internet.
  • The ultimate goal is to build a portfolio of companies that does a billion dollars in revenue.

Watch the video on YouTube:
How I got 700 people to pay me $40,000 each...no bs.. - YouTube

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