Alex Hormozi: NEVER lower your prices...

Last updated: Jun 15, 2023

The video is about why lowering prices is not always a good idea and how it can lead to losing profits.

This video by Alex Hormozi was published on Oct 4, 2021.
Video length: 08:50.

In this video, Alex Hormozi shares his personal experience of how lowering prices can lead to a significant loss in profit.

He talks about two instances where he made the decision to either increase or decrease prices and the consequences that followed.

He emphasizes the importance of believing in the value of what you are selling and not being afraid to charge what it's worth.

  • Alex Hormozi is an entrepreneur, investor, and CEO of Acquisition.com.
  • Lowering prices is not always a good idea and can lead to losing profits.
  • Switching from a boot camp to a semi-private program at triple the price resulted in one-third of customers leaving, but two-thirds stayed at the higher price.
  • Lowering the price of a program to decrease churn did not work and resulted in losing $5 million per year in profit.
  • Adding more value and increasing prices can lead to more profits, and it's important to believe in what you're selling to make more money.

NEVER lower your prices... - YouTube

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Introduction

  • Alex Hormozi is an entrepreneur, investor, and CEO of Acquisition.com.
  • The video is about why lowering prices is not always a good idea and how it can lead to losing profits.
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Story 1: Boot Camp to Semi-Private Program

  • Alex was selling a boot camp for $99 a month.
  • He wanted to switch all his clients over to a semi-private program that cost more.
  • He sent a mass letter out to his customers that said they were going to go from $99 a month to $299 per month.
  • He was going to triple his prices to add more value.
  • One-third of his customers left, and two-thirds of them stayed at three times the price.
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Story 2: Decreasing Price to Decrease Churn

  • Alex was selling a program at $42,000 per year, billed at $800 a week.
  • He wanted to decrease churn to increase lifetime value per customer.
  • His team suggested lowering the price, but Alex didn't like lowering prices.
  • He decided to add more and decrease the price to $600 per week.
  • His churn remained completely unchanged, and he lost $5 million per year in profit.
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NEVER lower your prices... - YouTube

Conclusion

  • Lowering prices generally doesn't mean you make more money.
  • When you lower your prices, you may lose profits and cut your income.
  • Adding more value and increasing prices can lead to more profits.
  • It's important to believe in what you're selling to make more money.
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Why lowering prices is not always a good idea

  • Lowering prices can lead to losing profits.
  • Providing more value and charging a higher price will make you more money.
  • Trying to service more people at lower prices by also providing more things will most times make you less money.
  • In a service-based business, providing more value and charging a higher price will make you more money.
  • Lowering prices can dramatically decrease the profit of your business.
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How to increase LTV without lowering prices

  • There are six ways to increase LTV: increase your price, decrease your costs, resales, upsells, cross-sells, and down-sells.
  • Lowering prices is not one of the six ways to increase LTV.
  • Trying to get more people to buy at a lower price can lead to losing profits.
  • Small tweaks can lead to big changes and lots of impact.
  • Think through decisions before making changes that can lead to losing profits.

Watch the video on YouTube:
NEVER lower your prices... - YouTube

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