How To Build A High Value Offer Without Discounts

Full transcript

How do we get his offer so good? People feel stupid saying, no, that's right, guys, we're gonna break down a hundred million dollar offers by Alex Hermosy. I did directly steal that quote. But more specifically, to really understand how to create an offer. And the reason it's relevant, it's what excites me the most about business. And I've been talking to somebody, I mean anyone, any business owner. Now that I've learned so much about offer structure and I still have changed things and done things differently, and you really deep look at numbers, things make so much more sense. And I just want to fix everyone's business. It excites me. I want to go into your face. And it's just because you fix yours. Yeah. Yes, it's contagious. Like ah, I know it's wrong. I want to pick it apart. Yep. So I want to talk about common business mistakes that people make first with creating offers. And then I want to go into how to structure and build an offer, if that makes sense. Yep, that makes sense. So yeah, I want you to guess what are some common mistakes people make when structuring offers, agreements in businesses.

I just saw one yesterday. Um undercharging, not charging enough. That's plain and simple. Not charging enough for the services you're going out, not checking the market. That's a big one.

Let's do one thing at a time. So undercharging.

Yep. How do you know how much to charge? I mean, you have to know the industry that you're in and the value. And I mean, that's pretty much it. Yeah, look at what others are charging and choose to charge either more and offer a service that others are not uh that are not uh offering. That's one thing. Um, convenience. If I can make it more convenient, I can charge more. That's pretty much what it comes to. That's what I would look at. How can I make it?

Those are generic ones, right? And I'm gonna be really specific and give advice that people can take home. So let's start with undercharging. There is a what they call like a golden rule in business, right? So it's 30% should go towards payroll, 40% goes to non-payroll, and then 30% profit.

Okay. Net, yeah.

That does skew when you get into service industries. The profit margins come down a little bit, the payroll goes up a little bit, and it's a little structured different. So you need to really figure out now what should this in the beginning, exactly how much you need to charge and work off of that. So let's take a per hour. Okay, right? So let's say your payroll on an hour for easy math is $33. I'm paying someone $33 an hour. Now, how much money do you have to charge in order to make that hour profitable? Well, we know payroll needs to be a third, so the amount would be $100 an hour. That's how much I charge. I'm not looking at the market. I'm looking at my margins to figure out what makes sense. To increase profit margin, yeah. Correct. And then I could figure out once I have that, what are some things I could add in that are one-offs that aren't going to increase payroll to help create more value inside of that hour offer? You but you should look at the market though. You 100% should you first start with the money, then you look at the market to add things that are not payroll heavy into it to help increase the value of it.

Yeah, but then how do you know you're not undercharged if the market's when you come out to that amount, when you come out to how much you're gonna you you're gonna charge? The market's charging 2x more.

If the market's charging more, you just go up and raise more. But that's what I'm saying. Step one, though, is figure out your minimum. Oh, I see what you're saying. Okay, your bare bottom below bottom.

Yes, yes, your bare bottom part.

And then you can look at the market. If the market's charging way more, then you just inflate and go way more. Correct. If the market's charging at or below where you're at, what non-payroll expenditure things that are a one-off or free for me to do, that can I add in to offer more value to get out of it, but I cannot drop my prices. Correct. Because that's gonna end up killing me and I'm not gonna be able to run a healthy business. And you know what's crazy?

Excuse me. One of my biggest problems in business, well, used to be, is I always created custom deals because I was so uh I just wanted to close the deal, pretty much. I always let me just be honest, yeah, I always tailored it to them, and boy, does that mess you up. Especially in the form of referral. Do you know why? Because this person will come and say, Hey, you charge Chris 3,000. How come I can't get the same 3,000? And that's why now I don't ask what your budget is. I turn the iPad around and say, choose one. That's the easy, it's the easiest thing in the world. No discounts. This is the structure, this is what I'm gonna give you. Well, we want four more videos. Well, that's package number three.

Okay, it works for me. We're gonna get there. All right. That's the answer to another question you just did. Okay. Too many options. Yes. That's another problem. You trying to customize things. Yeah, essentially, that's what too many options is infinity options. Come down and talk to me, and I'll put together an infinity option. Too confusing. People want simplicity. Correct. Less options is more. There have been thousands of studies to show you make more money with the less options you offer because you simplify everything for people. That is correct. We went, I mean, I even made this make as of last January. We had 16 offers. Yeah, I remember. I remember that.

We cut it to three.

I remember that.

And soon we're gonna be cutting it to two. Oh, let's talk about that. Because the last time we had a podcast, I asked you, I said, Anthony, are you ever gonna go below three? You said no. I'm eventually gonna go two.

Why? Because complexity in operational systems and complexity in advertising, it's so easy to say, here's my offer, here's what I have.

So let me ask you a question. Because before you said two, no, now you're going down to two. Will you ever go just one? Probably not. Why? I mean, one is simple. This is most simplistic. Hey, here's my one offer. You simplify.

I'm not gonna say never and I'm not gonna say no, but maybe. If you understand how it just looks simple, there's a gym in Manhattan that charges $10,000 a month. Flat. That's it. That's all inclusive one-off. Yeah, that's what I'm saying.

I might do that one day. Think about it. Hey, listen, it's 20. I'm just giving Randall.

It's just the balls to do it.

You heard what he said, folks? That was my problem. That's why when clients used to come to me and say, Yeah, so what would you trust me? What's a customized offer? Can we do this? Can we do that? And I always should say yes because I was money hungry. I just say, yeah, I was money hungry. I was desperate to close the deal out of disparity. But when I realized the less offers you have, they're inclined to choose one of them. And eventually, when you get down to two or just one offer, there is no more negotiation. There's no more, can you? This is what it is.

So we have too many offers.

Yeah.

We have not structuring pay enough. Correct. What other mistakes do people make?

Did we put not checking the market? You gotta check the market. Um, well, you said too many offers, not checking the pay. Doing that, uh, what other mistakes in terms of structure to not knowing your numbers, your profit, your loss, net, PL. I'll give you one, I'll help you out. Okay. Charging monthly. How's that? And what would you I mean, instead of bi-weekly? On weekly? Is that what you're saying? Instead of on any weekly cadence.

Why?

100%. That's 52 weeks in a year. You're losing out. And people make the mistake? I'm I used to make that mistake. You remember that? I used to make that mistake. You always do bi-weekly or weekly, or every four weeks.

It doesn't make a difference. Or every 12 weeks. As long as you're in a weekly cadence.

Yes, yeah, good job. As long as the cadence is weekly. Yes, because you're missing you're missing out. Yeah.

Guys, did math. 12 months out of the year. If you say four weeks in, that's 48 weeks. You just lost four weeks.

You just you just lost it, bro. And then people are not gonna tell you either. It's gonna be.

The way I figured, I figured this out years ago, we were in personal training. People would buy at a company used to work for uh amount of sessions per month. But then, like, they would be out in the longer months and be like, oh, you used all it, you gotta wait another week. You can't come in for a week because the month's longer. So they lost the cadence, they got pissed off and frustrated. Like, you end up doing your client a disservice. That is true, yes. So you have to also look at it that way.

That's a good point. It benefits both sides, yes. So it's either weekly or bi-weekly cadence, you can receive payment how you want, but as long as it falls in there, correct.

Yeah, the other big mistake people make selling us like as a one-unit item. I'll explain. So, personal training, because it's easier to relate to, selling things in personal training units, buy 10 pack, buy 20 pack, buy one session a week, buy two sessions a week. They're not that the value you're adding, it's just the per hour rate of personal training, and you're gonna go compare it to everybody else. You need to sell transformations, sell programs, as opposed to just per sessions. So instead of me saying it's a session's $100, you're doing two sessions a week, that's $200 a week. Say, all right, that twice a week is our core program, and you're gonna get customized programming, a biometronasa movement screening, you're gonna get free access, it becomes this big bundle. Oh so now it's not comparing it as a per unit breakdown of what you're charging, it's the bundle itself. The transformation side of it is what our advanced commitment is for 12 weeks. It's 12 weeks, we're gonna give you X, 12 weeks to weight loss, 12 weeks to moving better, 12 weeks to get a full-fledged film done, whatever it may be, you're buying a whole bundle of units. So hiring a film director, I want to produce a movie, right? Let's say that for an example. I'm gonna pay you for the movie. That's a bundle, that's all together, as opposed to saying, pay me per hour broken down.

No, no, no, no, no. No, no, exactly. Yeah, no.

It sounds stupid when you put it in the yes, yes.

Now it's clear.

Now I understand what you're saying. Or hiring a contractor to fix your house. Okay. I'm gonna pay you per hour to come in and build drywall for me as opposed to just build me a room. Correct. Correct. Yes, yes. You do the bundle. You're you're getting you're selling the vacation. Exactly. Basically.

Yes.

Like this is the all the whole thing you're buying all together. Okay. Any other ones you can think of?

Nah. I mean that's in terms of hmm. No. No. There's nothing else. No, that's all, that's all. Yeah. What do you think? I got I got one we're gonna argue over. Oh god. There it is. What is it?

Contracts. How does that how does that help your payment? How? Yeah, how? If you already have your price. I think it's a value thing. Okay. And I'm gonna explain. As a consumer, if someone says there's a 12-month or 24-month contract and I'm locked in, I take it as I really know what they're talking about. I'm gonna expect a lot more from it. I'm constantly gonna be thinking about it. And I'm gonna think of it as a deadline. Okay. So I have a 12-month contract. In my head, we're gonna start. At the end of 12 months, like I'm gonna reconsider this.

Yeah, yeah.

If I don't have a contract, it does two things. First thing it does. Confidence. I trust the brand, they're gonna work their asses off. Of course, the script. Confidence, right? I have to prove to you every single bill cycle that we're doing a good job. That's why I don't got no contracts. The second thing it does, there's no more end date in mind. Yes. That end date becomes a definite.

Yes. Now, here's the thing though. It allows, it allows the client to have the freedom to know I can stop this at any moment, but they're confident enough to know I may not. That's a lot to say no minimum lock-in. I just I just had a literally, I literally just closed the deal three days ago, four days ago, whatever it was. And they asked me, is there a monthly lock in? I said, nope. I'm gonna no monthly lock in another one on top of that. Yeah. Guarantees. Oh, see, I don't play with that. That that one I don't do. I do. Because what can you guarantee? You can't guarantee anything in life. Yes, you can. What are you gonna guarantee? Satisfaction. I mean, come on, that's subjective though, man. Yeah. What are you gonna what are you gonna say? I guarantee you're gonna be sub satisfied with the service.

I gave someone yesterday a seven-day for any reason whatsoever, you're not happy over fundia. Yeah, that one, yeah, nah. See, we're launching a new promo. By the time this comes out, it's gonna be live. It's a six-week holiday strong program that we're doing, and we're doing it based off of uh like we're medical fitness, right? So we're wanting the people to move better, be stronger. So as long as they attend their sessions and do the nutrition, if they don't see a 10% improvement in whatever goal we set from the movement screening, we're gonna extend them for up to six weeks longer for free on us until they hit that goal. That's a guarantee you're gonna get there.

Okay. I think guarantees are more suitable for certain industries than others. How you couldn't guarantee is in a film industry. If video marketing, video create, how what can you guarantee? I guarantee I'm gonna make your videos nice. Yeah, that's why we're hiring you. What can you? Yours is different.

No, because you're seeing physical changes, uh, your metrics. You guarantee in without just verbally saying it, you've done it. You mean here with you as a client? What? You had a bad film, you do something like production, whatever, something that comes out, right? Yeah, you redo it. That's a guarantee. You don't charge me for it. But I never did any bad work though. I'm just saying you would. I know you.

Oh, I'm sorry. I thought you said you did, and that's why I was like, what? Oh, I understand what you're saying. If a production comes out bad, I will redo it. For free. I guess that's your guarantee. That is correct.

Okay, yeah, yeah, yeah. And then why not put a 28-day satisfaction guarantee on what you do? How much do you trust it? How much confident would a consumer be? I do. That's why I don't put any monthly lock ins. There's no minimum. Imagine if you said no monthly lock ins, no contracts. I'm gonna give you a 14-day satisfaction guarantee. So for the first 14 days, for any reason whatever you're unhappy, I'll refund the holding to cancel the contract. That's how much I believe in what I do.

Let me tell you something. I love what you're saying because what that does is it makes people the percent the percentage of closing just skyrocketed.

And you know the percentage of people that enact the guarantee? Say it again. You know the percentage of people that actually will get a refund? How many? One to two percent. Yep. But your closing percentage went up 10.

10. Guaranteed. Because no one talks like that. Where'd you learn that from? Probably. I was like, yo, that's Alex kept it real. Shout out to Alex, man, because that's good as shit. And you know, you know what it is? So, pretty much speaking on that, elaborating on that, do you have the guts of balls to take those steps? The more confidence you're you accrue in your business, the more confidence that you build, the higher the chance of closing. For example, going from three offers to one takes a tremendous amount of confidence. Why? Because now you know you're gonna scare off a large percentage of quality leads. They're gonna run because you only got one offer. You can't customize, you can't negotiate. No, this is my one offer. The more offers you have, the mindset is if I have more offers, I'm guaranteed to close. Because I have so many offers someone can choose from. But when you have one offer, you're that means he's very confident, he or she is very confident in knowing I am only looking for a specific client. Only one specific client. Now, let me ask you a question, Anthony. Right now, is that the reason why? Is that fear in you? That's the reason why you won't go on to one offer today. Yeah, definitely. Okay, he kept it real. Kept it real. And I think I can't say now, but in the foreseeable future, yes. I will eventually go to one offer because you eliminate the BS and the conversations and the negotiation, and I want to do this, it's just one offer. This is what I charge 10,000 bi-weekly. Take it or leave it. That's it. Can you afford it? No, all right. Next client. Eventually you get that yes. And everybody that even the leads, once once they see this is what we we were speaking about before. Try price transparency. That scares away a waste of time. You try you have price transparency on your website. So when you see one offer for 10K, if they're on the phone with you, you know you already saw a price. I think I'm going to one offer. Not now. Foreseeable future. I see one offer. No, I'm not. I told you I'm not there yet. Listen, it's easier said than done. I'm not there yet.

But um it hurt initially our business doing it. I know. You see, yeah. But let me tell you the trust you build in people now when you're sitting in the outer front of the house. What have you seen change? Two things. Okay. One thing by accident as a positive. The second thing I knew was gonna happen. One, the thing I knew was gonna happen was the trust in a client coming in.

Okay.

Like the woman I spoke to yesterday and signed up. She's oh yeah, I saw everything once I know I'm getting into. It's an I definitely want to do that one. Okay. Oh, that that's dope. Yeah, because it's right there. It's right there. No, no, you it's closing for you. She just wants to know that when I pitch her, it's the same price and program. It's pretty fire.

That's pretty fire, bro.

And she even said that to me. She was like outspoken, she was an outspoken lady. Yeah, yeah, yeah. She's like, I was seeing if you're gonna offer me something different than what's online. I was like, no, it's the same thing. Oh I appreciate that a lot.

I like that. That's what I'm saying. So being pri tra having price transparency it essentially closes the deal for you. And then one more thing it did in an accident.

What we have legacy clients here that we have locked their rates in and we seldom we like raise them up. So I'm thinking a lot cheaper.

Kind of like Grandfather then, right? Yeah, yeah.

So we had to do a price increase on our legacy clients.

Correct.

Now the pricing is on the website. The people are staying more because they're going and looking, seeing what we're charging now to what they're getting. And there's no more, like, oh, I know what he's charging. Yeah, but it's changing though. But they're still paying less. How? Because it's they're they're way lower. Oh, okay, okay.

Still lower.

So now they're not sitting there arguing, well, you're charging this rate and blah blah blah. It's like, oh, I get I'm gonna keep my mouth cut.

Oh, so your LTV is skyrocketing.

Yeah, so they know what I'm charging, and they know they have a good deal locked in. What's your LTV? Uh, right now we're doing a four-to-one LTV to CAC. Okay. Um that's genius.

That is very simple.

I know what you're charging. I'm a consumer, I've been with the shut my mouth.

Yeah. Because look at those numbers. I don't want to pay those. Yeah, something just don't show me that.

Don't charge me that. I've been like, I'm giving you loyalty, right? That's worth something for a consumer, staying with you for a long time. So you're showing you, like, yeah, look, look what we're charging to look what you're getting.

I think another reason why I didn't do price transparency was competitors. That's another thing.

We are the most expensive studio in the area. And you're proud of it. Yes. Let me repeat that. We are the most expensive studio in the area, but we will go above and beyond and do things they want to do.

But the value.

Yeah, man.

There's no there's no competition. And let me just elaborate on what he's saying. Being the most expensive studio in the area or the most expensive in your business, go, and it comes with something going above your employees going above and beyond to offer that service to that client. You know what that comes with in your first maybe five to ten years? The owner, the COO takes home little to nothing. Please understand as an entrepreneur, if you're gonna have the best service around, but charge an arm and a leg for it in order to give that service to the client, you're gonna come home with almost nothing. You're netting almost nothing. Everything has to be dumped into the business, and then later you see that return. And you have to be okay with that. It's or you switch it, and this is one of the questions, or you go more clients, cheaper price. But then you have to be the cheapest, and you're always cutting. Exactly. And that's the problem. And that's the way that yeah, your price structure. So these are the key things are. So let's go through them one more time into the closeout. So, number one, I believe check the market, check the structure, what you want to take on, what's your bare bottom. Number two, make sure your contracts it's that's subjective too, but no monthly lock-ins. I don't think any most people don't do that anymore, though, right? People do. You often though, you think so? Yeah, it's just a bad yeah, it almost comes, and I think I lost a potential client because of that. I almost had him, and he said, What is this, month to month? I said, No, you got to do six months with me. He's okay. I'll call you back. He ran away, and I think that's the reason. So I don't do monthly lock ins. And if you're confident enough in your value and what you're um giving the service that you're providing, you shouldn't have any monthly lock-ins. What was number three, Ant? Bill on a weekly, not monthly cadence. Yeah, that's like one-on-one, though. You should know that because you're getting screwed out of a month for everything. Yeah, you're unique service. You should know that. Yeah, that's but it's good if you don't. You learn now. Uh, what was number four? Sell total package, like total transformation, total package. Don't do it as a per unit, a per hour basis. And I think you give a discount if they buy. Remember you, what about that? Remember if they if you pay for the year in advance, you get a certain discount. So discount. Yes, remember? You get like 10% if you pick.

Oh, you dropped that? Yeah, the year now, you buy a year out up front, and we give you value add-ons. So you'll get additional stretch sessions, additional nutrition, the protein, creatine, the pyro. So we just it's making a really big offer. I see what you're saying inside of one. But like you said, I learned from this. You never discount.

Yeah, I was that was about to say number six. Never discount your price. Never discounting your price leads to people asking for favors and what about this price? And this guy got this price. Stay there. And you eventually the key thing that I learned this whole year about business is stick to your price and standard. Eventually, you'll find your crowd. You're gonna find a lot of people, oh, it's too expensive, this and third. Eventually, people will come to you if you stay with that price. But once it starts to fluctuate, you start to crack a little. Okay, I'll offer you this, I'll give you a thousand for now. Your prices fluctuate, they go all over the place, and then the reputation is bad. He only charged me a thousand, he's charging you three thousand, the whole model gets destroyed.

I'm gonna add one more. Because you're the most expensive, go above and beyond. But that's a because now you have the hours. As opposed to, let's say you're charging four thousand dollars and the guy next to you is charging two thousand dollars, but he has to go back to back. Now you have double the time span, yeah, spend time with that person, like maybe spend an additional block with them. So you can really make sure you deliver quality. Oh, because your brand comes in now and you can showcase how much better you could be to every spec and every dustman. That's you wouldn't that's referral city right there.

And to pigle and to piggyback on it, here's one that I learned this year. And just I'm not ashamed to say, guys, like again, this show is about being truthful and being accountability. As a business owner, one thing that I was trying to do is retain as much money as possible. Also, because of financial issues in the initial part of my career. But as I passed those problems, I just tried to retain as much as possible and thought maybe I can get by if I hire C or B players. Be prepared to spend money. You cannot try to retain everything. It's better to go home with 50% less and knowing that I spent money with A players that are going to execute and go above and beyond than to go home with 50% more and be doubtful with the people you hired if they're going to go above and beyond. Your business will fail, my friend. Complaints are going to come in from clients. Anthony, you transitioned from B players to A players. Solely, you look for A players now. What changes have you seen when getting money from clients and utilizing that in your business to hire A players?

Or be able to charge more. Exactly. Because people come and they go, why is this so expensive? I always make a joke with my assessments. They look at our pricing and they go, I'm probably only going to do this for a little bit. I was like, sure you are. And they're like, what do you mean? I was like, I'm going to tell you the truth, and this is genuine. You're going to sit here and you're going to tell me you're only going to do this for eight to ten weeks, whatever, because that's all you can afford. You're going to fall in love with it, and you're going to be here for four years. Yep. Because everyone does that. And they go, really? I was like, don't ask people on the floor. How long are they here? Go ahead. Like you'll see. You're going to love this and you're never going to leave. You just gotta be confident, man, in what you're doing. But people, when they go, I see them years later, I made the joke. Ah, two weeks goes by. It's a really long time span, right? Two weeks is two years? They laugh.

Yeah, but that's because you're confident in what you're serving, what you're giving. I know what we're delivering. Say it again. I know what we're delivering. You can't get it. But that's what I'm trying to say. You're confident. There's no doubt at all. There's no crack in your armor at all, right? You believe in your product 110%.

For our industry, we're the best. Why? That's strictly because you're not going to get the quality and delivering of service that you're going to get from anyone else. Then how were you able to do that?

Why can't another gym owner do that? How were you able to do that?

Because I was charging more to pay more, so I can offer my trainers more money than they'll get anywhere else.

I just I knew he was kind of.

On top of that, I'm able to now hire things to get them more credentials. Exactly. What other what are the fitness studios pays a nurse practitioner to teach education and sign off on everything? Yep. What are the studios spend thousands of dollars working with the Department of Labor to get an apprenticeship program done for fitness instructors?

RD.

Like, what are the what are the studios hiring a registered actition over a nutritionist?

Exactly.

We close every Thursday from one to two to do education. What are the, you know, we I always tell people like we take maybe one out of every 50 trainers that come in the door. And they're all certified. We take one out of 50. With a thousand hours in training. Yeah, and they have to work there. Like they have to be good.

Yeah.

This is They're being tested. Annual test, test in the door. It's a round one will interview, which is face to face. Yeah, yeah, yeah. Then it's round two, it's a dirty question test. Oh yeah, here's your pen and paper, go sit here, take a test.

And a lot of how many fail? How many fail from that one?

You see? And then we go on the floor and we do squat bench deadlift and we pretend to be a client and we look for queuing, we look for how you stand, we look for how you hold yourself. Wow. And then you have to go through that. That's vigorous. When you get hired, you start at minimum wage, so $17 an hour, and you have two weeks to prove that you can be here. So it's two-week gate window where you're shadowing, mocking, a program you see to keep up with the pace. And then after that, then you start your job.

And this business model and this structure, have you just implemented most of this as of recently? The last two years. Oh, okay.

So while it's been I've always I've always had testing, even when I first opened. Okay. I knew that from the get-go. I would act like a client and have them go on the floor with me. Yeah. I can't, it was always made, always laughed. All these trainers come in and they go, I've never had to do this before. It's too much. It's like school. Wow. I just show them my credentials. I'm like, yeah, you mean your certification you bought online? Wow. But that's why you're the best.

You have to put these things in place to test people.

They're on the floor with our medically complex clients.

Yeah, you can't get to know what you're doing. Yeah, yeah, 100%. You're right. No, no, no, you're right. And that's another reason don't be afraid to fire. These are all things that you learn on your journey, though. You have to be afraid to fire. So those are the things that you need to learn in order to structure your business correctly when it comes to pricing. If you have any questions, leave it in the comments below. Anthony, take it away.

Make an offer so good.

That they talk about you at dinner. Throwing those encheladas, man.

Don't forget to like, subscribe, share. See you next time. Peace.