Ramit Sethi presents the "pay certainty technique," a simple framework to eliminate 50–75% of bad business ideas by assessing whether target customers have (1) the ability to pay and (2) the willingness to pay. He walks through examples (proofreading, men’s styling for different age groups, grant-writing for nonprofits, restaurant marketing) to show how the test quickly rules out poor markets and emphasizes validating remaining ideas by speaking directly to potential customers.
Chapters
This is a very simple yet powerful framework that I want to teach you today that will let you eliminate 50 to 75% of your ideas. And these are the bad ideas, the ones that sound good on paper but will never actually pay. It's called the pay certainty technique. It's very simple. It makes certain that you will get paid. Here's how it works. When you're thinking of your idea, remember, you think of your skills, turn them into services, and you think of who the customer is. For each, you're getting very specific 40 to 45 year old women, 35 year old senior executives, etc. And you say, would these people have the ability to pay? In other words, do they actually have enough money and do they have the willingness to pay? In other words, would they even be willing to pay for this? So let me give you an example. People come to me, they ask me, ramit, I want to be your proofreader. Do I have the ability to pay? Yes, I have the money. Do I have the willingness? Hell no. I would never pay for that service. Here's another example. Let's say that you're a really good stylist, right? You're amazing at dressing men. All right? So let's take three potential customers. You have 18 year old guys. Would they pay? No. Do they have the ability to pay? No, they don't have any money. Do they have the willingness to pay? No, they don't care. They dress in T shirts, they go to college. Let's Skip ahead to 65 year old retiree men. Do they have the ability to pay? Yes, they have the money. Do they have the willingness to pay? No. They're wearing Hawaiian shirts at the golf course. They don't give a damn. Now let's go to 35 to 40 year old senior executives or executives. Do they have the ability to pay? Yes, they have the money. Do they have the willingness to pay? Yes, they do. For them, looking good is important to their corporate careers. You see how right away we have eliminated the vast majority of clients in that idea. That's exactly what you can do with your own ideas. You will quickly discover that this pay certainty technique allows you to eliminate all these bad potential clients. For example, I have a lot of students who come to me and say, ramit, I want to write grants for nonprofits. And I just shake my head. They say, do they have the ability to pay? No, they don't really have that much money. Do they have the willingness to pay? No. Most nonprofits will not pay anyway even if they have the money. They prefer to do things like barter. Now, is this a broad generalization? Yes. Are there exceptions? Yes. Do I want to spend all my time pursuing a potential idea that has a very little chance of succeeding? No. Another idea that I constantly hear is people saying, I want to teach people who run restaurants how to do better marketing. And I say, okay. I smile. I say, go out and validate it. Go talk to 10 to 20 restaurant owners. What they quickly discover is that restaurant owners usually don't have the ability to pay because it's a very tight business and they almost never have the willingness to pay. I tried to give some advice to a coffee shop owner where I wrote almost my entire book. I said, hey, man, have you ever thought about doing any email marketing? Collect their email, send them a coupon every Friday. And you know what his response was? I know I should. I'm too busy to do marketing. Classic for restaurateurs. Terrible market. But you would only know that if you went out and validated your idea, first with the pay certainty technique, and then second by actually going and talking to the market. So this technique seems deceptively simple. Do they have the ability, do they have the willingness to pay? But when you apply both of those and you are brutally honest, you will quickly be able to eliminate 50 to 75% of the bad ideas, knowing that these remaining shining ideas have passed the test and are likely to be profitable.
