Alex Hormozi breaks down the value equation: dream outcome, perceived likelihood of achievement, time delay, and effort required. A customer pays more when results seem certain, arrive fast, and demand less work. Liposuction costs more than a gym membership because it delivers faster with less effort.
The value equation. You have to understand how to create value so that you can charge as much as possible. There's 4 elements that— one is the dream outcome, the perceived likelihood of achievement. Below that you have time delay, and then effort and sacrifice. The dream outcome is what I would say separates whether someone's even interested in your category of offer or not. So let's say weight loss. You can have a $5 PDF and a $50,000 liposuction thing, but they both fundamentally solve the same problem, which is that they don't like the way their stomach looks. Perceived likelihood of achievement. There's one surgeon just fresh out of medical school, and there's another physician who's got 10,000 surgeries under his belt. Who do you go to? The guy with 10,000. Why? It's the same procedure, but the perceived likelihood of achievement is significantly higher, and so you pay for that premium. Time delay— how far between when they buy and when they get personal training. They might get their six-pack 12 to 18 months later, whereas if you do liposuction, you're gonna go to sleep and then you're gonna wake up and you're gonna be significantly thinner. Time delay is so much shorter because of that, it increases the value overall. Effort and sacrifice— which effort are things that you have to begin doing that you don't want to do as a result of a purchase. In the personal training example, you got to be sore, like you got to stop Taco Tuesday. So it's both sides of the same coin, effort and sacrifice.
