The Game with Alex Hormozi

The Value Equation - How To Reverse Engineer Pricing | Ep 181

4 snips
Feb 18, 2020
Discover how to enhance the perceived value of your product by removing barriers and friction for customers. Learn about the four key components of the value equation and why real value lies in alleviating pain points. Alex shares intriguing examples, like comparing Xanax to meditation, to illustrate these concepts. Delve into strategies that focus on minimizing obstacles, improving customer experience, and maximizing retention, demonstrating how a smooth journey can lead to lasting loyalty.
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INSIGHT

Value Equation

  • The value equation has four parts: perceived outcome, likelihood of achievement, time delay, and effort/sacrifice.
  • Focus on the bottom part of the equation (delay and effort) to increase value.
ANECDOTE

Xanax vs. Meditation

  • Meditation and Xanax offer similar perceived outcomes (relaxation), but Xanax has higher value due to minimal delay/effort.
  • This explains why pharmaceuticals outperform meditation in market value.
ANECDOTE

Netflix Example

  • Netflix succeeded by minimizing delay/effort, not by changing content.
  • They made consumption seamless, increasing value without altering the core product.
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