The Game with Alex Hormozi

7 Business Concepts You've Never Heard of (But Will Make You LOTS of Money) | Ep 675

99 snips
Feb 21, 2024
Discover seven pivotal business concepts that can supercharge profitability and expansion. Learn how Lifetime Gross Profit and Customer Acquisition Cost play critical roles in financial success. Alex breaks down essential metrics like Return on Invested Capital and Payback Period, making them accessible for entrepreneurs. Explore Sales Velocity's influence on revenue and understand the Total Adjustable Market's significance for growth. Packed with real-life examples, this discussion offers invaluable insights for anyone looking to scale their business.
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INSIGHT

LTGP:CAC Ratio

  • Lifetime Gross Profit (LTGP) to Customer Acquisition Cost (CAC) is the fundamental economic unit of any business.
  • A high LTGP:CAC ratio (e.g., 20:1) indicates a scalable and attractive business.
ADVICE

Calculating Customer Lifetime

  • Calculate customer lifetime by dividing 1 by the churn rate (1 / churn rate).
  • For example, a 10% churn rate implies an average customer lifespan of 10 months (1 / 0.1 = 10).
ADVICE

Calculating Gross Profit

  • Calculate gross profit by subtracting the cost of goods sold (COGS) from the selling price.
  • For services, subtract the cost of delivering the service from the price charged.
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