BagerBach

$100M Offers

by Alex Hormozi

Amazon

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Rating: 8 / 10

Thoughts

This book attempts to help you solve two important problems for entrepreneurs: It wants to help you get more clients and more cash.
The book is short, but very dense in knowledge. I learned a tremendous amount from it. Most of it is probably basics, but I didn't know them, so it was of huge value to me.


Make people an offer so good they would feel stupid saying no. — Travis Jones

From this book, I learned a lot about

  • Creating an Offer
  • Finding a market
  • Why you should charge more
  • How to Create Value in Your Products and Services

Each of these topics — and much more — are covered in detail in the book. Below, I will summarize the most important points.

Selling is a lot more than just offering a product or service. It's about creating value.

Creating an Offer

Creating an offer is one thing. Creating a great offer is another. Before we look at how you can do that, first we must define what an offer is.

An offer is the goods or services you provide, how you accept payment, and the terms of the agreement.

Let there be no question that your offer must be fantastic if you are to do well.

When you are creating an offer, the value should far exceed the price. This protects you from the undercutting race to the bottom. Your returns are much greater because you're the only one there. If people can go somewhere else for what you're offering, they're buying by price, not value.

So, what constitutes a great offer?

  • there are no products like it, so customers cannot go elsewhere to get the same thing
  • it has an unmatchable value proposition
  • a premium price
  • an unbeatable guarantee with a money model (payment terms) that gets you paid and gets you new customers

When you are creating your offer, there are 4 ways to boost value and drive sales. One is to create Scarcity, another is to create Urgency. You can also offer Bonuses or Guarantees.

Instead of discounting your main offer, add bonuses.

Creating a 'grand slam' offer

$100M Offers describes a methodology for creating offers, in which there are five steps.

Step 1 — Identify Dream Outcomes

Here, you make a list of the dream outcomes that people have. Don't sell the plane ticket, sell the vacation.

You aren't selling a weight loss plan, you're selling ✨20lbs lost in 6 weeks✨. There's the big dream outcome — losing 20 lbs, and there's the time delay of 6 weeks.

Step 2 — List Problems

Write down the problems customers may face. Do your best to accommodate them (steps 3-4).

Step 3 — List solutions

After creating a list of potential problems a customer face, you create a list of solutions. You should frame this list as how-tos.

For example, here's a problem → how to solution:

It takes too much time to buy healthy food → how to buy healthy food quickly.

Step 4 — Create Your Solutions Vehicles

Think of all the solutions you could provide to solve the problems your customers face. This is what you're selling. Think of literally any possible solution. What might enhance your offer?

This makes your customers go, “Do I get all that?!”

Try to solve every possible perceived problem to help customers and increase conversion.

Step 5 — Trim and Stack

We now have a bunch of lists. It's time to trim and stack. Remove the low value, high cost items. Then, remove the low cost, low value items.

Scalability and 1-to-many is good, but there's still a place for the less scalable stuff, like 1-on-1 and 1-to-small-group. But make sure that those are high cost, high value add.

And now, we put the bundles together into a high value deliverable.

What to do about offer fatigue

Over time, offers fatigue. Once every potential prospect in some population/community has seen it, what do you do? You can potentially rename it. You don't change the offer itself, just the wrapping paper. This refreshes it.

Naming your offer — the MAGIC formula

The MAGIC formula from $100M Offers for coming up with headlines.

  • Make a magnetic reason.
  • Announce the avatar.
  • Give them a goal.
  • Indicate a time interval.
  • Complete with a container word.

Not all are required. Typically, you'll use 3-4. Using all will make your headlines too long. Brevity is best.

Just remember: the only way to know which headlines work is to make ten and test them. And: Making your headlines rhyme is good.

A Magnetic Reason

Act like a fraternity party planner. Any reason is good, as long as you believe it. We start the name with this. It should answer why you are making this offer, and why you should respond / what's in it for you.

Announce the Avatar

Specify your target. Who is it for?

Give Them A Goal

Articulate your prospects' goal — the more specific and tangible, the better.

Indicate a time interval

Mention the duration to expect — how long it takes to achieve results. But be careful when you're making quantifiable claims (weight loss or income gain).

Complete with a container word

The word denotes that it's a bundle of multiple things.

Examples: Challenge, Masterclass, Program, Experience, Shortcut, Launch, System, Mastermind, Game Plan, Solution

Finding a Market

You don't need to create a demand, you just need to channel an existing one.

You may be tempted to think that you simply picked a bad market if you initial offer fails. Don't quit, commit to your niche. Even if you don't succeed at first try until something works.

Another piece of advice is to Know the exact type of person you are selling to. This helps you understand them and how to communicate with them.

Be in a growing market with unmet needs in one of these categories:

  • improved health,
  • increased wealth, or
  • improved relationships

Health, wealth, and relationships are markets that will always exist. There are many pains for humans in those markets, and it hurts a lot — so there's a very high demand for solutions.

When finding a market, here are four indicators to look for

Pain

For the first indicator, there must be a massive pain. Customers should be suffering — and you should be offering a solution. Make your potential customers see life without the pain — with your solution.

The pain is the pitch: if you can put words to the pain accurately, they'll buy. The bigger the pain, the higher the price you can set.

If you could only have one advantage, a starving crowd would be a good one. There must be demand. If customers are starving for what you're offering, it doesn't matter if you are mediocre or if you're expensive, they'll buy.

Purchasing power

The second indicator of a good market is purchasing power in prospects. If your prospects can't actually afford what you're offering, it won't work. Serve those who can actually pay you.

Easy to target

The third indicator of a good market is that prospects are easy to target. If they all gather in one or few places, it's pretty good. However, if they're scattered and hard to reach, it'll be very hard to create offers.

Growing

The fourth indicator of a good market is that it is growing.

You should niche down

Niching down will make you more money because it allows you to charge more.

As illustrated in $100M Offers, this is what niching down allows you to do: Imagine that you are selling a time management course.

  • Time Management, $19
  • Time Management for sales professionals, $99
  • Time management for outbound B2B sales reps, $499
  • Time management for outbound B2B power tools & gardening sales reps, $1997

Which illustrates what happens if you niche down; you can charge more.


Ultimately, the market you pick is your choice, so choose wisely. However, while having a great market is an advantage, but not a necessity — you can make money in an average market.

Why you should charge more

Your products should always over-deliver. Especially when you are charging a premium. Charging a lot isn't the full story; the value of your product or service must be premium too.

Even if your offer costs nothing to fulfill, it can still be priced at a premium — it's about value, not price.

The goal is to charge as much money for your products or services as you can and have people agree to the price.

Why you shouldn't lower your prices

Don't lower your prices, instead, increase your offer value

Making your price match the value (so people buy) is not done by lowering your price. That's a slippery slope and not the game you want to play.

If there is a price to value discrepancy, meaning price doesn't match value, focus on raising either until they do. Never lower.

Decreasing prices is one of the worst things you can do for your business and customers

Decreasing prices are one of the worst things you can do for your business.

  • customers aren't very emotionally invested
  • it decreases perceived value
  • customers aren't invested, so they get worse results
  • attracts customers who aren't satisfied until it's free
  • destroys your margins, so you cannot provide a good experience, hire the best people, invest in your people, pamper your clients, invest in growth, invest in more locations or more scale, or do anything else to help more people.

Why you should increase your prices

Increasing your prices is one of the best things you can do for your business and customers

Increasing prices is much better. Avoid the race to the bottom.

  • clients are more invested
  • perceived value of your service increases
  • your clients get much better results because they are more invested
  • customers are easier to satisfy, they're better, it costs less to fulfill, and they're more likely to receive and perceive most relative value
  • you multiply your margins because you have money to invest in improving everything about your business.
  • And this also makes it much more enjoyable for you

Higher price means higher perceived value

If you charge more, you will have a higher perceived value.

How to Create Value in Your Products and Services

$100M Offers presents the value equation as an equation which describes value. Manipulating the variables herein allows you to increase the value of your offers.

To drive value, you must increase or decrease the variables in the value equation. Increase the dream outcome and the perceived likelihood of achievement, and decrease perceived time delay between start and achievement, and decrease perceived effort and sacrifice. So you have to know

  • what you will make
  • how you'll make it happen
  • how long it'll take
  • what is expected of you

The Value Equation

Dream Outcome×Perceived likelihood of achievementTime delay×Effort and Sacrifice \dfrac { \text{Dream Outcome} \times \text{Perceived likelihood of achievement} } { \text{Time delay} \times \text{Effort and Sacrifice} }

Dream outcomes

Everyone has a dream outcome. A desire. A goal. It's a burning want. It's what bridges the gap from where they are to where they want to be.

We need to channel that desire. We need to depict the dream back to them, so they feel understood, and then explain how our solution will get them there.

People want to be seen as beautiful, powerful, be respected, loved, and they want to increase their status.

I feel like the first four are under the last; increasing status.

There are many paths to achieve any of these. Beauty can be improved through fitness, make up, or surgery — and so much else. These channel the desire.

We value desires by that which gives us the most status.

Talk about how prospects will increase their status.

Frame benefits in terms of status gained from the viewpoint of others.

Perceived likelihood of achievement

People want certainty. They want results, guaranteed.

To increase the value of our offer, we must communicate perceived likelihood of achievement. We can do that through messaging, proof, what we include (and don't) in our offers, and our guarantees.

Time delay

A good way to drive value is to reduce the time between the customer making the purchase and achieving their dream goal.

There are both long-term outcomes and short-term experience. Often, there are short-term experiences that occur on the way to the long-term outcome. They happen along the way and provide value.

The short-term experiences are like carrots on the journey. They make the road bearable and more likely that the customer achieves their dream goal. It's like small milestones.

We want clients to have a big emotional win as close to their purchase as possible, which gives them emotional buy in and the momentum to reach the finish line.

Make fast wins for your client. This helps them to see that they're on the right track.

Fast beats free. People pay for speed.

Effort and sacrifice

These are the effort and sacrifice costs that happen along the way. We want to decrease the amount / pain of these.

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