Alex Hormozi: The SIMPLE FORMULA that has DESTROYED BILLION DOLLAR BUSINESSES

The video discusses the importance of understanding the interplay between price, value, and cost of goods in a business and how it can impact the success and value of the company.

This video by Alex Hormozi was published on Oct 20, 2021.
Video length: 07:09.

In this video, Alex Hormozi discusses the three most important lines that every business needs to understand:

price, value, and cost of goods. He explains the interplay between these lines and how they can dramatically impact a business's profitability and value. Hormozi uses different combinations of these lines to demonstrate how businesses can increase customer surplus and create a viral business.

He emphasizes that understanding these three lines is crucial for building a successful and scalable business.

• Alex Hormozi emphasizes the importance of understanding the interplay between price, value, and cost of goods in a business.
• Every business has three lines: price, value, and cost of goods, and the interplay between these lines can dramatically shift a business.
• The goal is to create a business that provides excessive value, costs almost nothing to make, and creates a big customer surplus.
• The bigger the discrepancy between price and value, the more viral the business will become.
• Understanding the interplay between price, value, and cost of goods is the trick to building a fortune in business.

The SIMPLE FORMULA that has DESTROYED BILLION DOLLAR BUSINESSES - YouTube

Introduction

• Alex Hormozi is an entrepreneur, investor, and CEO of Acquisition.com.
• The video discusses the importance of understanding the interplay between price, value, and cost of goods in a business and how it can impact the success and value of the company.

The Three Lines

• Every business has three lines: price, value, and cost of goods.
• The interplay between these lines can dramatically shift a business.
• Customer surplus is the excess between what they pay and what they get.
• The higher the surplus, the greater the distance between price and value, and the more viral the business will be.
• Netflix is an example of a business that priced its service low, but its cost of goods was still lower, resulting in high gross margins.

Business Scenarios

• Business scenario one is a business with a high customer surplus, low marketing needs, and thin margins.
• Business scenario two is a generic mom-and-pop business with decent margins and value.
• The goal is to create a business that provides excessive value, costs almost nothing to make, and creates a big customer surplus.
• The bigger the discrepancy between price and value, the more viral the business will become.
• The ultimate goal is to have a business with a quadratic way of expanding through word of mouth.

The SIMPLE FORMULA that has DESTROYED BILLION DOLLAR BUSINESSES - YouTube

Conclusion

• The trick to building a fortune is understanding the interplay between price, value, and cost of goods.
• If you can think about your business using these three lines, you can build a fortune.

The Importance of Understanding Price, Value, and Cost of Goods in Business

• Having a surplus of word-of-mouth referrals is crucial for business success.
• Providing remarkable or noteworthy value is key to generating word-of-mouth referrals.
• Lowering the cost of goods sold to a significant degree can increase profit margins.
• Having a product or service with high value and low cost can lead to significant financial success.
• Understanding the interplay between price, value, and cost of goods is essential for creating value, margin, and ultimately taking home the most money.
• Using this simple framework can help entrepreneurs plot their own business and their competitors' businesses to create value and margin.

Watch the video on YouTube:
The SIMPLE FORMULA that has DESTROYED BILLION DOLLAR BUSINESSES - YouTube