Hello!
Just read 100M$ Money Models by Alex Hormozi and took some book notes. I thought it was kind of pointless for me to keep these notes only for myself, so I decided to share them online. Here they are:
3 Main Factors to Make $$$:
CAC: avg cost to acquire a customer. Includes ad spend, labour, software, etc.
Use lead magnets and attraction offers to lower CAC
FREE drives down CAC by a lot, slightly lowers lead quality
Discounts (always 50%+) drive down CAC, smooth upsells. Generally don’t discount core offer.
CAC can only go down so much, will be similar to competitors
GP: The amount of $$ you get from a customer, after deliverables cost
Gross Margin = (Price Client Paid / Gross Profit) * 100%
Increase GP with more offers, downsells, continuity offers
Payback Period: Time until GP ≥ CAC
To reduce payback period: Make more offers.
(5) Times to upsell (in chronological order): immediately, net step, big win, halfway point, last chance. (Notice how most upsell opportunities are early on.)
Client Financed Acquisition: (3 levels)
LTGP > CAC (bare survival)
30 Day GP > CAC (can pay back credit card in 30 days)
30 Day GP > 2 * CAC (unlimited scale) (2x is the minimum)
You should keep working at the money model until you can get to level 3.
Money Model
Series of offers designed to get more customers, pay more, in less time.
ex: Rental Car - The game is all optimized to make more money.
Upsell: bigger car (because reserved one isn’t available)
Upsell: Waive late fees (escape a made up fee lol)
Upsell: Premium insurance upgrade?
Downsell: ok… So just the minimum then? (called minimum, like you need to have it)
Prepay for gas?
Late return
Reward Program
btw Money Models aren’t patentable, there’s no IP. You just need to make crazy $ before everyone else catches up, then change it up again. Innovators can make like 80% of the money before the marketplace catches up.
4 Types of Offers: Attraction, Upsells, Downsells, Continuity
First, we talk about attraction offers, which are designed to get customers in the door.
1. Attraction Offers (6)
Win your money back
Set a goal for customer + give instructions. If they do it → get money back (aka rollover upsell)
Good for businesses that require clients effort
Great cash flow + onboarding + they better results
Works with new, current, and previous customers
Actions/goals customers need to do need to be easy to track
Actions customers take should: help them reach goals or advertise my business
Sales:
Ask them if they want short or long term goals? This will kickstart long term.
Tooshbrush analogy.
Skin in the game: rollover upsell
Everyone is a winner: do rollover upsell at midway point and end of the program
Giveaways
Give away 1 or 2 copies of my premium offer for free. Then, sell everyone else a discounted version of that same offer, or a downsell. Of course, always have scarcity and urgency
The grand prize needs to be epic.
Ask for contact info, ask qualifying questions, require specific actions (attend call/event, make a post, enter a group) = free ads + more loyal customer
Key thing: contact everyone else privately with the promotional offer
Always have a downsell available as well
Decoy Offer (FREE)
Advertise a free/smaller offer, but sell them a much better premium offer instead. Offer both options, but emphasize on the premium one (assumed close).
Make the contrast HUGE
Present premium offer first. If they really want the decoy: “Are you here for free stuff or do you want lasting results?”, then: “Which do you think will get you to your goal faster?”. Then assumed close. Get excited about the premium offer
If they choose the free offer, add a few bonuses from the premium offer too.
Buy X get Y FREE
Instead of using a discount, increase price of each item, but give away stuff for free along with the purchase.
ex: “Buy 1 shirt (20$), get 2 FREE” instead of “Buy 3 shirts at 33% off (6.67$ >
10$)”ex: “Get 6 months, get 12 months FREE”
You can mix and match the free stuff. Always try to give out more free things than paid things.
Works really well for business that generally only sell once
Also, keep upselling to customers who prepaid long durations
Pay Less Now or Pay More Later
Gives the customer the option to pay later at full-price - ONLY if they like it, or pay now, at a discounted price with bonuses.
Get their card on file, only bill them if they think they got results after getting the thing
(1) If they take the pay later option, THEN: (2) offer to pay now + give them bonuses
The “pay now” part is there to pay for CAC
There should be a clear YES/NO result. There need to be clear conditions for getting $$ back.
Recurring Business ex: Pay higher rate 30 days later OR pay lower rate today but keep it forever + add in bonuses
Pay special attention to people who didn’t get the results, help them to avoid refunds
Free with Consumption
Basically, you get people to consume 20min to 5 days worth of content → facilitates big sales.
ex: Events: Day1 - Give, Day2 - Give/Pitch, Day3 - Repitch/Give
ex: 3-5 Day Challenges. VERY VERSATILE: can be in-person, online, 1 to Many, 1on1, etc.
Basically, do CLOSER framework: Our Story, Ask about goals/obstacles, Relate to customer, How we can help, What we’ll cover, Ask if they might be interested in working long term
BREAK BELIEFS (3): blame circumstances, blame others, fear -
TEACH CONCEPTS NOT TACTICS.
5 Steps: Current beliefs, Why it’s wrong, New belief, Why it’s right, Proof
Overcome beliefs + value
Overcome beliefs + value
Pitch
Repitch + Q & A
ex: Webinars - Same steps as the 3-5 day thing, but condensed into 90min. (Benchmark: Try to close 10% of people who are there live.)
Cool thing about content: you can post across many platforms and insert as steps in sales process
Upsells - basically anything you sell next to your customer.
Upsell Offers
Classic Upsell
You simply do a A/B sale on the next thing they would need.
Just offer the next thing they would want! They’re gonna buy it anyway!
“You don’t want anything else do you?” (Implied sale) ← VERY POWERFUL
Menu Upsell
It’s a 4 step process where you prescribe things for the customer to buy. Implied close.
Unsell: Delete items from the list that they won’t need (builds trust)
Prescribe items they do need (make it feel personalized)
Ask which they prefer (A/B sale), implied close ← VERY POWERFUL
“Do you just want to use the card on file”? ← VERY POWERFUL
Bonus: employees love this. Even better, you can actually have the employee pretend to be against the system by recommending competitor products or giving items for free. (help a homie)
Extra (The Economist Play): If you have 2 options and you want customers to pick the most expensive one, put a middle option to nudge them towards the bigger option. ex: place a middle option that’s very close (or equal) in price to the expensive offer, but much worse in comparison.
Anchor Upsell
You show a very expensive item first (5-10x more), then: present a much cheaper similar option that has a few less extra features.
Treat the anchor upsell as a serious offer, watch the customer gasp
Come to their rescue: offer a similar thing that’s only slightly worse, and a lot cheaper
Rollover Upsell
Apply customer credit as a discount for another thing over a long period of time.
Rollover Upsells can be used in so many different situations:
Use as part of a Win Your Money Back initial offer
Re-engage old patients with a “winback” campaign
Save my own upset customers
Steal other people’s upset customers 😏
Or just to upsell regular customers
Always add urgency to rollover upsells (One-Time Only)
Also, rollover upsell should only discount up to 25% at most of the new offer
Bonus: Gift Card Play: Advertise a 90% off gift card. Limit to 2 per customer. So the existing customer pays for the card, I ask who it’s for + intro. When referral comes in → rollover upsell.
If people aren’t taking my offers → use downsells to save people who otherwise wouldn’t have bought anything.
Downsells
Payment Plans
Just spread out the payments. You can use as a way to test out your current pricing in the marketplace, since you always show the more expensive option first, then show payment plan option to lower the price after.
There are 7 specific steps to payment plan downsells:
Reward for payment in full (give a discount), “Would you like to save some money?”
Offer 3rd party financing, credit card, layaway options. credit card ex: “Would you rather I decide your payment plan or you decide?” → “Ok, use a credit card. That way, you can pay the credit card company over time as you choose; longer than you have with my payment plan.”
Layaway: make customers pay completely before they get the product.
Half now, half later? “What’s the most you can pay today?”
“On a scale from 1 to 10, how bad do you want to do this?” YES → Keep going. NO → feature downsell
Offer 3 payments
Offer to evenly spread payments
Offer a trial with penalty
DURING THE PAYMENT PLAN:
Offer them to pay the whole thing upfront to get the original discount amount instead of the payment plan extra.
Charge them on paychecks days!
Alternative technique - Seesaw Downsell: “Would you rather have giant monthly payments or tiny ones?” → Tell them the more they pay upfront, the smaller monthly payments they’ll have. This frames the payment plan as a negative.
Free Trial With Penalty - “Call a Free Trial”
Let a customer try product/service for free, as long as they meet my terms. If they don’t meet the terms, you charge them a penalty fee. Gives them added incentive to follow through (very similar to Win Your Money Back).
ALWAYS get their ID and card before starting the trial. I ask for the ID, then fill out the form. When I’m done: “I’ll trade you for whatever card you wanna use.” → Get card to complete their profile. Just say “But that’s how we’ve always done it + Shrug”
Ask “If this program got you results, would you stay long term?”
Then explain the fees. “This is the best way I can get you results and keep it free for you. Best of both worlds.” Force them to do: meetings, testimonial, advertise, referral.
Angry customer (after trial): be more mad than them, then sell a “better fit” thing (rollover upsell)
Feature Downsells
Basically, you remove features from your offer and lower the price.
What you can downsell: Quantity, Quality, Speed, Entire Features, DFY - DWY - DIY, Guarrantees, Personalization, Provider Qualification, Content Format
Make sure to remove the highest-value thing first, so they see their value, and then upsell themselves. ex: The Guarrantee
If no go → Make a huge decrease in price + remove mid features = more value
Do temperature check after 2 downsells (like payment plans)
Generally, name the cheapest combination “The Minimum” “Ok, so nothing more than the minimum package then?”
Extra: If existing customers aren’t using all the features, you can feature downsell them by removing what they don’t use. Builds insane loyalty + they’ll never churn out.
Barter with reviews, testimonials, referrals, free promotion (it’s a different offer)
Next, we get into continuity offers…
Continuity Offers
Lets you significantly customer LTV and get more through the door since the payment is smaller. Recurring revenue is great to raise entreprise value, also great to keep your company stable. However, continuity takes a while to get $$ from customers. Also, make sure not to sell one-time things as continuity - some things provide value once and other don’t. For many businesses, continuity is what keeps them alive.
Add lifetime discount at your month of greatest churn to decrease churn
CANCELLATIONS: (make policy ahead of time)
Make clear steps to cancel = low risk AND they’ll leave less bad external reviews
If customer is mad, be MORE MAD than them.
Generally have cancellation fee equal to the bonus value they got
ALWAYS get an exit interview (upsell here) - Lets them avoid cancellation fee
Continuity → FREE Bonus Offer
So you have an expensive bonus package that you offer for FREE when customer joins the continuity program (+ also gets other benefits).
Anchor the bonus first, then “Do you wanna know how you can get this for free?”
Find the right balance in price to nudge people into continuity, but also getting enough cash up front
Continuity Discount Offers
Make a one-time discount or FREE continuity offer for long-term commitment.
Works really well with industries that can enforce contracts (cell phones, real estate, hosting services
Generally does NOT get customers profitably.
You can add the free months at the front, at the back, or spread out.
You can get them to pay a little upfront (ex: pay for the last month, setup fee, etc.)
Could give the discount in the form of a gift card
Waived Fee Continuity
Have a large fee upfront that they can avoid if they prepay for continuity. If they want to cancel, they have to pay the onboarding fee.
Call it something like: initiation, onboarding, setup, activation… whatever.
Very sticky, people don’t churn out thanks to the big fee
Drop the fee after the commitment
Works really well for services that take a long time to work
Other Tips:
When running events/workshops/presentations, hint at next offer early. Imply that “everyone” always wants it.
Pay experienced people lots of $$ to learn their skills 1 on 1
ALWAYS do BAMFAM
If you sell out of anything, take payment anyway. Then, set expectations of delivery.
A/B Sale and implied sale might just be the most powerful sale technique ever, use as much as possible. You can nudge the customer in the direction you want = seemless buy.
The Gift Card Play is actually insane. Literally get paid to get warm referrals.
If customer is mad, be MORE MAD than them. (applies in all aspects of life btw)
When doing sales, always be The Helpful Guide. Never negociate on price.
BILL WEEKLY - You’ll make 8.3% more money annually.
Add 3% processing fee. Ask if they want to avoid it → Get a second form of payment (ACH)
Try to have these numbers in your business:
30 Day Cash ≥ 2(CAC + COGS) - COGS is Cost Of Goods and Services
LTGP:CAC ≥ 3:1
Gross Margin ≥ 80% (in service-based businesses)
And finally, things to do (in order):
Make Grand-Slam Offer
Get leads reliably (free offers work great here)
Make sure leads pay for themselves (CAC + COGS)
Make sure leads pay for other customers
Start maximizing LTV (continuity)
Scale as fast as possible - Main drag is delivering the product/service
Thanks for reading! I hope these notes weren’t too hard to follow lol :)