Lecture Notes: Charging What It’s Worth

Introduction

• Speaker: Alex, Founder and CEO of Acquisition.com
• Company Focus:
  • Works with companies earning $3-10M in revenue.
  • Helps these companies scale and exit in 3-5 years.
  • Provides free training for companies below $3M.
• Motto: “You should only have to get rich once.”

Importance of Pricing

• Charges what it's worth as a crucial component of successful offers.
• Key in helping their businesses achieve $120M+ in sales.
• Two potential problems if an offer isn't converting:
  1. Wrong market.
  2. Wrong price.

Understanding Price-to-Value Discrepancy

• Concept: Customers buy when perceived value exceeds price.
• Sustainability: Continuous buying stops if value dips below price.
• Impact: Most businesses struggle because the product/service doesn’t meet exceptional standards.
• Improvement Method: Instead of lowering prices (which leads to failure), businesses should increase the value.

Ways to Increase Value

1. Niching down
2. Positioning the offer
3. Reversing Risk

Price Adjustment Strategy

• Example: $50,000 burger vs. $13 burger and how perceived value is affected by earning capacity.
• Goal: Create offers that seem like “dollars at a discount” to provide the best perceived return on investment.

Virtuous vs. Vicious Cycles of Pricing

• Vicious Cycle: Lowering price to compete leads to less profit and customer dissatisfaction.
  • Decreased emotional investment, perceived value, and results.
• Virtuous Cycle: Increasing prices enhances emotional investment, perceived value, and results, which validates higher service levels.

Practical Examples and Studies

• Wine Study: Price tags influenced the perceived quality of identical wines.
• Warren Buffet's Cease Candies: Regularly increased prices to boost profit and perceived quality.

Becoming a Category of One

• Drastic price differentiation sets a company apart.
• Personal example: Gym Lunch company set prices drastically higher than competitors to establish uniqueness.

Ethical Considerations

• Higher prices necessitate higher customer emotional investment, leading to better outcomes.

Conclusion

• Key Insights:
  • Pricing is a crucial determinant of perceived value and overall business success.
  • Free resources are available at acquisition.com for companies to scale up to $3M.
  • Once companies reach $3-5M, Acquisition.com can help them scale further and exit.

Additional Resources

• Visit Acquisition.com for more free training modules and courses on offers and pricing.