How TO Make A TON Of Money (in just a few minutes)

Summary

This video script offers a strategy for pricing products to maximize sales and profits. It suggests marking the price of your main product at 10x, 50x, or 100x its current value to create a high price anchor. This psychological tactic makes lower-priced items seem more attractive by comparison. The video also discusses the importance of understanding the value customers perceive in a product, emphasizing that if they see the value, they will find a way to afford it. It advises creating a pricing menu with the most expensive option at the top to make other options appear more reasonable, and tailoring prices to different customer segments based on the value provided.

Takeaways

• 💰 Pricing Strategy: Aim to sell more expensive items to increase profits, as there's strategic advantage in being the most expensive in the market.
• 📈 Price Anchoring: Use the highest price as an anchor to make other products seem more reasonably priced in comparison.
• 🔄 Avoiding Price Competition: Don't compete on price alone; instead, focus on operational efficiency and providing unique value.
• 👔 Personal Experience: The speaker shares a personal story about being price anchored with a suit, illustrating the concept in action.
• 📊 Psychological Pricing: Understand that customers are influenced by the psychology of pricing, and use this to guide your pricing structure.
• 🍿 Small, Medium, Large: Use the example of tiered pricing (small, medium, large) to show how customers are influenced by the middle option.
• 💡 Value Perception: Emphasize the importance of perceived value over the actual price, and how understanding value can motivate customers to spend more.
• 🚗 Ferrari Analogy: Use the example of a drastically underpriced Ferrari to illustrate how customers will find a way to pay if they believe in the value.
• 🎁 High-End Offerings: Include a very high-priced option in your offerings to attract 'whales' or high-spending customers.
• 📈 Price Elasticity: Recognize that customers are willing to spend more when they see the value, and adjust your pricing to reflect this.
• 🏆 Customized Pricing: Tailor your pricing to meet the needs and perceived value for different customer personas or segments.

Q & A

What is the main idea of the video script?

The main idea of the video script is to teach viewers how to price their products or services to maximize sales and profits, focusing on the concept of price anchoring and offering high-priced items to attract customers who value quality over cost.

What does the speaker suggest doing with the average price of the product you sell?

The speaker suggests multiplying the average price of your product by 10, 50, or 100 times to create a high-priced anchor product that can influence the perceived value of your other products.

Why is there a strategic benefit to being the most expensive in the marketplace?

There is a strategic benefit to being the most expensive because it allows you to position your product as a premium option, which can attract customers who are willing to pay more for higher quality or perceived value.

What is the only strategic benefit to being the lowest cost person in the marketplace?

The only strategic benefit to being the lowest cost person in the marketplace is if you have built your entire business around operational efficiency and automation, allowing you to provide the same product or service for less.

What is price anchoring and how does it work in the context of the script?

Price anchoring is a psychological effect where the first price presented influences the perception of subsequent prices. In the script, it's used to establish a high-priced product first, making other products seem more reasonably priced by comparison.

Why does the speaker mention the example of buying a suit and the experience of price anchoring?

The speaker uses the suit-buying example to illustrate how price anchoring works in a real-world scenario, showing how a high initial price can make subsequent, lower prices seem like a better deal.

What is the significance of having a 'small, medium, large' pricing structure?

The 'small, medium, large' pricing structure is significant because it allows businesses to strategically position their products, with the medium option often being the most popular choice due to its perceived value compared to the cheapest and most expensive options.

How should businesses price their products if they want to appeal to high-value customers?

Businesses should consider offering a premium, high-priced product at the top of their pricing menu to appeal to high-value customers, even if they expect only a small percentage of sales from this option.

What is the importance of understanding the value proposition when selling expensive items?

Understanding the value proposition is crucial when selling expensive items because it helps customers see the worth of the product, making them more likely to invest in it despite the high price.

Why might a business want to have a very high-priced item on their menu even if they don't expect to sell it?

A very high-priced item on the menu can serve as a price anchor, making other items seem more affordable and can also attract 'whales' or high-spending customers who are willing to pay for premium products.

How can businesses segment their pricing to meet the needs of different customers?

Businesses can segment their pricing by offering different tiers of products or services, such as bronze, silver, and gold packages, to cater to the varying needs and budgets of different customer personas.

Outlines

00:00

💰 Pricing Strategies for High-Value Sales

The speaker introduces a strategy for increasing sales by pricing products at higher levels to attract customers who are willing to pay for premium quality. They suggest writing down the average price of the product being sold, then calculating what it would be at 10x, 50x, and 100x that price. The speaker emphasizes the importance of positioning as the most expensive option in the market to capture a strategic advantage, as being the cheapest is only beneficial if built on operational efficiency. They also discuss the concept of 'price anchoring,' where presenting an extremely high-priced item first can make subsequent, lower-priced items seem like a better deal. The speaker uses the example of a suit store to illustrate how this works in practice.

05:01

📈 Tailoring Pricing to Customer Segments

In this paragraph, the speaker discusses the importance of understanding different customer segments and tailoring pricing to meet their needs and perceptions of value. They suggest using a tiered pricing model, such as small, medium, large, to indicate which product is likely to sell the most. The speaker explains that some customers will always opt for the cheapest option, while others are influenced by the relative pricing and may choose a middle or higher-priced option if it seems like a better deal. They stress the importance of creating a sense of value and offering a deal that customers perceive as a bargain. The speaker also touches on the idea of offering extremely high-priced items to attract 'whales' or high-spending customers, and the psychological impact of having a very expensive item on the menu, even if it's not expected to sell.

Keywords

💡Pricing Strategy

Pricing strategy refers to the method a business uses to determine the price of its products or services. In the video, the speaker emphasizes the importance of setting higher prices to attract customers who are willing to pay for perceived value. The strategy is used to position products as premium and to create a price anchor that makes other products seem more affordable by comparison.

💡Price Anchoring

Price anchoring is a psychological concept where the first price presented for a product influences the perception of its value. The video script describes how a high initial price can set a reference point, making subsequent lower-priced options seem like better deals. This tactic is used to nudge customers towards certain purchases by leveraging their cognitive biases.

💡Operational Efficiency

Operational efficiency is the ability of a business to produce the maximum output with the minimum input. The video mentions that being the lowest-cost provider in the market is a strategic advantage, achieved by focusing on operational efficiency and automation, which allows a company to offer the same product for less than competitors.

💡Value Proposition

A value proposition is the promise of value to customers delivered by a company's product or service. The script suggests that understanding and communicating the value of a product is key to selling it at a high price. If customers perceive the value as worth the cost, they are more likely to make a purchase, even if the price is high.

💡Psychological Pricing

Psychological pricing is the use of psychology to influence a customer's perception of a product's price. The video discusses how pricing tactics, such as setting a high anchor price and offering a range of options, can leverage psychological effects to encourage purchases. For example, customers may opt for a 'medium' option that seems like a good value compared to a cheaper 'small' and a more expensive 'large'.

💡Market Positioning

Market positioning is the process of creating a unique place for a product in the consumer's mind, relative to the competition. The video emphasizes the strategic benefits of being the most expensive in the market, which can signal exclusivity and high quality, as opposed to being the cheapest, which may indicate lower quality.

💡Product Differentiation

Product differentiation is the process of making a product unique and distinct from competitors' offerings. The script suggests that offering a product at 10x, 50x, or 100x the price of a standard offering can create a perception of differentiation, attracting customers who are willing to pay for the perceived exclusivity or superior quality.

💡Customer Segmentation

Customer segmentation is the practice of dividing a market into groups of customers with similar needs or characteristics. The video mentions the importance of tailoring pricing to different customer segments, recognizing that the value of a product can vary significantly depending on the customer's needs and the context in which it is sold.

💡Conversion Rate Optimization

Conversion rate optimization is the process of maximizing the number of conversions from website visitors or potential customers into actual customers. The speaker uses this term to illustrate how the value provided by a product or service can be scaled according to the size and needs of the customer, such as an e-commerce store with different annual revenues.

💡Perceived Value

Perceived value is the customer's subjective assessment of the worth of a product or service in comparison to its price. The video argues that if a customer perceives a high value in a product, they are more likely to find the means to afford it, even if the price is high. This concept is central to the video's message about selling expensive items.

💡Whales

In the context of the video, 'whales' refers to high-spending customers who are willing to purchase the most expensive items on offer. The speaker suggests that having a very high-priced item can attract these customers, even if the expectation is that few will actually make the purchase.

Highlights

The video promises to teach viewers how to price items to increase sales of high-priced products.

Suggests writing down the average price of what you sell and multiplying it by 10x, 50x, and 100x to set higher price points.

Advocates for selling more expensive items as a strategy to make more money, rather than competing on price.

Being the most expensive in the market can have strategic benefits, unlike being the second-cheapest.

The importance of building a business around operational efficiency if aiming to be the lowest cost provider.

The concept of price anchoring to influence customers' perception of value.

Using price anchoring to make subsequent lower-priced items seem like a better deal.

The psychological impact of pricing on customers' purchasing decisions.

The strategy of listing the most expensive item first in a pricing menu to make other options seem cheaper.

The use of 'small, medium, large' pricing strategy to indicate which product is most likely to sell.

The idea that customers are more likely to buy the middle-priced option in a range.

The importance of understanding that all prices are arbitrary and can be adjusted to influence sales.

The belief that customers want to buy great deals, not just cheap items.

The notion that if customers understand the value, they will find a way to pay for expensive items.

The concept of offering a high-priced item with the expectation that it will sell occasionally to 'whales'.

The idea of using high-priced items as a way to teach yourself about the value customers place on your offerings.

The strategy of segmenting customers based on their willingness to pay for different levels of value.

The importance of pricing based on the value delivered to a specific customer avatar or persona.

Transcripts

everybody's watching this video i'm

about to make you a ton of money in a

few minutes i'm gonna walk down exactly

how you can price stuff to get more

people to buy really expensive things

that you sell and if you don't sell

something really expensive you're gonna

want to by the end of this video right

now if you can write down on a piece of

paper what the average price of the

thing that you sell is let's say it's a

hundred bucks what i want you to do is i

want you to put 10x i want you to put

50x i would put 100x next to it now once

you write the price of what that would

be if your main thing's 100 bucks 10x is

a thousand 50x is 5 000. 100x is 10 000.

it doesn't matter what business you have

if you want to make lots of money

sell more expensive stuff there's no

strategic benefit to being the second

cheapest person in the marketplace but

there is for being the most expensive

there's only one strategic benefit to

being the lowest cost person in the

marketplace which means that you went in

with that strategy and you built an

entire business around operational

efficiency automation and you built the

whole strategy of the business on being

able to provide the same thing for less

if you did not do that and are simply

trying to do the same business as other

people and compete on price you will

lose you will have no profit left over

and you will get price to the point of

breakeven and you will just run a

non-profit thank you that's probably not

why you got into business no matter what

you sell you should have something

that's 10 50 100 times more expensive

than thing you're currently selling when

i bought my first nice suit for myself a

friend of mine was like fashionable and

he like took me to the store or whatever

i put a suit on i remember checking the

price tag and it was thirteen thousand

dollars homie didn't have thirteen

thousand dollars and i was like [ __ ] and

then what they did is after i took that

off they put me in a suit that was like

twenty nine hundred bucks or twenty 2

500 and i was like okay i can get with

this right i didn't realize it then but

they had completely price anchored me

and that was 100 the strategy was get

put you in the most expensive suit and

then you're like geez but the thing is

is that some guys will look at that and

the right guy will be like done i'm in

price anchors have two benefits and this

isn't the only point of the video this

is the first point for everybody who

isn't going to buy the really expensive

10x 50x 100x thing you anchor the rest

of your pricing against that first price

so you're showing them this thing kind

of like ripping off the band-aids like

stretching the length through which they

see your pricing if i say a thousand

dollars first and then i say a hundred

thousand dollars it's like [ __ ] that's

huge but if i say a thousand dollars

first and then i say

a hundred dollars or ten dollars that

sounds like less if you have a pricing

menu for a membership for example of any

kind you want to have the most expensive

one first not the least expensive one

and then everything else will look

cheaper by comparison if you do it with

wine you can do with software you can do

with memberships it works in every

situation because it works on psychology

now let's talk about the other side of

the equation all right so we've got the

anchor and then we've got other options

of pricing so how do we organize the

other two options good question i like

to use the small medium large example to

kind of like break this down so you can

use this as small medium large popcorn

small medium large cokes whatever but

let's say you've got 10 bucks five bucks

and you've got this middle price where

you put this middle price will indicate

which product gets sold the most of a

certain percentage people always buy the

cheapest thing because that's who they

are and that's fine the next people are

influenced by the pricing in general so

if i have a five dollar thing and a ten

dollar thing i can make this medium six

bucks so i make my medium a dollar more

than my small and it seems like a great

price but the thing is to ever forget is

that we make up all the prices all of

these are made up so we got 510 and we

got six or 650 or 6.99 and we're gonna

get a lot of people are gonna buy this

one now

if i bump this to here nine dollars and

i make this 10

what are people going to do a lot of

people are gonna buy this one because by

comparison it's like wait just for a

dollar more i get twice of the small

well that sounds like a great deal and

so fundamentally people want to buy

great deals they don't want to buy cheap

stuff think about the difference there

price is what you pay value is what you

get the deal is the discrepancy between

the two for example and this is a big

one this is a i want to break this

belief for you if right now you sell

expensive stuff five thousand dollar

things or ten thousand dollar things if

i were giving you a ferrari

brand new and i said it's ten grand and

i'm walking up to people on the street

and they believe that i was actually

going to give them the ferrari

how hard do you think it would be for

them to come up with 10 grand

what would they do

they would call their friends they'd

call their family they would take out of

their credit cards they'd take a loan

why because they know it's worth more

than 10 grand whenever you are selling

something expensive the reason someone

is not buying it is simply because they

do not understand the value because if

they understand the value and they

believe that you're giving them a

ferrari they will find a way to get the

money i want to banish this whole

concept of like they can't afford it

everyone can afford it if they believe

the value is there and so the idea is

not that we're giving cheap stuff away

we want the value relative to the price

to be a huge bargain when you're coming

up with the stuff that you're going to

sell the first thing that i want

everybody to do 10x 50x100x pick one and

then figure out what you would have to

fulfill to make it worth that they are

getting a ferrari for 10 grand and

that's how you get people to say yes

over and over again and the other thing

is is that it'll start to teach you that

people are willing to spend more when

they see the value the other benefit of

having this huge price anchor is that

whales will buy it so a certain

percentage of population just like i

said certain percentage population

always buys the cheap thing because

that's who they are there's another

percentage of the population that always

buys the most expensive thing because

that's who they are it doesn't hurt you

at all to have something that's super

expensive on your menu put it there with

the expectation that you're never gonna

sell

and be surprised when you do if you

didn't get a gasp from the price you

didn't go high enough you want that gas

because that gap shows that you've

broken the rubber band of pricing that

they associated with what they expected

your product or service to be priced at

and so if you're like oh it's 100 grand

they're like whoa i was not expecting

that you're like oh no worries and then

you can explain why it's worth it but

then it's like you know what i think we

can do 80 of that for 10 because that's

our our silver that make more sense for

you yeah that would make a ton of sense

for me now if silver's 10 bronze is 8

and gold is 100 you need to sell a lot

of 10ks because now it seems like

nothing it depends on the customer or

segmentation but one of the big mistakes

i see people do is that they'll have

like 100 a month 110 a month and 120 a

month you want to meet buying personas

so you might have a hundred dollar a

month you might have a 200 a month you

might have a thousand dollar a month

because the people and the needs between

those customers are different so you

want to price based on the value

delivered to a specific avatar like if

i'm selling something to coca-cola it's

going to be more valuable to coca-cola

than it is to a local brewery so you can

price it accordingly if you are a cro

expert conversion rate optimization and

you can help an e-commerce store buy 10

if the store is making a million bucks a

year 10 is 100 grand if the store is

doing 100 million dollars a year 10 is

10 million you literally can provide

more value to them because of who they

are not because of who you are so 10x

50x100x think about what you provided

for each of those levels put that at the

top of your menu be the first thing that

you explain to people expect 1 out of 20

to say yes to it and for everybody else

to feel much more comfortable taking the

other options bye