63. The value equation

The four elements people forget about.

Value is such a confusing topic as we all have our own opinion on what it consists of and what it would look like.

Watching a talk by multi-millionaire business owner, Alex Hormozi, on the topic I learnt this strategy.

The equation goes as follows:

Dream outcome + Perceived Likelihood of Achieving / Time delay + Effort and Sacrifice

This is so helpful as creates an objective blueprint by which we can push products, services, and ourselves forward.

When there are options for buying things we don’t realise unconsciously we are leaning into the equation.

We buy the gym membership for a dream outcome, we eat well to try and increase the chance of us getting that body we want, we frequently do exercise to get fitter quicker, and we research exciting routines to make it less boring.

This isn’t just for the gym though- think about most successful businesses; Amazon, Netflix, Uber- they have little to no time delay and no effort or sacrifice and allow us to get what we want.

When the bottom half of the equation is zero or minimal- people are more likely to take a gamble on you as there are no downsides.

Entrepreneurs love promising massive dreams, yet, they forget where the value lies for investors, individuals, and customers- in having no risk.

But the sad reality is that not all people see value the way you do; so you have to guide people to see things how you see them.

Of course, it is good to increase the dream outcome and perceived likelihood of achieving but you will still be struggling. You are be begging clients to come to you but if your solution isn’t fail proof they can question your proposition- if you can eliminate the hardship and delay you can essentially sell anything.

The route of success is to curate something that is an easy yes to people, then slowly over time make that product better, and consequently the way you pitch that changes as you see real hand how it provides dream outcomes.

Why do you think prices of items that tick all areas of value increase?

Because they are helping people more- a large price tag isn’t an area of resistance as they don’t see it as a sacrifice for what compensation they receive.

Go out there and make a great deal- follow the value equation.