New entrepreneurs get stuck in the trap of selling a commodity, a product or service easily comparable to competitors, which leads to price shopping. The solution is for you to serve a starving crowd (a market with urgent needs), choose a narrower niche, and add unique components to your offer.

Here’s the problem: Business is really hard when we’re trying to compete on price. Trying to offer more for less than the guy down the street is a sure path to diminishing profits.

New entrepreneurs get stuck in this trap when they sell a “commodity.” In this book, a commodity means a product or service that appears to be interchangeable with those from other businesses.

3 solutions to “the commodity problem” are explained in detail by Hormozi. Here’s a fast overview:

1. Find a Starving Crowd. The most fundamental part of our business is not WHAT we’re selling, but WHO we are serving. Any new business must begin with the right target market—that is a group of people motivated by an urgent need, desire, or pain. (For more details, read the hamburger stand example from the late great copywriter Gary Halbert, who is mentioned in this book as an unnamed “marketing professor.”)
2. Narrow Your Niche. Choosing a smaller target group of customers is almost always going to accelerate the success of a startup business. When we narrow our focus, then our sales message will immediately become far more effective. Only after we are making $10 million per year, says Hormozi, does he recommend expanding our target customer profile.
   
   (This strongly reminds me of one of my favourite business quotes ever, that comes from the billionaire Peter Thiel, who was actually Elon Musk’s former business partner. He wrote: “The perfect target market for a startup is a small group of particular people concentrated together and served by few or no competitors.” Read more in his book Zero to One by Peter Thiel.)

3. Build a Unique Offer. This is about adding additional components to our product or service, so the overall offer we are selling solves our customer’s problems more fully than anything else on the market.
   
   As a result, our customers can no longer directly compare us to the competition, which prevents price shopping so we can sell more easily and charge higher prices. The core part of this book will later explain HOW we actually do this.
   
   Some more commentary: Making what we sell unique is definitely not a new idea created by Alex Hormozi. The Unique Selling Proposition (USP) is a classic marketing idea that was first formulated by powerful advertising men of the 1960’s like Rosser Reeves. Having a USP for your business is about answering the question: WHY should someone buy your product or service instead of the competitor’s? In other words, what is unique or different about your offer, so that your customer’s problem will be solved better, faster or easier? As an example, Dominoes grew rapidly in the hyper-competitive pizza market with the USP of “pizza delivered in 30 minutes or less, or it’s free.”

💎 3. Raise Your Value: To charge higher prices, increase the value of your product by enhancing desire, certainty, speed and ease

Charging higher prices puts our business into an upward spiral, leading to higher profits, better service, higher perceived quality, and more results for our clients. To deserve higher prices, we also must increase the value of our offer by fulfilling your customer’s true desires and reducing the uncertainty, time, and effort to get their desired outcome.

Charging higher prices is almost always the correct move, says Alex Hormozi. He argues that businesses that try to compete through low prices usually become trapped in a downward spiral of diminishing profits, lower product quality, and worse client outcomes.

Businesses that charge premium prices, on the other hand, often rise in an upward spiral. Larger profit margins allow them to invest more money into product quality and advertising. (A good example of this is Apple.) Hormozi’s clients spend more money, so they tend to be more invested, which means they take more action and get better results. Studies even prove people actually perceive more expensive products to be better, like expensive wine actually tastes better to our brains. Weird, huh?

But how do we increase prices without losing sales? By increasing our product’s perceived value, so customers still feel they’re getting a great deal.

There are 4 ways to raise the value of our offer:

1. Fulfill their true desires. The stronger the desire we solve, the greater people’s willingness to pay. So you gotta make sure you are connecting to real desires people have. These tend to be rooted in universal human needs like shelter, food, belonging, love, appreciation, etc.
   
   Hormozi writes that we cannot create desire, but only channel the market’s pre-existing desire onto our product. Some commentary: Here he’s actually paraphrasing Eugene Schwartz, one of the greatest copywriters of all time. In his 1966 book Breakthrough Advertising, Eugene Schwartz wrote: “Copy cannot create desire for a product. It can only take the hopes, dreams, fears and desires that already exist in the hearts of millions of people, and focus those already existing desires onto a particular product. This is the copy writer’s task: not to create this mass desire – but to channel and direct it.”
2. Provide greater certainty. Most people really want to avoid risk and value certainty, and they will gladly pay more for a perceived greater likelihood of getting a result. That’s one reason they will pay more for a service that is done-for-you than for a how-to course. Increase certainty by showing your experience, past testimonials, and providing guarantees.
3. In less time. Speed has value. People will pay more to get their desire or get out of pain faster. I think some of the largest companies have relied on providing this value. Some quick examples that come to my mind include: Amazon’s free 2-day shipping, McDonald’s 5-minute fast food, or FedEx’s overnight shipping.
4. With less effort. Make it easier to get their desired result. Remove steps in the process. Do the work for them, or provide tools that will. For example, Hormozi once created a complex spreadsheet app that automatically created weekly meal plans for his gym clients, based on their personal goals. He made the spreadsheet one time, and it became a great asset that provided value to his clients for years.
   
   The bestselling productivity book Atomic Habits explains that humans tend to take the path of least resistance, so if we want to encourage ourselves to do a good habit then we should make it require less effort. For example, if we want to start running every morning, then we could prepare our running shoes and clothes beside the bed the night before. The fewer steps, the less friction, the easier it is to start our habit, the more likely we are to stick with it. And we can do the same thing for our clients or customers.

🧩 4. Solve All Their Problems: Craft an offer that removes ALL obstacles in the way of your customer’s ultimate desire

To design your game-changing offer, begin with asking “why?” until you find your customers’ true desires. Then list ALL the obstacles they will face getting that desire. Finally, write down your solutions to every one of the obstacles.

So, how do we actually build an offer that is not only unique, but it is unique in a way that our customers value? This is really the core section of this book, the part that teaches how to put together your amazing offer. To summarize Hormozi’s method, I’ll simplify it into 3 steps:

1. Find: What is their real desire? You can do this by asking “why” multiple times until you get a core motivation. Your new offer will be built on this deeper motivation. For example: Why do most people want a gym membership? To lose weight. And each person has their specific goals: to get a six pack, to lose 10 pounds in a month, to fit into their old jeans, etc.
   
   Some commentary: Dan Kennedy is a direct marketing teacher that I’ve learned an immense amount of wisdom from, and he is also mentioned several times in $100M Offers. One core principle that Dan Kennedy often teaches is the difference between features and benefits. Most business owners make the mistake of talking too much about the features. We forget that people only care about the benefits—the results that our product or service will help them achieve. For example, people don’t really want to buy a gym membership, they want to lose weight or get fit. If they could snap a finger and have their ideal body, they wouldn’t bother with the gym! As Dan Kennedy wrote in his classic book The Ultimate Sales Letter, “People do not buy things for what they are; they buy things for what they do.”
2. List EVERY obstacle to getting their desire. On the way to their desired goal, what problems, setbacks and difficulties will they face? Ultimately, your offer will provide the solution to ALL these obstacles. For example, Hormozi realized for his gym clients to achieve their goal of losing weight, they would face additional obstacles with buying groceries, cooking meals, eating out, etc.
   
   Some discussion: One of my favourite quotes from Elon Musk is “You are paid in direct proportion to the difficulty of the problems you solve.” In business, we get paid to solve problems for others. So if we want to raise our value, and raise the price we can charge, then we need to solve more problems. This exercise by Alex Hormozi is a brilliant way to really understand what additional problems our customers will face.
3. Finally, write down individual solutions for each obstacle. What could you offer to solve each problem from that previous list? These solutions will then be bundled together to create your outstanding offer. At first, brainstorm loosely to get lots of ideas. Don’t worry yet about how difficult it would be to implement the ideas, because later you can make them more realistic.
   
   For example, Hormozi gained success because he stopped selling a gym membership for $99/month, a commodity that was easily compared with other gym memberships. Instead, he began selling a “6 Week Challenge” fitness bundle for $600, that included extra pieces helping with EVERYTHING someone needs to lose weight. To mention just one piece, he helped clients overcome the challenge of buying healthy food, by providing a personalized training class and weekly shopping lists. That one piece alone is more than any other gym provided, which made Hormozi’s offer incomparable. As a result, his ROI on advertising skyrocketed by 30x.

🎁 5. Stack Your Offer: Boost perceived value through exciting names, bonuses, stacking and guarantees

To finish creating your offer, give it an exciting name and include desirable bonuses. Stack the value of all your offer’s components to communicate higher perceived value. Finally, add a guarantee to reduce risk so people feel safe buying.

Now we’re putting all the pieces together to present a polished package to our prospects. (Try saying that tongue-twister 10 times fast!) Kidding aside, this is where you really build the perceived value of your offer, to make something people may really feel stupid saying no to.

Here is an overview of the strategies:

1. Naming. Give exciting names to your overall offer, plus name each individual component within your offer. The name should include the RESULT they want to achieve. Good names may also include WHO it’s for, HOW LONG it will take, and perhaps WHY a current promotion is happening. For example: a 2-Week Summer Leadership Bootcamp for Managers.
2. Bonuses. Split your offer into multiple pieces to increase the perceived value. Why does this work? Because it allows you highlight and sell each piece of your offer individually. That enables the next strategy…
3. Stacking. Make a big list of every component in your offer, give each one a separate dollar value, then add them all up. The real price of your offer should be much less than that number. This shows they’re getting a great deal buying your offer.
   
   For example, a coach who specializes in helping managers become better leaders could offer a bootcamp that includes a 2-hour masterclass ($50 value), plus a book on managements communication ($20 value), plus an audiobook about negotiating a raise ($35 value), and an implementation guide for the whole package ($15 value). Adding it all up, the total value is $120, but during the summer promotion you will only pay $80. See how this works? The old infomercials used this same kind of stacking strategy… because it worked! However, I’d avoid some of their cheesy lines like, “But wait, there’s more!”
   
   Even huge companies use similar techniques, like McDonald’s selling combo meals instead of just individual items, or Apple now bundling multiple subscriptions (music, TV, games, news, etc) into one offer.
4. Guarantees. People take a risk of losing their money or time whenever they buy a product or service. By offering a guarantee, we can reduce that perceived risk and make them feel safe buying. This can be very simple, like telling them: “If you’re not satisfied for any reason, you’ll get your money back.”
   
   Offering a guarantee is the “number one way” to increase sales, according to Alex Hormozi. This is probably why the most successful companies like Walmart, Amazon and Apple have such relaxed return policies!

⏳ 6. Make it Limited: Skyrocket demand for your offer using the psychology of scarcity, urgency, and exclusivity

Part of human psychology is wanting what we can’t easily have. We can leverage this to increase demand for our offers. Scarcity is about limiting the quantity available, urgency is setting a deadline, and exclusivity is adding an element of status to owning our offer.

There are many ways we can increase demand for our offer that don’t require lowering the price. Researchers have been studying human behavior for decades, and there are some clear psychological factors that can influence our buying decisions.

Here are 3 that Hormozi teaches in $100M offers:

1. Scarcity. Limiting the number of products or spots available. We want things more when they appear harder to get, as documented by Robert Cialdini in Influence, his must-read book on the psychology of marketing. The best scarcity is honest, says Hormozi. For example, every business has a limit to how many clients they can serve, so just advertise that number!
2. Urgency. Using deadlines and limited-time promotions. This motivates people to buy now, rather than procrastinating. The reason for a promotion could really be anything. You may not be able to stop selling your product, but you can set a limit to a bonus. For example, a personal trainer could offer a free bottle of protein power to each new client that signs up in January, then a free yoga mat for February, and a t-shirt for March, etc.
3. Exclusivity. People pay more for things that increase their status. The third-richest man in the world is a man named Bernard Arnault, who built his wealth through luxury fashion brands such as Luis Vuitton and Christian Dior.
   
   Hormozi has a strategy called “skimming the pyramid,” which means he would rather sell 2 clients at $5,000 each than 20 clients at $500 each. Not only is it easier to serve 2 clients well, it also creates pent up demand next time you open the doors of your offer.

1. Create Your Offer: Identify every potential problem your customers might face in achieving their desired outcome. Develop solutions for each obstacle and incorporate them into your offer. Highlight how your product removes these obstacles in your marketing messages.
2. Enhance Desire: Tap into your customers’ existing desires by emphasizing how your product fulfills their deepest wants (e.g., love, respect, beauty, status).
3. Increase Certainty: Collect and display testimonials, case studies, and guarantees to show proven results.
4. Speed Up Results: Offer quick wins or milestones within your product to provide immediate value.
5. Reduce Effort: Simplify the user experience by offering done-for-you services or easy-to-follow guides.
6. Add Bonuses: Include additional valuable items like checklists, templates, or exclusive content to increase perceived value.
7. Implement Scarcity: Limit the quantity of your offer (e.g., limited seats, products, or slots) to create urgency.