Rich People Buy Differently (So Price Like It) | Ep 949
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Why do businesses struggle to make money?
You aren't making as much money as you want because you don't know how to get it from the people who've got it. My name's Alex Ramosi. I run a portfolio of companies at Acquisition.com that earns over $250 million per year. I did a book launch 12 weeks ago that did $106 million in sales in a weekend and broke a Guinness World Record for the fastest selling nonfiction book of all time.
How can applying the Pareto principle enhance profits?
In this video, I'm going to explain a core shift in my understanding of how getting money actually works and why the rich do in fact get richer. And I'm going to show you the math behind it and most importantly, how you can gain access to it. The first reason that you aren't making as much as you want is because you're selling to people who don't have the money to give you.
What is a top-down business and pricing strategy?
So think about it like this, and this is really important. Imagine this pyramid as a representation of earning in the United States. What percentage of the people do you think earn 40% of the income? The top 10% earn 40% of the income in the entire U.S. Now, that's income, and that's pretty extreme, but it's not even close to the difference when you look at wealth. So U.S. household net worth, okay, this is the value of their assets, last year was $100,000. and $63 trillion. And you're like, man, how am I gonna pay rent?
Why should you sell to wealthy customers?
I'm like, let's get some of that 163 trillion. So this is going to blow your mind. So I want you to imagine that you had $100, okay? So I'm gonna equate this 163 trillion is now $100, okay? And we're gonna spread it out. relative to how it actually is spread within the United States. So this is 100 people to represent 100 percentiles in terms of net worth in the United States. This $163 trillion, what would they have if there was 100 people to represent this $100? they would have $2.50. I'm just gonna use bills because I don't feel like I haven't changed. So $2 out of that 100, the bottom 50. So the next 40%, what do you think they would have?
How do you determine the right price points for your offers?
They're gonna have 20, 25, 28 bucks. That's the next 40. Remember, we got $100 to distribute here. So the next 9%, so now we're getting the top 10, the top decile of net worth in the United States.
What insights do close rates provide about pricing?
How much do you think they got? They got 20%. They got $30. They got $35. They got $38. All right.
How can you systematically raise prices for your products?
$38 in just this 9%. Now, you ready for the drum roll? How much do you think the top 1% has? I mean, it's one-tenth, right? So, like, it can't be more than the other nine, right? I mean, you'd think that. The top one, just the one guy... would have $32. One guy. Now this means that this one guy has more than the bottom 90% combined. This is very important because it has implications for how you do business. So when you hear me say sell to the rich, they pay better, it's not some pithy statement. It's reality. And it takes people a very long time to learn this. And people often take years before they actually start to figure this out. Usually there's belief issues. They're like, no one else could do this. And part of the reason is because everyone they know is poor.
And they're like, there's no way I could sell something for that price. And so they make stuff against all the other small businesses to compete for these two dollars. Think about that for a second. You're putting all the resources because you see all these people. They're the ones that you're brushing shoulders with. They're the ones that you see in the street every single day. And you're trying to compete and slice these $2 a hundred different ways, right? If you want to make money, go where the money is. So let's put this concept on steroids now and actually apply this to doing business. This is how big companies get big. They go where the money's at, and this is a breakdown of something called Pareto's principle.
You might have heard of it, 80-20. It's one of the most powerful concepts in business, and most people still don't understand how to actually apply it. All right, so I want you to freeze this idea in your head. Just look at the money here. $2 here, 28 bucks here, 38 here. Now we're in the top 10%, right? And we have another 30%.
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Chapters
8 chapters
1
Why do businesses struggle to make money?
0:00–0:17
2
How can applying the Pareto principle enhance profits?
0:17–0:33
3
What is a top-down business and pricing strategy?
0:33–1:13
4
Why should you sell to wealthy customers?
1:13–1:54
5
How do you determine the right price points for your offers?
1:54–2:09
6
What insights do close rates provide about pricing?
2:09–2:18
7
How can you systematically raise prices for your products?
2:18–16:53
8
What are the implications of selling to the rich?
16:53–44:20