I’m in grad school for accounting rn and I’m kind of upset because idk about you but I feel like we just learn how to calculate these figures robotically. They don’t teach it conceptually aswell to understand how that truly benefits the CEO/company
@@AZANlA I was in the accelerated grad program called the MSA. It makes you eligible to sit for the CPA exam and also get your master's and bachelor's degree at the same time. LOL, update; I withdrew from the program, it isn't really in line with what I truly want to do and focus on.
Takes a simple concept like margins, simplifies it for any non-finance majors, but also presents it in a tangible way that can make a significant difference for people…bravo
@@anitha6249I’m sure you know now bc it’s been 7 months, but just incase: The increase to 26% net margin was possible because he was able to increase his gross margin 14%, and that directly translated into his net margin.
@@AlexHormozi I’m a private self defense trainer. I’m not sure how I calculate my cost of what I do? I charge all my students in series of 10sessions every time. I charge $3000/10. Would the cost of gas/travel be my cost? Thank you in advance
In the last example he gives, there are 2 ways of increasing Gross Margin Ratio from 75% to 80% 1- Increase the COGS-Cost of Goods Sold- Monthly cost of the program from $400 to $500. Wich is a 25% increase in price to the customer. or 2- Decrease the salary of the coaches from $4,000/mo to $3,200/mo. Of these 2 options, decreasing the salary of the existing coaches or hire new coaches at a lower salary might compromise the quality of the product, on the other hand, increasing the perceived value of the product and therefore justifying the 25% increase in price might be easier. Great stuff! I was thinking about pursuing an MBA but the experience of running a business in addition to studying these videos and implementing the knowledge will help me advance a lot more.
Sorry this is incorrect, the first option he is increasing the price per month per customer $20 so the three month package would be $1260. Which would then result in 25% increase of net profit margins
Yeah but lets keep in mind that also increasing the margin wether by increasing profit or decreasing the cost comes with ether losing clients or employees so it’s not always that easy
It depends on what you are selling. Some things people will pay more for even if you keep increasing the price. It’s called pricing power. Luxury purses could go up 20% in price and women would still buy them. I don’t agree in cutting an employees pay though.
Alex, it's a 33% increase. Teacher is testing to see if we're paying attention ;) My products have great margin and I've never considered the true take home value that a slight increase in this way (likely for all the same reasons your clients give you). Thanks for the enlightenment, amigo! 💚
Love these old videos where you dove into the nitty gritty details Alex! So appreciate you breaking down the concepts and making them accessible for all entrepreneurs. Any chance Caleb might work some of these “boring work” videos into the UA-cam strategy going forward? I know they’re not popular topics that are going to get the same sort of views and reach as the newer stuff, but they are so so valuable.
Alex,We want you to deep dive more on this topic, more examples of models for people starting to grow a team, along with suggestions of how your would build for hiring first 1-3 coaches in a organization
I'm an investor. I have always maintained that people who know business make the best investors. Alex clearly knows his stuff. He did not read this yesterday in a book, he clearly KNOWS it and lives it. I'm sure he enjoys developing businesses, but the shift to making a good investor is very small.
I now have 3 employees in my bed bug heat treatment company and this really summed up how to set my goals and expectations with sales targets. I appreciate your content man, glad I found you
In your scenario, is the COGS, cost of good solds simply the manhour you pay to your employees? I a having trouble to understand this term in a service based model.
Did I understand this wrong or does increasing the monthly price from 400 --> 420 not get you to 80%? 420*40 = 16.8k, 16.8k-4k = 12800 and then to find the % you do 12.8k/16.8k = 76.2%. So if we went with what he said above we would need to charge each client an extra 100 / month ==> 500*40 = 20K, 20K-4K = 16K, Then to finally get your margin 16k/20k = 80%. Just wanted to make sure I understoodd this correctly! Thank you so much for sharing this informations for free!
@@DavideDileoofficial One way is in microsoft excel: goal seek analysis. Build a table and tell the spreadsheet you want the 75% to change to 80% by changing this or that value
This man is the truth. I'm proud of his continued success. Humble beginnings shows thru out his demeanor. Can't help but root for a guy like that. Godspeed
Love ya Alex! But 20% is a 33% (+5 percent) increase from 15. Still awesome though! My accountancy professor never actually explained this stuff well, out here you sharing gold!
this is really great , it is good to see it implemented in your type of business , i use the same formula in a different way because i have a different business . i sell goods , so my cost is fixed monthly rents salarys ِetc... no matter how much sales i make , and with the harsh competition i just target more sales and that’s will automatically lower my cost and for my clints i keep the price or lower the price to keep up with the competition . my average margin is 26% to 27% , and my cost is 5% and i try to keep it like this so at the end of the year my net margin is close to 22% and with more sales the cost can be low as 3% .
It’s so great that both your heart is gold and your material is gold. kudos to you for helping us all out man. Super helpful and inspiring material. I started with your new stuff and am working my way backwards. Your production has improved in the newer stuff, but your energy and value brought seems to have always been there! Thank you.
This is clearly focused towards service-based businesses (Really helpful though), would like to see another version where you focus on product-based businesses instead
WOW! I had no idea i could make more money by cutting my expenses and charging more! I am now an expert business man. I can definitely see how this guy became a $100mil CEO. This is not a scam at all!
This can reduce quality of service , best option here is to increase the price. $4k for 40 clients is already a low wage so can’t really lower it. More clients & higher price
easy to say on the board in reality being in actual business doesn't really work that way cause you still have to consider consumer purchasing power economic and inflation, also if you are selling economies of scale is also a factor
not really sure how I ended up watching this video but well presented. One note in the example at the end - it's actually even more than 25% increase it's a 33% increase because your original basis is only 15% so an addition 5 is 5/15 = 1/3
Thanks man! I think this is also important for people when trying to negotiate their salary. It's always important how much someone will make off of you so you can get compensated properly... I'm running my own business and your content is super helpful! I've read your $100M offers book, loved it! Looking forward for more content!
It’s one of those works in theory videos. Try selling something for 100 when everybody else is selling it for 60 to 80. And that’s where reality comes in
Interesting and thought provoking stuff, Alex! Coming from an engineering background I am enjoying learning about the business world, and so your channel has been awesome to delve into. I must say though, you should check your math before hand because you undersold your own punchline at the end there! Strictly speaking, going from 15% to 20% net margin is a staggering 33.3 percent increase (not 25%) which is even more impressive! Point taken though, and well done.
Good idea! Then he gets the $800 extra needed without dropping the coach's pay or having to raise the monthly fee to $500 per month to get 80% although if he did sell for $500 per month that 80% margin would equate to $16000 total rather than $400 per month at $12800 total, might be a hard sell though.
well technically, improving efficiency is the same thing as reducing cost, as by improving output while maintaining the same costs results in lower costs per unit. But you are right, thats another solution.
lmao no it does not. Ur course is made for people that want to fix their life not for high value people. + u dont pay rent and all these things ur margin is already big
Raising $20 only makes it to 76% the only one that works is paying $3200 you would have to raise price by almost $150 per month per client to get to 80%. What were not doing is assuming that the trainer would quit if he got an $800 a month pay cut and the clients would quit if you raised it by $550. Would take years longer to raise that margin without losing more than half clients putting your revenue under
This video underscores how critical it is to select/define your market in a way that allows you to achieve high gross margins. It's easier to accomplish this with Software and Learning products than with physical products. If you have a physical product, usually, the only way you can achieve reasonable gross margins is to "wrap it" in some service with recurring revenue.
Love this video, Alex! I’m going to have to keep track of my margins going forward. Btw the bottom right calculation toward the end is a 33% increase, not 25%. Even better!
@@tapfilms6806 because it’s 5% increase from 15%. So 5/15 is 0.33 which is 33% of an increase from 15%. If you were making $15 and now making $5 more that is a 33% increase in your profit.
Cogs is basically labor and any materials you use while delivering a service. That's it. I hate when people have to be pretentious when the concept is so simple.
BRO you just opened my eyes. Ive been wrongly priced at the cost of my life savings for so long. Ive been trying to run at 6% yearl margins for. Holy crap
This is wonderful. I really appreciate this content. I own a Plumbing company - we run a gross margin of around 60 percent, and that is on the higher end of our market. I wish more contractors watched videos like this and raised their prices - so we could all be closer to 80 percent margin.
Is there any way to give bigger value than your competitors that does not elevate your expenses in long-term? Like this you could up your prices and get there
Lol no. We’d be living in a world where services are even more expensive than they are right now. You are a businessman, but don’t forget you’re also a consumer. If what you suggested actually came to fruition, you’d be paying a lot more for every single thing you buy/consume… and that would effectively decrease your salary significantly.
Im gobsmacked at why people don't understand the importance of the gross margin, then gross to net. Im a software product manager. Im always looking at GPM on my products year on year. I also look at what the targets are set at over 5 years or towards the end of business lifecycle (product exit or product retirement/morph). Fine tuning the GPM in a messy product team is what I do - software product scaling with great GPM is really tricky as a one to many model. Trying to get people in the current company to accept and understand it is tough too. :)
I got to say… When this info started popping up on my feed I was super skeptical! It’s a pretty successful person who runs a number of businesses I find the stuff on the Internet complete crap. Alex‘s stuff however is unbelievably valuable! I’m all in on this stuff!
You have great advice. Quick tip to take your videos to the next level: look at the camera instead of your notes or script. Makes it more personal and therefore believable.
love this dude for real...wish so bad he would help my business out...we're a film production company from germany that really stands out in quality, but our sales and marketing aint good :) - hormozi will change! im learning
Every increase in Gross Margin is an exponential increase on the net margin. Lower cost Increase price Increase gross margin to minimum 80%, better 90%.
The way margins play out for products and services are very different... It would've helped if you could go into the definition of net margin and show how net margins are different for products vs services... Additionally retail stores have a different calculation to margins today, as retail businesses get complex the margins get complex...
At c.4 mins, how did you get from 66%/12% to 80%/25%? While it's good to get people thinking about the levers they have to grow their business, not explaining relationship between gross to net or showing a real calculation demonstrates just how shallow your advice is. It basically boils down to increase the sale price or decrease costs to increase your margin so you have more profit left over to pay yourself. Also, while I'm here, the percentage increase from 15 to 20 is 33.33%
I could be wrong, but the way he defined COGS sounded more like Variable Cost (VC). There are two different ways to account for these: Rev-COGS=Gross Margin Rev-VC=Contribution Margin These two are VERY different things.
Well done. I have a salesforce that is very limited on their mindset to grow their margins. We actually have team members who thinks 25% gross margin is too much. You can’t catch your cost to profitability. We have to justify our margins.
Also take this into consideration. Profit is profit. I own a brick and mortar and will get cash heavy at times. I will purchase an item that will make me 15% profit over sitting on cash. The cost of employees, and all other expenses remain the same as it would if I didnt aquire a item that gives me 15% margin. Finding things that are a lock and SECURE profit is the biggest hurdle.
What if our business runs on a flat percentage for the COGS? So if we charge $70 an hour for PT and pay the trainers 42% of the $70, how can I increase my margins then while still maintaining happy and well compensated trainers?
Very cool, the numbers and process seemed scary until you challenged us by saying “you just don’t want to do the thinking to understand it” lol great video man! Thanks for this.
Most business owners I talk to are at 20-45%. I think 25-35% is very healthy and attainable for most businesses. I can’t seem to push past 22% in my service business
Looks good on paper but when you enter a market where the competition has set a certain price point, how do you increase yours and still stay competitive?
Accountant here, this info is absolutely golden! Entrepreneurs need to put this to heart.
I’m in grad school for accounting rn and I’m kind of upset because idk about you but I feel like we just learn how to calculate these figures robotically. They don’t teach it conceptually aswell to understand how that truly benefits the CEO/company
@@forbes4007 school is designed just to get you to pass the CPA exam. The real learning happens on the job.
@@forbes4007 why would you do grad school for accounting
@@AZANlA I was in the accelerated grad program called the MSA. It makes you eligible to sit for the CPA exam and also get your master's and bachelor's degree at the same time. LOL, update; I withdrew from the program, it isn't really in line with what I truly want to do and focus on.
Liar liar tongue on fire
Takes a simple concept like margins, simplifies it for any non-finance majors, but also presents it in a tangible way that can make a significant difference for people…bravo
I’m in Grad school for Accounting and I’m mind blown that this is the power of gross margin. I understand it far more in-depth now than just vaguely
The new
Hi, can someone please explain how 26% net margin @4:05?
@@anitha6249I’m sure you know now bc it’s been 7 months, but just incase:
The increase to 26% net margin was possible because he was able to increase his gross margin 14%, and that directly translated into his net margin.
Another gem from Alex Hormozi!!!! Every time I see him, he looks like he's put another inch on his arms!!!!
Ha. Appreciated James.
Looks like one sharp edge grazed and he will explode!
All those inches…and still struggling with a marker cap…we have all been there! Hahah great content!
It's the TRT he and his wife is taking
@@AlexHormozi I’m a private self defense trainer. I’m not sure how I calculate my cost of what I do? I charge all my students in series of 10sessions every time. I charge $3000/10. Would the cost of gas/travel be my cost? Thank you in advance
I don’t even have a business and I’ve watched this at least 10 times in the last few years. This vid should have a million views easy
In the last example he gives, there are 2 ways of increasing Gross Margin Ratio from 75% to 80%
1- Increase the COGS-Cost of Goods Sold- Monthly cost of the program from $400 to $500. Wich is a 25% increase in price to the customer.
or
2- Decrease the salary of the coaches from $4,000/mo to $3,200/mo.
Of these 2 options, decreasing the salary of the existing coaches or hire new coaches at a lower salary might compromise the quality of the product, on the other hand, increasing the perceived value of the product and therefore justifying the 25% increase in price might be easier.
Great stuff! I was thinking about pursuing an MBA but the experience of running a business in addition to studying these videos and implementing the knowledge will help me advance a lot more.
Sorry this is incorrect, the first option he is increasing the price per month per customer $20 so the three month package would be $1260. Which would then result in 25% increase of net profit margins
Yeah but lets keep in mind that also increasing the margin wether by increasing profit or decreasing the cost comes with ether losing clients or employees so it’s not always that easy
It depends on what you are selling. Some things people will pay more for even if you keep increasing the price. It’s called pricing power. Luxury purses could go up 20% in price and women would still buy them. I don’t agree in cutting an employees pay though.
Alex, it's a 33% increase. Teacher is testing to see if we're paying attention ;)
My products have great margin and I've never considered the true take home value that a slight increase in this way (likely for all the same reasons your clients give you). Thanks for the enlightenment, amigo! 💚
15% increase to 20% Net Margin is a 33.3% increase. 20% down to 15% would be a 25% decrease. 12:00
Exactly!
How are you getting 33.3%?
@@MT-cy4fg 20 divided by 15 = 1.333 so it is a 33.33% increase
@@rafi10539you x by 100. It's 133.333
At 12:03" Alex says going from 15% to 20% margins is a 25% increase. It's actually a 33% increase if I'm not mistake. Amazing video!
Tw7 7 0:40
Great explanation of margins. Completely in la la land as to practical application in 95% of the real world.
Love these old videos where you dove into the nitty gritty details Alex! So appreciate you breaking down the concepts and making them accessible for all entrepreneurs.
Any chance Caleb might work some of these “boring work” videos into the UA-cam strategy going forward?
I know they’re not popular topics that are going to get the same sort of views and reach as the newer stuff, but they are so so valuable.
Hopefully that’s what the Mozi Media channel is for!
Alex,We want you to deep dive more on this topic, more examples of models for people starting to grow a team, along with suggestions of how your would build for hiring first 1-3 coaches in a organization
So good! It's kinda hard to believe it until you see it for yourself. Even at 50% Gross margin our business was under water for years.
I'm an investor. I have always maintained that people who know business make the best investors. Alex clearly knows his stuff. He did not read this yesterday in a book, he clearly KNOWS it and lives it. I'm sure he enjoys developing businesses, but the shift to making a good investor is very small.
I now have 3 employees in my bed bug heat treatment company and this really summed up how to set my goals and expectations with sales targets. I appreciate your content man, glad I found you
In your scenario, is the COGS, cost of good solds simply the manhour you pay to your employees? I a having trouble to understand this term in a service based model.
Hey its been a year how has business been?
@@felixg.7752 business is booming, unfortunately lots of bed bugs to kill 😅
That’s amazing. Keep up the good work man! Wish the best for you and your three co-workers.
Did I understand this wrong or does increasing the monthly price from 400 --> 420 not get you to 80%? 420*40 = 16.8k, 16.8k-4k = 12800 and then to find the % you do 12.8k/16.8k = 76.2%. So if we went with what he said above we would need to charge each client an extra 100 / month ==> 500*40 = 20K, 20K-4K = 16K, Then to finally get your margin 16k/20k = 80%. Just wanted to make sure I understoodd this correctly! Thank you so much for sharing this informations for free!
I noticed the same mistake also. He did not change total gross/month thats why his numbers came "right", I also came up with 500 cost to reach 80%
@@RadicalSelfImprovement how you calcolate the 33% increase?
@@DavideDileoofficial One way is in microsoft excel: goal seek analysis. Build a table and tell the spreadsheet you want the 75% to change to 80% by changing this or that value
I did the math also. Yea have to raise it by almost $150 a month not $20
If he decrease the cost of goods by $800/month then he would 80% net margin. That's where Alex is making the mistake.
This man is a Gem. Gaining it and then sharing it back, thus helping both parties involved. Respect!
This man is the truth. I'm proud of his continued success. Humble beginnings shows thru out his demeanor. Can't help but root for a guy like that. Godspeed
Jesus is the truth.
Love ya Alex! But 20% is a 33% (+5 percent) increase from 15. Still awesome though! My accountancy professor never actually explained this stuff well, out here you sharing gold!
this is really great , it is good to see it implemented in your type of business , i use the same formula in a different way because i have a different business .
i sell goods , so my cost is fixed monthly rents salarys ِetc... no matter how much sales i make , and with the harsh competition i just target more sales and that’s will automatically lower my cost and for my clints i keep the price or lower the price to keep up with the competition .
my average margin is 26% to 27% , and my cost is 5% and i try to keep it like this so at the end of the year my net margin is close to 22%
and with more sales the cost can be low as 3% .
It’s so great that both your heart is gold and your material is gold. kudos to you for helping us all out man. Super helpful and inspiring material. I started with your new stuff and am working my way backwards. Your production has improved in the newer stuff, but your energy and value brought seems to have always been there! Thank you.
This is clearly focused towards service-based businesses (Really helpful though), would like to see another version where you focus on product-based businesses instead
I concur with you as well. I'm more interested in the product side.
Alex took business 22 years ago thanks for your videos. you will be continually successful bc you help people
Thanks Alex!! I’ve been in business for 10yrs and this is enormously helpful!!
WOW! I had no idea i could make more money by cutting my expenses and charging more! I am now an expert business man. I can definitely see how this guy became a $100mil CEO. This is not a scam at all!
In the last example, the 3rd option is to make the trainer handle more people. Volume is another way to increase gross and net margins
This can reduce quality of service , best option here is to increase the price. $4k for 40 clients is already a low wage so can’t really lower it. More clients & higher price
That doesn’t increase profit margins., You’d simply be adding more work with the same profit margins. Get your margins right and then scale my friend.
watched it once, not stopping till it makes sense!!
easy to say on the board in reality being in actual business doesn't really work that way cause you still have to consider consumer purchasing power economic and inflation, also if you are selling economies of scale is also a factor
One of your best videos I've seen so far. Will watch again, thank you!
not really sure how I ended up watching this video but well presented. One note in the example at the end - it's actually even more than 25% increase it's a 33% increase because your original basis is only 15% so an addition 5 is 5/15 = 1/3
Praise Jesus ! This is exactly what I needed at exactly the right time. Thank you!!!
Thanks man! I think this is also important for people when trying to negotiate their salary. It's always important how much someone will make off of you so you can get compensated properly...
I'm running my own business and your content is super helpful! I've read your $100M offers book, loved it!
Looking forward for more content!
It’s one of those works in theory videos. Try selling something for 100 when everybody else is selling it for 60 to 80. And that’s where reality comes in
Most underrated entrepreneur information on UA-cam. Mozi nation baby!
Interesting and thought provoking stuff, Alex! Coming from an engineering background I am enjoying learning about the business world, and so your channel has been awesome to delve into. I must say though, you should check your math before hand because you undersold your own punchline at the end there! Strictly speaking, going from 15% to 20% net margin is a staggering 33.3 percent increase (not 25%) which is even more impressive! Point taken though, and well done.
This is my tenth Hormozi video today and the gems just keep coming! 🔥
In the coaches example, you could also increase their efficiency, so they could service 42 clients per month rather than 40.
smart
Good idea! Then he gets the $800 extra needed without dropping the coach's pay or having to raise the monthly fee to $500 per month to get 80% although if he did sell for $500 per month that 80% margin would equate to $16000 total rather than $400 per month at $12800 total, might be a hard sell though.
Only problem is that it’s easier to reduce cost, or increase price, than it is to improve your Human Resources.
I was thinking the same thing during the video. That’s another option
well technically, improving efficiency is the same thing as reducing cost, as by improving output while maintaining the same costs results in lower costs per unit. But you are right, thats another solution.
Thank you Alex. Charging more for your service or product also brings better customers. Doubling my course price now
Great!
lmao no it does not. Ur course is made for people that want to fix their life not for high value people. + u dont pay rent and all these things ur margin is already big
Raising $20 only makes it to 76% the only one that works is paying $3200 you would have to raise price by almost $150 per month per client to get to 80%. What were not doing is assuming that the trainer would quit if he got an $800 a month pay cut and the clients would quit if you raised it by $550. Would take years longer to raise that margin without losing more than half clients putting your revenue under
Alex! Thanks for all your help these past couple years
Glad I could provide value
@@AlexHormozi you've changed my outlook on selling my services, so thank you. Opened my mind to other possibilities to get those Margins up as well.
Super appreciate your videos. 😀Thank you for your consistent, solid information. You are one of the few business people I listen to. Thanks!
This video underscores how critical it is to select/define your market in a way that allows you to achieve high gross margins. It's easier to accomplish this with Software and Learning products than with physical products. If you have a physical product, usually, the only way you can achieve reasonable gross margins is to "wrap it" in some service with recurring revenue.
Love this video, Alex! I’m going to have to keep track of my margins going forward.
Btw the bottom right calculation toward the end is a 33% increase, not 25%. Even better!
lol when i saw that i thought to myself "am i the only one catching that?" lol
Could you enlighten me on your math? How does bumping the extra 5% net margin increase = making 33% more loneyb
@@tapfilms6806 because it’s 5% increase from 15%. So 5/15 is 0.33 which is 33% of an increase from 15%.
If you were making $15 and now making $5 more that is a 33% increase in your profit.
This is a gem. Thank you Alex. This is highly appreciated. Saad from Kuwait.
Cogs is basically labor and any materials you use while delivering a service. That's it. I hate when people have to be pretentious when the concept is so simple.
The single best business video I have ever seen...thank you so much!
BRO you just opened my eyes. Ive been wrongly priced at the cost of my life savings for so long. Ive been trying to run at 6% yearl margins for. Holy crap
6:36
It's not linear, margin increases are exponential
This is wonderful. I really appreciate this content. I own a Plumbing company - we run a gross margin of around 60 percent, and that is on the higher end of our market.
I wish more contractors watched videos like this and raised their prices - so we could all be closer to 80 percent margin.
Is there any way to give bigger value than your competitors that does not elevate your expenses in long-term? Like this you could up your prices and get there
Lol no. We’d be living in a world where services are even more expensive than they are right now.
You are a businessman, but don’t forget you’re also a consumer. If what you suggested actually came to fruition, you’d be paying a lot more for every single thing you buy/consume… and that would effectively decrease your salary significantly.
Wow, this IS AMAZING. I can't believe I've been studying business for many years and this is the first time I learn about this concept.
Im gobsmacked at why people don't understand the importance of the gross margin, then gross to net. Im a software product manager. Im always looking at GPM on my products year on year. I also look at what the targets are set at over 5 years or towards the end of business lifecycle (product exit or product retirement/morph). Fine tuning the GPM in a messy product team is what I do - software product scaling with great GPM is really tricky as a one to many model. Trying to get people in the current company to accept and understand it is tough too. :)
ps my son hacked my youtube. im a product mgr mum. :)
BRO Always Inspiring us with Golden info.❤
Am MBA Graduate And Am Gonna start My Busness at Dubai Hopefully🎉🎉
I got to say… When this info started popping up on my feed I was super skeptical! It’s a pretty successful person who runs a number of businesses I find the stuff on the Internet complete crap. Alex‘s stuff however is unbelievably valuable! I’m all in on this stuff!
Love that he couldn't get the lid off the market lmao. Great info as well
Thank you so much your content helps me out a lot and inspires me to go for me dreams
THANK YOU
This is gold!
Literally had to do this with my web design business.
Thanks! , never thought of it that way. Brilliant 💪
Glad you liked it
You have great advice. Quick tip to take your videos to the next level: look at the camera instead of your notes or script. Makes it more personal and therefore believable.
And they say you need to go to college to learn this SMH. Appreciate you Alex for this info.
love this dude for real...wish so bad he would help my business out...we're a film production company from germany that really stands out in quality, but our sales and marketing aint good :) - hormozi will change! im learning
He nailed it with that extra every month. this is key for increasing marketing, which leads increasing to exponential growth (scale)
Good job! It all starts with the nucleus of this thinking. Thank you for doing this. The impossible is becoming more possible on this planet.
The last example is actually a 33% increase in take-home-money, but that makes the point even stronger
Every increase in Gross Margin is an exponential increase on the net margin.
Lower cost
Increase price
Increase gross margin to minimum 80%, better 90%.
I liked it and found it valueable. Thanks for the return on my attention Alex
Wow!! Thanks Alex. Amazing content👏👏
You're doing God's work out here. Amazing content!
Still one of the best videos. Deserves more views
The way margins play out for products and services are very different...
It would've helped if you could go into the definition of net margin and show how net margins are different for products vs services...
Additionally retail stores have a different calculation to margins today, as retail businesses get complex the margins get complex...
At c.4 mins, how did you get from 66%/12% to 80%/25%? While it's good to get people thinking about the levers they have to grow their business, not explaining relationship between gross to net or showing a real calculation demonstrates just how shallow your advice is. It basically boils down to increase the sale price or decrease costs to increase your margin so you have more profit left over to pay yourself. Also, while I'm here, the percentage increase from 15 to 20 is 33.33%
🔥 Wow, ive never done these numbers this way in my business. Thank you. 🙏 Price rise is happening July 1st haha.
Good!!
I could be wrong, but the way he defined COGS sounded more like Variable Cost (VC). There are two different ways to account for these:
Rev-COGS=Gross Margin
Rev-VC=Contribution Margin
These two are VERY different things.
Thanx bro for useful information 🙏😊
Excellent information and presentation!
Watched it a few time to fully comprehend it. Very well explained, just a hard to swallow pill
So sick dude. The game needs guys like you.
That was very illuminating...I'm embarrassed to say I had no idea about this
Thank you for the recap near the end!
Well done. I have a salesforce that is very limited on their mindset to grow their margins. We actually have team members who thinks 25% gross margin is too much. You can’t catch your cost to profitability. We have to justify our margins.
Opened my mind to reality of the necessity for at least 80% gross margin being reasonable.
This is killer! awesome content Alex 🤙
Most I've EVER learned about business. You're a great teacher bro!
Valuable, Highly valuable. Fantastic 👍
Also take this into consideration. Profit is profit. I own a brick and mortar and will get cash heavy at times. I will purchase an item that will make me 15% profit over sitting on cash. The cost of employees, and all other expenses remain the same as it would if I didnt aquire a item that gives me 15% margin. Finding things that are a lock and SECURE profit is the biggest hurdle.
Keep them coming - would love to learn mire about how you evaluate a business as it’s overall health. Thank you
Who needs school when you’ve got Alex
🙏🏼✊🏽
This really worked! 🙏🏾 Thank you!
What if our business runs on a flat percentage for the COGS? So if we charge $70 an hour for PT and pay the trainers 42% of the $70, how can I increase my margins then while still maintaining happy and well compensated trainers?
Love bro ! Your Channel is a Free Course on Business, Scaling and Marketing ! I can’t thank you enough ! Much Gratitude Alex 💪🏼🏆
Wow! This is amazing! My friend Scott linked me....what a gift!
Very cool, the numbers and process seemed scary until you challenged us by saying “you just don’t want to do the thinking to understand it” lol great video man! Thanks for this.
Great information. Thanks for making it easy to understand. The challenge is most businesses don't operate on anything close to 80% margin.
Most business owners I talk to are at 20-45%. I think 25-35% is very healthy and attainable for most businesses. I can’t seem to push past 22% in my service business
Yeah I was thinking / wondering the same thing
Steps that I can go and actually apply today! Thank you for this.
great vid. the glare off the paper makes it hard to read or my laptop geekin.
Thank you so much
You are a very good teacher!
Wowza! So valuable. Thank you Alex! I’m using what you are teaching me now everyday.
Business made easy! Dang so much value 😊
Awesome content. I need to take a course from this guy
Looks good on paper but when you enter a market where the competition has set a certain price point, how do you increase yours and still stay competitive?