Podcasts > The Game w/ Alex Hormozi > How to Price High-Ticket Without Fear | Ep 903

How to Price High-Ticket Without Fear | Ep 903

By Alex Hormozi

In this episode of The Game, Alex Hormozi and Anthony explore strategies for scaling businesses and optimizing sales operations. Their discussion covers practical approaches to marketing channels, sales team compensation, and talent acquisition, with specific insights on how businesses can maintain growth while managing costs and team performance.

The conversation also delves into portfolio management and business model optimization, including Hormozi's 'barbell' strategy for balancing active and passive investments. Topics include identifying the most profitable parts of a business, adapting to changes in platform algorithms, and building effective content distribution strategies across multiple channels. The episode provides a framework for business owners to evaluate and improve their current operations while planning for future growth.

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How to Price High-Ticket Without Fear | Ep 903

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How to Price High-Ticket Without Fear | Ep 903

1-Page Summary

Scaling and Optimizing Sales and Marketing

Alex Hormozi and Anthony discuss strategies for optimizing sales and marketing to drive business growth. Hormozi advises against stopping existing marketing efforts in favor of new ones, instead recommending the addition of new channels while maintaining current ones. He emphasizes that when ad costs increase, the focus should be on improving ad quality rather than changing targeting or location.

For sales team compensation, Anthony reveals their approach of offering modest base salaries with uncapped commissions. Hormozi suggests that offering competitive base salaries can attract better talent, and recommends using a "try before you buy" contractor model to evaluate sales representatives before permanent hiring.

Managing a Portfolio of Business Models and Revenue

Hormozi emphasizes the importance of focusing on core business strengths and avoiding distractions from misaligned opportunities. He shares his experience with 24 deals in 24 months and recommends a 'barbell' strategy that balances active business pursuits with passive investments. This approach involves reinvesting core profits into growth while diversifying excess capital into hands-off investments for stability.

Talent Acquisition and Team Building

In discussing recruitment strategy, Hormozi advocates for maintaining a strong recruiting team and offering above-market compensation to build a robust talent pipeline. He reveals that his companies offer 90th percentile salaries for all roles, believing this yields high returns. The strategy extends to empowering high performers by promoting them to leadership positions and providing necessary resources for their success.

Identifying Highest-Leverage Parts of the Business

Hormozi advises businesses to analyze their income streams and divest from less profitable activities. He recommends focusing on services with strong unit economics and targeting profitable customer segments. For process optimization, he suggests recording sales calls to identify inefficiencies and building retention-boosting actions into onboarding flows.

To maintain competitiveness, Hormozi recommends monitoring platform algorithm changes and adjusting tactics accordingly. He advises diversifying content types and distribution channels to avoid reliance on a single platform. When facing declining engagement, he suggests analyzing whether it's due to content quality or environmental shifts, and potentially starting fresh on new platforms if necessary.

1-Page Summary

Additional Materials

Counterarguments

  • Maintaining current marketing efforts while adding new ones may not always be feasible due to budget constraints or diminishing returns on some channels.
  • Improving ad quality is important, but sometimes targeting or location adjustments can also yield better results, especially if the market dynamics have changed.
  • While uncapped commissions can motivate sales teams, they can also lead to aggressive sales tactics that might harm the company's reputation or customer satisfaction in the long run.
  • Offering competitive base salaries may attract better talent, but it can also inflate the company's fixed costs and may not be sustainable for startups or companies with tight cash flows.
  • The "try before you buy" contractor model can be beneficial, but it might also lead to a lack of commitment from potential employees who seek job security.
  • A 'barbell' strategy can be effective, but it may not suit all types of businesses, especially those that require a high level of active management or have unique industry risks.
  • Offering above-market compensation can attract talent, but it might not be the most cost-effective strategy for every company, especially if other aspects of the work environment are not competitive.
  • Promoting high performers to leadership positions assumes that top performers in one role will excel in another, which may not always be the case as leadership requires a different set of skills.
  • Divesting from less profitable activities could overlook the potential long-term value or strategic importance of those activities.
  • Focusing solely on services with strong unit economics might lead to missed opportunities in emerging markets or areas where initial profitability is low but growth potential is high.
  • Recording sales calls is useful, but it must be balanced with privacy concerns and potential discomfort it may cause to employees or customers.
  • Adjusting tactics based on platform algorithm changes is important, but over-reliance on these platforms can be risky if they suddenly change policies or lose popularity.
  • Diversifying content types and distribution channels is wise, but it requires additional resources and may dilute the brand if not managed carefully.
  • Starting fresh on new platforms when facing declining engagement might not address underlying issues with the product or service that are causing the decline.

Actionables

  • You can experiment with a side hustle to understand the impact of diversifying income streams without quitting your day job. Start a small online business or freelance service on the side, track the profitability, and learn to balance it with your primary income source. This hands-on experience will teach you about the importance of focusing on profitable activities and when to divest from less lucrative ones.
  • Develop a personal brand by creating content across various social media platforms to learn about content diversification. Begin by choosing a topic you're passionate about, then create different types of content (blogs, videos, podcasts) and distribute them on at least three different platforms. Monitor which types of content and platforms get the most engagement, and use that data to refine your strategy.
  • Create a feedback loop for your personal projects by recording and reviewing your performance. If you're learning a new skill or working on a project, document your process through video or audio recordings. Review these recordings to identify areas for improvement, much like analyzing sales calls, and adjust your approach to enhance your efficiency and effectiveness.

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How to Price High-Ticket Without Fear | Ep 903

Scaling and Optimizing Sales and Marketing

Sales and marketing optimization is essential for fueling growth. Alex Hormozi and Anthony provide insights into best practices for diversifying lead generation channels and structuring compensation to attract top sales talent.

Leverage Multiple Channels to Fuel Growth

Diversify Lead Generation By Adding Channels, Not Sacrificing Sources For Efficiency

Alex Hormozi advises against halting existing marketing flows in favor of new ones. Instead, he recommends adding more channels, such as hiring additional marketing agencies, while retaining current ones to avoid putting the entire business at risk for the sake of efficiency. Hormozi notes that increasing promotional efforts can lead to higher earnings, particularly if the product has a favorable gross margin.

Audience member #6 underscores the benefit of multiple lead generation channels by mentioning they have about 2,000 free trials and 6,000 leads a month from their current strategies, which include advertisements and biannual product launches.

Enhance Marketing Quality and Conversion Without Increasing Ad Spend

Hormozi identifies the quality of ads as being paramount when ad costs increase, instead of the geographic location or other factors. He emphasizes creating a superior offer, optimizing efforts, and producing better ads to surpass an "ad ceiling." Hormozi uses the example of the Old Spice campaign's success with a single ad to demonstrate the impact of high-quality creative.

He also recommends leveraging top-performing organic content for ads by adding a call-to-action, making effective ad creation more attainable for those skilled in content creation.

Compensation to Attract and Retain Top Sales Talent

Incentivize Top Salespeople With Competitive Salaries and Uncapped Commissions

Anthony reveals that their sales team operates with a significant profit margin and currently offers a modest base salary plus uncapped commissions. Hormozi stresses that star Business Development Representatives (BDRs) often look for a base salary to cover them as they build a pipeline, which may not be immediately achievable through commission.

He suggests that offering a competitive base salary can ...

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Scaling and Optimizing Sales and Marketing

Additional Materials

Counterarguments

  • Diversifying lead generation by adding channels can lead to dilution of focus and resources, potentially reducing the effectiveness of existing channels.
  • Increasing promotional efforts without a clear strategy may not always lead to higher earnings, especially if the market is saturated or the additional promotions do not resonate with the target audience.
  • Leveraging top-performing organic content for ads assumes that what works organically will work in paid channels, which may not always be the case due to different audience behaviors and expectations.
  • The emphasis on ad quality over geographic location might overlook the importance of targeting and personalization, which can be crucial in certain markets or industries.
  • While multiple lead generation channels can bring in a significant number of leads, they may not all be of equal quality, potentially wasting resources on low-conversion prospects.
  • Offering competitive base salaries and uncapped commissions could lead to unsustainable cost structures, especially for startups or businesses with tight cash flows.
  • A well-structured compensation plan ...

Actionables

  • You can analyze your current hobbies or side projects to identify additional revenue streams without abandoning your primary focus. For instance, if you enjoy photography, continue to sell your photos online, but also consider offering virtual photography workshops or creating a YouTube channel with photography tips to diversify your income sources.
  • Experiment with turning your top social media posts into sponsored content by adding a direct link to your products or services. If you have a post that received a lot of engagement, edit the caption to include a call-to-action that directs your followers to your online store or booking page, potentially converting that organic success into sales.
  • Create a simple referral program to attract talent to you ...

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How to Price High-Ticket Without Fear | Ep 903

Managing a Portfolio of Business Models and Revenue

To successfully manage business ventures, strategists like Alex Hormozi highlight the importance of focusing on core strengths and balancing active and passive income.

Invest In Core Business That Plays To Strengths

It's essential for businesses to concentrate on their main areas of competence and avoid distractions.

Avoid Distractions From Misaligned Opportunities

Alex Hormozi cautions that having several ventures, as mentioned by an audience member, who is juggling an agency and a fund on top of his main real estate work, may distract from the core business. Hormozi implies that these diversified interests could potentially divert energy away from the main objective.

Evaluate Acquisitions or Investments for Strategic Fit and Outsized Returns

The audience member speaks about scaling through roll-ups and potentially taking companies public via institutions or family offices. The strategy involves building a proficient team that can scale operations effectively. Hormozi discusses engaging in 24 deals in 24 months, showing a keen interest in rapid expansion and strategic acquisitions. Emphasizing the importance of aligning with one's business model, he notes Constellation Software's success with a large number of smaller deals that align with their strengths. Hormozi also discusses the idea of chasing bigger deals if they align strategically and promise higher returns.

"Craft 'Barbell' Strategy For Balancing Active and Passive Income"

For financial stability and ongoing growth, Hormozi recommends a 'barbell' approach to investment, which involves a dual focus on active business pursuits and passive investments.

Reinvest Core Profits Into Growth and Expansion

According to Hormo ...

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Managing a Portfolio of Business Models and Revenue

Additional Materials

Counterarguments

  • Focusing solely on core competencies may limit innovation and the ability to adapt to changing market conditions.
  • Diversified interests can lead to new opportunities and revenue streams that might not be available within the core business.
  • Not all acquisitions need to promise outsized returns immediately; some strategic acquisitions might be for long-term positioning or to acquire talent and technology.
  • Rapid expansion through roll-ups and acquisitions can lead to integration challenges and dilute company culture.
  • A strict adherence to aligning acquisitions with the current business model might overlook the potential benefits of diversifying into new areas.
  • Reinvesting all core profits into growth might not always be prudent; sometimes it's wise to secure a cash reserve for unforeseen circumstances.
  • The 'barbell' strategy may not be suitable for all businesses, especia ...

Actionables

  • You can conduct a personal skills audit to identify your core competencies and focus on developing them further. Start by listing all the skills and talents you possess, then rank them based on your proficiency and passion. Concentrate on the top skills that align with your career goals or personal aspirations, and seek out resources or courses to enhance these areas. For example, if you're great at graphic design but passionate about photography, consider taking advanced photography classes to turn a hobby into a potential side business.
  • Create a simple investment checklist to ensure any financial decisions align with your long-term goals. Before making any investment, whether it's stocks, real estate, or a small business venture, run it through a checklist that includes criteria such as the time commitment required, the potential return on investment, and how it fits with your existing financial strategy. This could mean choosing index funds or robo-advisors for passive investment that don't require daily monitoring, allowing you to focus on your primary income-generating activities.
  • Develop a 'barbell' approach to ...

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How to Price High-Ticket Without Fear | Ep 903

Talent Acquisition and Team Building

Alex Hormozi sheds light on the critical importance of recruitment in creating strong leadership teams within portfolio companies and leveraging talent to confer a competitive advantage in today's business landscape.

Recruitment as Core Competency and Advantage

Hormozi places significant emphasis on the need to maintain a robust recruiting team, which is key to filling leadership roles with exceptional talent.

Offer Above-Market Compensation to Build Talent Pipeline

Hormozi advocates for always be in hiring mode and expresses a willingness to overpay for high-caliber talent. He reveals that they offer 90th percentile salaries for all roles, a strategy that he believes yields a high return on investment. By offering above-market compensation, Hormozi’s approach ensures the construction of a talent pipeline that continuously feeds skilled individuals into the organization.

Leverage Talent to Drive Synergies and Efficiencies

By investing in a strong recruitment team, Hormozi emphasizes the dual benefit of being able to identify standout performers within the company as well as onboard additional exceptional talent, ensuring that the companies become fully competent. Highlighting specific cases, Hormozi identifies individuals showcasing extraordinary abilities, such as marketers or sales leaders, and positions them within their holding company. This strategy allows for their expertise to be utilized across the entire portfolio, thus driving synergies and efficiencies within Hormozi's business operations.

Empower High-Performing Team Members to Scale Leadership

Hormozi's recruitment philosophy doesn't stop at acquiring talent; it involves fostering leadership by empowering the high performers.

Promote Top Performers to Take On Increased Responsibilities

To m ...

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Talent Acquisition and Team Building

Additional Materials

Counterarguments

  • Offering above-market compensation consistently may not be sustainable for all companies, especially startups or those with limited financial resources.
  • High salaries do not guarantee employee loyalty or performance; other factors like company culture, job satisfaction, and work-life balance are also crucial.
  • Constantly being in hiring mode could lead to a lack of focus on developing current employees and may create a culture where internal talent feels undervalued.
  • Overemphasis on recruitment might overshadow the importance of employee retention strategies.
  • Promoting top performers to leadership roles assumes that high-performing individuals have the necessary leadership skills, which is not always the case.
  • Providing resources and support to leaders is important, but it must be balanced with accountability measures to ensure tha ...

Actionables

  • You can start a peer recognition program at work to identify and celebrate high performers. Create a simple system where colleagues can nominate each other for small rewards or acknowledgments when they notice someone going above and beyond. This not only fosters a culture of appreciation but also helps highlight potential leaders within the organization.
  • Develop a personal mentorship habit by offering to mentor someone less experienced in your field. By sharing your knowledge and experience, you're empowering others to grow their skills and leadership capabilities. This can be as simple as setting up regular coffee chats or offering to review their work and provide feedback.
  • Volunteer for cross-departm ...

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How to Price High-Ticket Without Fear | Ep 903

Identifying Highest-Leverage Parts of the Business

Alex Hormozi and audience members explore strategies for businesses to focus on profitable areas, optimize key processes, and target the right customer segments for sustainable growth.

Assess Profitability and Growth Potential of Product/Service Lines

Hormozi urges businesses to analyze their active income streams, divest from less fruitful activities, and retain hidden talent within smaller ventures. He emphasizes the importance of focusing efforts on areas of the business that offer the highest returns and profitability.

Divest From Underperforming or Non-strategic Offerings to Focus

Hormozi advises businesses to cut ties with underperforming investments and to divest time from less significant business activities. In his experience, some deals were simply not worth the effort, leading him to give equity back and stop communication with stakeholders of those investments.

Double Down On Services With Compelling Unit Economics

Focusing on services with strong unit economics is crucial, as Hormozi indicates that star performers in the portfolio often outperform others significantly. He suggests servicing big brands and becoming their go-to for specific services, citing TikTok as an example, to create a stable and valuable business model.

Scale and Optimize Key Business Impacts

Hormozi and the audience discuss the importance of streamlining business processes, automating tasks, and focusing efforts on the most profitable customer segments.

Streamline Processes and Automate Tasks to Improve Efficiency

Recording sales calls can identify inefficiencies and streamline the sales approach, Hormozi suggests. He also recommends building actions that lead to higher retention rates into the front-end onboarding flow to improve efficiency. Audience members share challenges with process efficiency, such as replacing themselves with other less experienced agents, which led to losing clients.

Target Profitable Customer Segments With Direct Marketing and Sales

Hormozi emphasizes refining how offers are presented and improving direct sales tactics. He advises targeting profitable custo ...

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Identifying Highest-Leverage Parts of the Business

Additional Materials

Counterarguments

  • While focusing on profitable areas is generally sound advice, it can lead to short-termism and underinvestment in future growth areas that are not immediately profitable.
  • Divesting from underperforming offerings might ignore the potential for turnaround or strategic importance in the long term.
  • Retaining hidden talent within smaller ventures is beneficial, but it could also lead to a lack of exposure and opportunities for that talent in more significant parts of the business.
  • Focusing solely on high-return areas might result in a lack of diversification, which can be risky if market conditions change.
  • Cutting ties with underperforming investments may not always be the best course of action; sometimes, a reevaluation and restructuring could yield better results.
  • Services with compelling unit economics are important, but this focus might overlook the value of brand building, customer satisfaction, and long-term customer relationships.
  • Streamlining processes and automating tasks can improve efficiency, but over-automation can lead to a loss of personal touch and customer dissatisfaction.
  • Recording sales calls is useful for identifying inefficiencies, but it must be balanced with privacy concerns and potential discomfort for both employees and customers.
  • Building actions for higher retention rates into the onboarding flow is strategic, but it should not compromise the authenticity of customer interactions or lead to aggressive upselling.
  • Targeting profitable customer segments is smart, but it can also lead to neglecting smaller customers who could become profitable over time or contribute to market share.
  • Refining offers and improving direct sales tactics are im ...

Actionables

  • You can evaluate your monthly subscriptions to determine which ones yield the most value and eliminate those that don't align with your goals. Start by listing all your subscriptions, estimate the value you get from each, and compare it to the cost. If a subscription isn't contributing to your personal development, professional growth, or providing sufficient entertainment, consider canceling it to reallocate funds to more beneficial areas.
  • Develop a habit of conducting weekly personal audits where you assess how you spend your time and energy. Use a simple tracking tool like a spreadsheet or journal to log your activities throughout the week. At the end of the week, review your log to identify patterns or activities that are not contributing to your desired outcomes, such as personal goals or career advancement, and strategize ways to reduce or eliminate these inefficiencies.
  • Create a personal referral system to str ...

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How to Price High-Ticket Without Fear | Ep 903

Navigating Changes in the External Business Environment

Businesses must adjust to shifts in platforms and audience behaviors to maintain relevance and competitiveness in an ever-changing environment, as Hormozi advises.

Adapt To Evolving Audience Preferences

Monitor Platform Algorithm Changes and Adjust Tactics Accordingly

An audience member's concern about a drop in social media metrics suggests the importance of monitoring changes such as platform algorithms that can impact content distribution. Hormozi acknowledges that a decrease in viewership could be due to the audience finding the content less compelling or to an environmental shift like an algorithm change.

He advises considering whether a shadow ban has occurred and, if so, whether starting a new account could help mitigate the impact. Hormozi also suggests that a decline in views might indicate a broader shift in platform preferences, emphasizing the need for creators to remain adaptable to these evolving conditions.

Diversify Content & Distribution to Avoid Single Platform Reliance

Hormozi recommends diversifying content types, such as creating shorter clips from longer live streams, to appeal to wider audience preferences and adapt to different content formats. This approach can help avoid over-reliance on a single format or platform.

He also emphasizes using tools like oneoften.com to analyze high-performing content on YouTube, thus helping to refine content strategies based on successful headlines and thumbnails. Recognizing that the audience's interests can change rapidly, Hormozi shares the necessity for his own business to regularly adjust content in line with what viewers want to see.

Address Industry Competitive and Regulatory Changes

Hormozi’s conversation suggests that being agile and responsive in the current content creation landscape is paramount. While he does not specifically discuss competitive and regulatory changes, the subtext is c ...

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Navigating Changes in the External Business Environment

Additional Materials

Counterarguments

  • While diversification is generally beneficial, spreading resources too thin across multiple platforms can dilute a brand's presence and impact.
  • Constantly adapting to algorithm changes can lead to a reactive rather than strategic approach to content creation, potentially compromising the creator's original vision or brand consistency.
  • The suggestion to start a new account in response to a shadow ban does not address the root cause of the ban and may not be a sustainable long-term strategy.
  • Overemphasis on adapting to audience preferences could lead to a loss of unique voice and authenticity, which are often key differentiators for successful content creators.
  • The use of tools like oneoften.com to analyze high-performing content may not always capture the nuances of why content performs well and could lead to formulaic content creation.
  • The focus on competitive edge and constant adaptation may not be suitable for all business models, particularly those that rely on stability and long-term customer relationships.
  • The advice to double down on platforms like Instagram and YouTube may not be applicable to all audiences, especially if a business's target demographic does not primarily use these platforms.
  • The text does not address the potential downsides of frequent content changes, such as confusing the audience or eroding tru ...

Actionables

  • You can create a personal "content adaptation diary" to track how your social media posts perform after each platform update. Note down the date of the update, the nature of the change, and any shifts in your content's performance. This will help you identify patterns and adapt your strategy accordingly.
  • Develop a "content diversification plan" by listing different types of content you can produce, such as blog posts, videos, or infographics, and the platforms where they could be shared. Set a goal to create and share a new type of content each month to expand your reach and reduce the risk of platform dependency.
  • Start a "responsive content challenge" whe ...

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