Value Equation

This framework outlines Alex Hormozi's Value Equation for creating irresistible offers that maximize customer value and drive business growth.

The Value Equation

• Formula: (Dream Outcome × Perceived Likelihood of Achievement) ÷ (Time Delay + Effort & Sacrifice)

Key Components

1. Dream Outcome

   • Defines what the customer ultimately wants to achieve
   • Determines if someone is interested in your category of offer
   • Example: In weight loss, the dream outcome is looking better

2. Perceived Likelihood of Achievement

   • Customer's belief in the probability of success
   • Influences willingness to pay a premium
   • Example: Choosing an experienced surgeon over a new graduate for liposuction

3. Time Delay

   • Duration between purchase and result attainment
   • Shorter time delay increases perceived value
   • Example: Liposuction (immediate results) vs. personal training (long-term process)

4. Effort & Sacrifice

   • Effort: Actions customer must take to achieve the outcome
   • Sacrifice: Things customer must give up to achieve the outcome
   • Example in personal training:
     • Effort: Waking up early, experiencing soreness
     • Sacrifice: Giving up unhealthy habits, less leisure time

Enhancing Offer Value

• Itemize all customer requirements post-purchase
• Identify potential risks, time delays, efforts, and sacrifices
• Create solutions for each identified item
• Include these solutions in your offer to increase its value and conversion rate

Additional Offer Enhancers

1. Scarcity: Limit the number of units available
2. Urgency: Set time constraints on the offer
3. Guarantees: Use different types to mitigate risk
   • Unconditional
   • Conditional
   • Zero guarantee
   • Performance (implied) guarantee
4. Bonuses: Add extras to drive short-term buying decisions

Implementation Strategy

• Create a comprehensive "bonus stack" addressing each potential objection
• Use bonuses strategically during the sales process to overcome objections
• Provide surprise additional bonuses post-purchase to exceed expectations
• Focus on adding value rather than discounting to close sales