Another gem from Alex Hormozi!!!! Every time I see him, he looks like he's put another inch on his arms!!!!
@AlexHormozi3 жыл бұрын
Ha. Appreciated James.
@MrScottSenior2 жыл бұрын
Looks like one sharp edge grazed and he will explode!
@jakemeier12112 жыл бұрын
All those inches…and still struggling with a marker cap…we have all been there! Hahah great content!
@wolfuck Жыл бұрын
It's the TRT he and his wife is taking
@raymondayala5355 Жыл бұрын
@@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
@annylieberman12 жыл бұрын
Thank you Alex! In the beginning stages of my brick and mortar and margining is new for me. I appreciate you sharing this information. You’re the Best!
@alwayscreatingio2 жыл бұрын
So simple
@NetanelColish2 жыл бұрын
So valuable Tysm!
@senpai_sake32765 ай бұрын
Would the huge price increases actually scare off potential customers?
@lucafigueiredo60052 жыл бұрын
Great info here but in the real world when you lower your COGS you cant expect the same quality to demand the same high REV
@TD-rp6ii2 жыл бұрын
He’s the MORE PLATES MORE DATES OF BUSINESS!
@Jcj_jos2 жыл бұрын
If I get paid weekly from my own work, does that count in the cost of doing the work? Since I am the businesses only employee, my hourly cost to do the actual labor and my businesses profit are separate correct?
@tcosmos2 жыл бұрын
This was a real eye opener
@mattpiccirillo3 жыл бұрын
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
@forbes40072 жыл бұрын
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
@TonyLewis42 Жыл бұрын
The new
@anitha6249 Жыл бұрын
Hi, can someone please explain how 26% net margin @4:05?
@nickwongmusic Жыл бұрын
@@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.
@toughlovetom68873 жыл бұрын
15% increase to 20% Net Margin is a 33.3% increase. 20% down to 15% would be a 25% decrease. 12:00
@GrzegorzWierzowiecki3 жыл бұрын
Exactly!
@MT-cy4fg2 жыл бұрын
How are you getting 33.3%?
@rafi105392 жыл бұрын
@@MT-cy4fg 20 divided by 15 = 1.333 so it is a 33.33% increase
@lancesterling84472 ай бұрын
@@rafi10539you x by 100. It's 133.333
@grantstewart45133 жыл бұрын
Accountant here, this info is absolutely golden! Entrepreneurs need to put this to heart.
@forbes40072 жыл бұрын
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
@grantstewart45132 жыл бұрын
@@forbes4007 school is designed just to get you to pass the CPA exam. The real learning happens on the job.
@AZANlA2 жыл бұрын
@@forbes4007 why would you do grad school for accounting
@forbes40072 жыл бұрын
@@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.
@nonefvnfvnjnjnjevjenjvonej33842 жыл бұрын
Liar liar tongue on fire
@marwanelhadi9030 Жыл бұрын
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
@AJohnson03254 ай бұрын
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.
@Emeryx3 жыл бұрын
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!
@raduiuonac48002 жыл бұрын
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%
@DavideDileoofficial Жыл бұрын
@@RadicalSelfImprovement how you calcolate the 33% increase?
@justinmckibben4534 Жыл бұрын
@@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
@nickspaulding1511 Жыл бұрын
I did the math also. Yea have to raise it by almost $150 a month not $20
@abcdef8915Ай бұрын
If he decrease the cost of goods by $800/month then he would 80% net margin. That's where Alex is making the mistake.
@jjwolfcreative Жыл бұрын
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!
@TWEQDvideo6 ай бұрын
Tw7 7 0:40
@metallicarchaea1820 Жыл бұрын
So the secret to a more profitable business is to charge more and or cheap out on goods and pay? Sounds like Capitalism with extra steps.
@jamie_gelaskins Жыл бұрын
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! 💚
@gorkagarcia87152 жыл бұрын
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
@BMartinsGamingExpo24 күн бұрын
I concur with you as well. I'm more interested in the product side.
@epic-controller933 ай бұрын
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.
@normaldean2 ай бұрын
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
@graanmanely67563 жыл бұрын
isn't going from 15 to 20 a 33% inc?
@JohnJesus2 жыл бұрын
yes, I noticed that too. His thinking was "that extra 5 is 25% of 20" But yes, the increase is 33.3%
@lizziesophiaTV Жыл бұрын
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 KZbin 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.
@IZSIN222 Жыл бұрын
Hopefully that’s what the Mozi Media channel is for!
@deyraga2 жыл бұрын
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!
@VersariJames2 жыл бұрын
U don't feel bad for charging, u can't coz every man and his dog are already under cutting everybody's price to get work. It's all good on paper
@dcase202 жыл бұрын
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
@AscendedMasculine3 жыл бұрын
Thank you Alex. Charging more for your service or product also brings better customers. Doubling my course price now
@AlexHormozi3 жыл бұрын
Great!
@fingerarmy66692 жыл бұрын
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
@Tenacious_Legend2 жыл бұрын
Alex, I love your content but your math is wrong at the very end. You would have to charge $1500 (instead of $1200) for the 3 months making it an extra 100/mo (not 20/ mo) to the customer. They would still see a 1% increase to their margin and a 4% increase to their NOI with adding 20/mo.
@SeanHardaker2 жыл бұрын
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%
@thedoble3 жыл бұрын
In the coaches example, you could also increase their efficiency, so they could service 42 clients per month rather than 40.
@jordanroberts29292 жыл бұрын
smart
@bchettle10682 жыл бұрын
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.
@dr.strattonpoulson2 жыл бұрын
Only problem is that it’s easier to reduce cost, or increase price, than it is to improve your Human Resources.
@forbes40072 жыл бұрын
I was thinking the same thing during the video. That’s another option
@radonsmith43862 жыл бұрын
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.
@clinicsanantonio160 Жыл бұрын
Hay Alex, at 12:05 time into this video, isn't net margin increase from 15-->20% a 33% increase, rather than 25% as you say?
@Kuser012 жыл бұрын
15% Net Margin to 20% Net Margin isn’t a 25% increase. It’s a 33% increase! (20 minus 15 equals 5, 15 divided by 5 is 33%).
@TheNathanielWoods2 жыл бұрын
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
@Diogenesthegreat013 жыл бұрын
You will learn more from Alex Hormozi's channel than from Harvard Business School!!
@grumpus1403 Жыл бұрын
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?
@accuruhcyrl4196 Жыл бұрын
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?
@rocthabloc Жыл бұрын
This is brilliant content, but I have one question. How is increasing your Net Margin from 15% to 20% a 25% increase? How does one calculate that?
@sanjayplays50106 ай бұрын
(20 - 15)/15, so 5/15. The formula is to take (new - orginal) / original. He made a mistake in the video, it's a 33% increase
@benbailey1174 Жыл бұрын
15 to 20% margin increase is a 33% increase, not 25%
@Seedmanfred2 жыл бұрын
Great explanation of margins. Completely in la la land as to practical application in 95% of the real world.
@Soyunmaní7772 жыл бұрын
from 15% to 20% net margin that is a 33,3333% Increase :D
@lancesterling84472 ай бұрын
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.
@ramikhandakji3710 Жыл бұрын
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
@quantumsystems9382 Жыл бұрын
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
@michaelgephart1515 Жыл бұрын
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.
@howlanguages7768 Жыл бұрын
I'm at 52% margins and I'm stuck. I can't budge the COGS or prices. What do I do?
@jamesphipps8657 Жыл бұрын
You don't need to be 80+ in margins to the profitable or do well. This is how industries monopolize the value of goods. You know it cost slim to make but you can't find it cheaper anywhere because the industry normalized and set the value
@jeffreyspiker Жыл бұрын
Great information. Thanks for making it easy to understand. The challenge is most businesses don't operate on anything close to 80% margin.
@michaelbacile8439 Жыл бұрын
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
@HIDDENADHD8 ай бұрын
Yeah I was thinking / wondering the same thing
@nickspaulding1511 Жыл бұрын
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
@LRG533 жыл бұрын
Here at less than 100 videos and @ 1.62K subscribers :)
@AlexHormozi3 жыл бұрын
Everyone starts at zero :)
@thorsvenson35303 жыл бұрын
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.
@dled2010 Жыл бұрын
Love this. Obviously this translates to any type of business, but is there a particular target gross margin for a business that has physical products, like a supplement or ecommerce biz? Or is it just a goal of as high as humanly possible?
@jamesemoka9092 Жыл бұрын
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
@dannywarnock8822 Жыл бұрын
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.
@RemodelCommander2 жыл бұрын
I’d donate a kidney to achieve an 80% gross margin as a General Contractor.
@jamieodegaard17 күн бұрын
50% is your 80%
@nathanyeo26213 жыл бұрын
🔥 Wow, ive never done these numbers this way in my business. Thank you. 🙏 Price rise is happening July 1st haha.
@AlexHormozi3 жыл бұрын
Good!!
@jeremybedford50982 жыл бұрын
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
@pawelkapica5363 Жыл бұрын
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.
@felixg.7752 Жыл бұрын
Hey its been a year how has business been?
@jeremybedford5098 Жыл бұрын
@@felixg.7752 business is booming, unfortunately lots of bed bugs to kill 😅
@wiljonguarin5866 Жыл бұрын
That’s amazing. Keep up the good work man! Wish the best for you and your three co-workers.
@travischarlessmithOKC2 жыл бұрын
Hi Alex, how do we calculate COGS if we are self employed ?
@keysncoffee7733 Жыл бұрын
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!
@claycruckosha Жыл бұрын
lol when i saw that i thought to myself "am i the only one catching that?" lol
@tapfilms6806 Жыл бұрын
Could you enlighten me on your math? How does bumping the extra 5% net margin increase = making 33% more loneyb
@keysncoffee7733 Жыл бұрын
@@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.
@jch83762 жыл бұрын
Charge more pay less . Hmm . Never thought of it before. 🤔
@doggereats3 жыл бұрын
Would you Also look for 80% if It were physical products instead of services? Could you give us an example ?
@brainiac8005 Жыл бұрын
Thank you so much your content helps me out a lot and inspires me to go for me dreams THANK YOU
@anitha6249 Жыл бұрын
Hi, can someone please explain how 26% net margin @4:05?
@mathieucharette9556 Жыл бұрын
15 to 20 is a 1/3 (.33) increase, not a 25% increase
@WideAwakeHuman3 жыл бұрын
Wouldn't 15% to 20% be a 33% increase since 5% is 1/3rd of 15? Not trying to be a smartass just making sure I understand it
@lukehood55463 жыл бұрын
Dropped out of math class in the 5th grade I see
@LS-xz9wq Жыл бұрын
Love that he couldn't get the lid off the market lmao. Great info as well
@henryferguson483 жыл бұрын
Thanks! , never thought of it that way. Brilliant 💪
@AlexHormozi3 жыл бұрын
Glad you liked it
@STELLASCUTENESS3 жыл бұрын
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!
@G5Hohn Жыл бұрын
Ugh, if you don’t understand something as basic as margins, you should probable be nowhere near business leadership
@Top_Geezy2 ай бұрын
No dip
@anindyodutta8247 Жыл бұрын
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...
@garilique2 жыл бұрын
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.
@MishaWilson3 жыл бұрын
Hey Alex, good stuff man. Question- With this model, do you include costs for commissions for sales guys, and media buyers on % of profit-sharing setups as costs you back out from the 100%? Or is it just around the fulfillment part? Example: Lets say we have a $30k coaching package - When its sold, the sales guy gets 20% - So right there we're at 80% - Then we have media buyers who are on a % of profit pay plan... So that would bring it down more. Are you deducting those out of the 100% cost of the $30k program, or are you optimizing more around fulfillment specifically costing less? Thanks man!
@michalnohel3 жыл бұрын
I wanted to ask similar question and that was: What are you including in COGS and what you do not Alex?
@sebastiencote5033 жыл бұрын
You would indeed include this in COGS, because you only (and always) incurr the cost when you make a sale.
@jameslowe39892 жыл бұрын
What if increasing your gross margins reduces business?
@jch83762 жыл бұрын
Or you have to fire your best employees and hire shitier employees to pay them less .
@FilmsByDan2 жыл бұрын
Sounds like variable costs vs fixed costs
@soul5983 жыл бұрын
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% .
@DewTime2 жыл бұрын
33% increase 😁
@bereketaklilu4351 Жыл бұрын
Thank you so much
@bozjohnson49152 жыл бұрын
Super appreciate your videos. 😀Thank you for your consistent, solid information. You are one of the few business people I listen to. Thanks!
@SujimyMohamad2 жыл бұрын
Super helpful👏👏🙏
@businessconstructАй бұрын
Good explanation on margin although I would argue, using your example, that 66% ($40) gross margin with a 12% ($7.40) net margin would put your operating overhead (operating leverage) at nearly 55%. As an accountant (CPA) and owner operator of my current business, this number seems very high. We could lower operating leverage by selling more at the same price. ie each additional unit sold would only cost $20. Am I thinking of this wrong? Good video.
@dazisgud2 жыл бұрын
What happens if customers stop buying or expenses can't be reduced? Business isn't worth it?
@nathanarant64652 ай бұрын
Some good principles, but once he said that the biggest businesses in the world are running a 99% gross profit margin, I realized something was off here. That's just patently false and gives the wrong impression to people. Does a $1,000 iphone only cost Apple $10? No.... Do you think Amazon is running 99% GPM? No......
@9svm2 жыл бұрын
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
@annamollyobjetos2 жыл бұрын
What abaout a country, like ARGENTINA, where inflation is out of this world and there is NO WAY to calculate ANYTHING?, not even costs of products and services like electricity or internet for tomorrow, cause you dont know if they are gonna be at the same prize o duplicated next week or month. HOW??!! I always watch videos like this one, BUT in a country with a stable economy seams SO EASY..., but NOT A SINGLE ONE talks about INFLATION and how the F can we make a business that works here, form a SMALL independent business like the one I'm trying to scale. THANKS!! I love your mind!
@theguy05943 ай бұрын
pretty crazy to think charging people an extra $20 per month in that example makes such a big difference to yearly margins
@memegod6340 Жыл бұрын
There is something wrong if I understood what happened here. In minute 12:45 you said he needs to get the gross margin to $12.800 in order to hit an 80% Gross Margin. You would need to charge actually $20.000 for you clients ( $500/per month = $1.500 Package) and give the coach $4000/per Month in order to hit 80% Gross Margin. OR you could just keep charging the client the same amount ( $1200 Package - $400/month) but decrease the coaches salary by a $1000 - So from $4000 per month to $3000 per month in order to hit the 80% Gross Margin. I don't want to bother you with the math, but if you check it out then you will realize that I am right. For everybody reading this. Hormozi is the GOAT, he just probably forgot his calculator and to be fair ... I myself wouldn't be able to do this is in my head. Just trying to clarify for everyone. You shouldn't just listen, but actually listen, try to understand and execute. Thanks Alex for everything, eternally grateful for all of your content
@KepaBengoa Жыл бұрын
I'd like to apply this to my brother's business and I'm running into a block. I'd love feedback if anyone has ideas. It's in construction so majority of the jobs are based on bids, usually lowest bidder wins. Usually a specific flooring type will go for $8-12/sqft but if we apply 80% margin to our material plus sundries and labor (CoGS) then we end up in the range of $25-35/sqft which seems unreasonable in a business where most work is bid based, and the work that isn't we'd still be charging 2-4 time the market. Any thoughts?
@Eveproguides2 жыл бұрын
How do I know my COGS when I'm self employed in a service industry (Photographer and Drone Pilot) and I'm the only employee?
@matei.chelbegean3 жыл бұрын
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.
@MicahGreaney Жыл бұрын
Someone correct me if I'm wrong, but wouldn't the marginal percentage increase @12:05 actually be 33 1/3%? Since the extra 5% should technically be divided by the 15%? Not trying to nit pick or anything, but I believe that would just further solidify his point. That's a huge increase!
@EssDubz Жыл бұрын
Some of the math here is wrong / wonky. 15%->20% is a 33% increase not 25%.
@andrewstorm82403 жыл бұрын
Or handle more clients
@IliePandia3 жыл бұрын
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.
@ryszardwieczorek64285 ай бұрын
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
@jordancantos38323 жыл бұрын
Who needs school when you’ve got Alex
@AlexHormozi3 жыл бұрын
🙏🏼✊🏽
@JW-mz8ym Жыл бұрын
This was completely useless…anyone who doesn’t understand gross profit from the very beginning yeah this may be helpful. Let me magically lower my costs because I magically have that super power in todays markets…or price my “thing” above everyone else’s “thing” and price myself out….going this direction he forgot magical number 3 option….pay your employees less….because that’s the game…
@truezenithcreative2 жыл бұрын
In the example with the coach couldn’t you also find a way to increase his efficiency and get him more clients?
@AlexYenom3057 ай бұрын
This doesn't take into account overall profit though, in absolute amount. For example, raising the price to get a better net margin may hurt sales enough that even though you are more profitable percentage wise, you are less profitable in total. Not saying that's always the case, actually most likely the opposite in most cases, but i'd rather make 15% of 1 million than 20% of 600k.
@HIGHCLASSBOSS Жыл бұрын
And they say you need to go to college to learn this SMH. Appreciate you Alex for this info.
@aminemehabi3 жыл бұрын
Great video Alex! I understand how it works! How you calculate the gross margin but how do you know the net margin ?
@HanifiDst3 жыл бұрын
i suppose you take the gross margin amount - all the other cost to run your biz ( rent, payroll etc) and then divide it to get the %
@ryanmcneil5772 Жыл бұрын
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
@sheldonberg661 Жыл бұрын
The math is simple but what no one seems to get is that you can't charge people $100 for a haircut and expect to have a business. Large businesses play this game. I mean really big companies. Smaller businesses can do this as well but a 80% margin is ridiculous if you have any kind of competition. One of the most basic concepts in economics is the idea of scarce resources. Whether it is labour/human capital, energy, material goods, land, etc, there is only so much to go around. People have a finite income. This notion that you can make these kind of margins on any kind of business is laughable. If you dint have a really innovative product, or bring exceptional value, or have some kind of significant advantage to what you are selling you are just another business owner that will struggle to survive. The stuff this guy is teaching is as simple as can be. Five plus five equals ten but that never put ten dollars in anyone's pocket. You can increase younyour margins all day long but if no one is going to buy your product or service for that price then what? Oh brother! Real wisdom is not in knowledge but in experience. Not that knowledge is unimportant but it will not make you rich or wise.
@BoostWang2 күн бұрын
Hey if someone doesn't mind answering, why does the Net margin drops to something as low as 15% by the end of the year if the monthly is 80+%
@neilspell8727 Жыл бұрын
This video is just a really dumb math video... "If this number changed to x, then y would be bigger". Thanks, Sherlock.
@dnickr12 жыл бұрын
If selling a product and offering free shipping, do you add shipping cost to the gross margin? Thanks for all of the golden info you provide!