BigDeal Podcast Episode Summary: "It's Boring, But It Will Make Even Beginners More Money"
Host: Codie Sanchez
Release Date: June 2, 2025
Episode Title: It's Boring, But It Will Make Even Beginners More Money
Introduction: Rethinking Business Pricing Strategies
In this episode of BigDeal, entrepreneur and investor Codie Sanchez delves into a critical yet often overlooked strategy for service-based businesses: understanding and selling to wealthy clients. Sanchez challenges the conventional approach of targeting volume through low-priced offerings, highlighting how this method can lead to high churn rates and stagnant growth.
The Problem: Undercharging in Small Businesses
Sanchez begins by addressing a prevalent issue among small businesses: undercharging for services. She states, “Nine out of ten small businesses undercharge” (00:45), emphasizing that many entrepreneurs fear raising their prices, often due to perceived barriers or self-doubt. This reluctance forces businesses to rely on high volumes of sales to sustain profitability, a strategy that is both challenging and less sustainable.
The Solution: Selling to Wealthy Clients
Shifting focus from volume to value, Sanchez advocates for targeting wealthy clients who are willing to pay premium prices for exceptional services. She illustrates this with a compelling comparison:
“Sell expensive things to people who can afford them” (01:15).
This approach not only increases profit margins but also reduces the dependency on high sales volumes. Sanchez explains that wealthy clients typically have a visceral need for quality and are willing to pay more for services that deliver significant returns on their investment.
Rich Desire Pyramid: Five Key Motivations of Wealthy Buyers
Central to Sanchez’s strategy is the Rich Desire Pyramid, a hierarchy of five primary reasons why wealthy individuals make purchases. Understanding and leveraging these motivations can transform a business's profitability and client relationships.
1. Status: The Top of the Pyramid
Status is paramount for wealthy clients, who seek to enhance their social standing through their purchases.
“Position your business as the best, not the cheapest” (04:30).
Sanchez advises businesses to showcase expertise, exclusivity, and premium service. She cites the example of Hermès Birkin bags, highlighting how their limited production and high quality make them symbols of status that wealthy individuals proudly display without seeking discounts.
2. Convenience: Making Life Easier
For affluent clients, convenience equates to saving time, which is invaluable.
“If you can do something that allows them to buy back their time, they will pay you for it” (07:45).
Sanchez suggests offering services that eliminate friction, such as white-glove services or concierge treatments. She gives the example of Delta’s concierge service, which, despite costing up to $1,000, provides seamless airport experiences, enhancing the overall convenience for their clients.
3. Exclusivity: Feeling Special
Exclusivity ensures that wealthy clients feel distinguished and part of an elite group.
“Restrict access, invite-only services, VIP tiers” (11:20).
Sanchez points to Tiger 21, a community that requires a net worth of $20 million for membership, as a model of exclusivity that wealthy individuals are willing to pay a premium for.
4. Privacy: Ensuring Discretion
Maintaining privacy is crucial for affluent clients who often seek to protect their personal and professional lives.
“Offer high trust, high security, high privacy services” (14:10).
She illustrates this with a bespoke cleaning service that ensures client confidentiality through NDAs and personalized communication preferences, thereby fostering loyalty and trust.
5. Scarcity: Creating Desire through Limited Availability
Scarcity enhances the perceived value of a product or service by making it harder to obtain.
“Limit availability. You do this on purpose” (17:35).
Sanchez emphasizes the importance of creating waiting lists, premium tiers, and application processes to drive demand. She references the allure of Birkin bags again, noting that their limited quantity makes them highly coveted items among the wealthy.
The Rule of Two: Combining Motivations for Maximum Impact
Sanchez introduces the Rule of Two, advising businesses to ensure that their offerings address at least two of the pyramid’s categories. For instance:
- Convenience + Exclusivity: Offering a premium, concierge service that also provides exclusive access to other high-end service providers.
- Status + Scarcity: Positioning a product as a status symbol by limiting its availability.
This strategic combination enhances the appeal of the offerings, making them more irresistible to wealthy clients.
Practical Steps: Immersing in Wealthy Environments
To effectively understand and cater to wealthy clients, Sanchez recommends:
- Frequenting Luxurious Spaces: Visit affluent areas such as Beverly Hills or upscale shopping malls to observe and learn how luxury brands interact with their clients.
- Engaging with Wealthy Individuals: Initiate conversations to gain insights into their preferences, values, and behaviors.
- Modeling Successful Interactions: Emulate the high standards of service, discretion, and exclusivity observed in these environments.
Sanchez shares the success story of her friend Jesse Eitzler, who mingled in high-end settings to build valuable connections, ultimately contributing to his success as a billionaire entrepreneur.
Conclusion: Embrace a Wealth-Centric Business Model
Codie Sanchez wraps up the episode by reiterating the transformative potential of selling to wealthy clients. By understanding and addressing the core motivations outlined in the Rich Desire Pyramid, businesses can significantly enhance their profitability and sustainability. The key takeaway is a singular yet profound idea:
“Do you understand rich people?” (25:00).
Sanchez encourages entrepreneurs to immerse themselves in environments frequented by the wealthy, learn from their interactions, and adapt their business models to cater to this lucrative market segment.
Key Takeaways:
- Undercharging Limits Growth: Many small businesses fail to scale because they focus on volume over value.
- Targeting Wealthy Clients Enhances Profitability: Selling premium services to affluent clients can lead to higher margins and reduced churn.
- Rich Desire Pyramid: Understanding the five motivations—Status, Convenience, Exclusivity, Privacy, Scarcity—enables effective product and service positioning.
- Rule of Two: Combining at least two motivations can amplify the appeal of offerings to wealthy clients.
- Active Engagement: Immersing oneself in wealthy environments and building connections is essential for understanding and catering to affluent clients.
By shifting focus from chasing high sales volumes to cultivating high-value relationships, entrepreneurs can build more resilient and profitable businesses.