23. Continuity Offer. Discount + One Time Fee. | $100M Lost Chapters Audiobook - The Game with Alex Hormozi

Podcast Summary: The Game with Alex Hormozi

Episode 23: Continuity Offer. Discount + One Time Fee. | $100M Lost Chapters Audiobook
Date: November 14, 2025
Host: Alex Hormozi

Main Theme / Purpose

In this episode, Alex Hormozi shares a pivotal lesson from his entrepreneurial journey about structuring offers by combining a discounted initial period with a one-time fee. He details how this approach impacts customer acquisition, increases customer commitment, and helps offset costs—delivering powerful insights for entrepreneurs looking to grow recurring service businesses profitably and sustainably.

Key Discussion Points & Insights

1. Origin of the Offer Structure ([00:00–03:30])

A Random Encounter:
Alex narrates an encounter in 2015 with “Owen,” a manager from a failed gym, who proposed bringing a team of trainers to Alex’s gym.
- Owen’s pitch: Owen wanted to use Alex’s facility, asking only for a discounted first month for new clients and an enrollment fee to be given as commission to his sales team.
- Alex’s initial skepticism:
  
  “He just didn’t seem trustworthy… I didn’t want a foreign group of trainers and salespeople… representing my company.” (Alex Hormozi, 01:35)
Takeaway:
Alex rejected the partnership but was struck by the psychological power and financial logic in the “discount + fee” offer structure.

2. Mechanics of the Offer: Discount + One Time Fee ([03:30–07:00])

Structure Explained:
- Customers get a discounted rate (“hook”) on the first term of the service.
- Simultaneously, they pay a one-time fee up front — often labeled as “setup,” “enrollment,” etc.
- The upfront fee can be “made up,” waived, or charged at the salesperson’s discretion for flexibility.
- This structure is flexible and can be adapted for any business type.
Why It Works:
- A discount attracts customers and lowers acquisition friction.
- The one-time fee covers acquisition costs and embeds commitment.
“It both attracted customers with a discount and liquidated commissions and acquisition costs through a fee.” (Alex Hormozi, 04:20)

3. Practical Examples ([07:00–09:30])

Recurring Service Offers:
- Example: First month “$100” (discounted), plus a $1,900 setup fee. Total first payment: $2,000, then standard recurring charges.
Defined-End Program Offers:
- Example: 12-week program, advertised as “$1,000/month for three months,” but “88% off” first month ($120), then a $1,000 setup fee.
- Total first payment: $1,120, followed by normal recurring payments.
- Sales Flexibility:
  
  “You just separate the recurring from the upfront and then it allows you to be more flexible with your advertising details.” (Alex Hormozi, 08:44)
Compliance Reminder:

“Always obey the advertising rules within your area and of your time period.” (Alex Hormozi, 09:05)

4. Impact on Customer Behavior & Business Health ([09:30–13:00])

Lowers Churn, Raises Commitment:
- Higher one-time fees create a “barrier to exit”; clients are less likely to cancel.
- Example from a tanning business: $100 sign-up fee for a $10/month plan led to much lower churn than a $19 down/$19 a month plan.
“When people pay, they pay attention.” (Alex Hormozi, 10:50)
Especially Valuable for Results-Driven Services:
- If client participation is key (i.e., showing up, providing info, changing habits), upfront fees build “skin in the game.”
Premium vs. Recurring Balance:
- Case: Online weight loss coach charges $5,000 upfront, $267/month thereafter.
- Result: Clients log >2 years on average, compared to industry’s 4-month average.
“This large upfront sum gets the client invested in the process and makes leaving almost insane.” (Alex Hormozi, 12:30)

5. Implementing the Fee Structure ([13:00–14:30])

Be Upfront and Honest:
- Always explain the rationale for the fee—even if it’s “made up,” tie it to legitimate setup activities.
- It creates clarity and justifies the value for customers.
Four Steps to Creating a One-Time Fee: ([13:50])
1. Pick your fee name
2. Pick your fee price
3. Pick your reason why
4. Start charging it, discounting it, or waiving it

Notable Quotes & Memorable Moments

On Resistance to “Free”:

“Depending on the strength of the salesperson, this offer will tend to surprise fewer people since they already came in expecting to pay something.” (Alex Hormozi, 05:34)
On Churn:

“The higher the one time startup fee, the lower the churn, the higher the barrier to entry — so too becomes the higher the barrier to exit.” (Alex Hormozi, 09:40)
On Value Perception:

“When people pay, they pay attention. This is especially important for services where you require something to be done by the customer...” (Alex Hormozi, 10:50)
On Fee Flexibility:

“Waiving made up fees can also help you generate more goodwill than just signing someone up directly.” (Alex Hormozi, 14:35)

Timestamps for Important Segments

00:00–03:30: Story of the first encounter with the “discount + fee” model
03:30–07:00: Deep dive: How discount + one time fee offers are structured; why they work
07:00–09:30: Specific business examples, applications, and compliance notes
09:30–13:00: Effects on customer retention, psychology, and business metrics
13:00–14:30: Step-by-step implementation and communication of fees
14:30–End: Summary points and practical flexibility

Recap & Takeaways

The “discounted trial + one-time fee” offer is a powerful method to attract customers, recoup customer acquisition costs, and drive commitment.
The fee doesn’t have to be “real”—but always give a reason for it and communicate its value.
This flexible model works for both recurring and finite duration offers, can be manipulated by salespeople as a closing tool, and meaningfully increases customer lifetime value.
Even if you don’t apply the model directly, thinking through fees and discounts can uncover new profit streams or retention levers for practically any business.

If you’re looking to strengthen your recurring revenue, boost customer commitment, and open up new monetization avenues, Alex’s breakdown of the “Discount + One Time Fee” model is a playbook worth revisiting.

Transcript

A (0:00)

Continuity offer discount plus one time fee. Spring 2015 I was walking out the front door of my La Habra location. The sun baked the black asphalt of the empty parking lot. It was midday before the afternoon rush would begin in a few hours. Before I could take a step towards my car, a man quickly approached me, almost out of nowhere. Hey, you the owner? I was a bit startled. I said yeah. Before I could ask what he wanted, he plowed right into his pitch. My name's Owen. I'm a personal training manager of a gym that just went under across town. I've got a group of trainers that just want to sell personal training packages. We do about a hundred thousand dollars a month in personal training sales. We just need a facility to work out of. We don't really offer personal training here. I said, half lying because I didn't like the guy's vibe. He just didn't seem trustworthy. I started to turn my side towards him to show I wasn't interested, and began to make my way towards my car. He realized he needed to change his approach. I promise we're a self sufficient team. I can see through the window you guys have a lot of dead space even when your sessions are going on. We can just help you monetize that area. It'll cost you nothing. It's just upside. It'll cost me time and attention. I countered. And most importantly, it'll cost me the goodwill I've accrued with my customer base. No, no, no, no. We won't even talk to your customers if you don't want us to. We'll just go get our own leads and sell them. We just ask that you give them a discounted month upfront. And we'll charge an enrollment fee, which I just give to my guys as commission for the sale. So whatever they can close for, the fee is theirs. That's how we do it. It'll cost you nothing. Hmm. I'll think it over. After thinking it over, I decided I didn't want a foreign group of trainers and salespeople that I hadn't vetted walking around my gym representing my company. But I did notice the offer structure. He presented a discount plus a fee. He'd clearly seen success with that. That much I believed. And this was the first I'd heard of this monetization structure. It both attracted customers with a discount and liquidated commissions and acquisition costs through a fee. Here's how it works. Description. You charge a discounted rate for your first term or peer to service. Then you charge one or more additional fees that you just made up. Just like the free with fee structure. If you can waive some and charge others, waive them all or charge them all. It gives you a lot of offer flexibility. Depending on the strength of the salesperson, this offer will tend to surprise fewer people since they already came in expecting to pay something, which is one of the key benefits of using discounts over free for this particular structure. Examples Any recurring service offer 95% off the first month $1900 off the first month first month for $100 monetization. They come in for the first month for 100 bucks, but they still get charged a $1900 setup fee. All in all they get charged $2000 and go straight into recurring. From a monetization perspective, they just got charged two grand for their first month and each month thereafter. To be clear, you still have to explain this and sell this, but I'm saying that's how the offer works. Any defined end service or program offer 88% off first month. Selling a 12 week program for $3,000 monetization, you'll say it costs a thousand a month for three months, but you get 88% off your first month which would be 120 bucks in total. But then we have a thousand dollar setup fee. They end up paying 1,120 for the first month and then continuing their next few payments at $1,000 each. Same idea. You just separate the recurring from the upfront and then it allows you to be more flexible with your advertising details. To be clear, always obey the advertising rules within your area and of your time period details. The higher the one time startup fee, the lower the churn, the higher the barrier to entry, so too becomes the higher the barrier to exit. John told me that when his tanning empire had a hundred dollar signup fee for the $10 a month membership, the churn on those clients was next to nothing. Whereas the clients who paid $19 down and then $19 a month churned at a higher rate. This means you can use made up fees we've been talking about to actively decrease your churn and increase the investment of your prospects. This helps them and you in the long run. Everyone wins. When people pay, they pay attention. This is especially important for services where you require something to be done by the customer, getting you information, filling out forms, showing up certain times, making selections, changing behavior, et cetera. If you need someone to do something in order to be successful, then more times than not it makes sense to charge a one time setup fee or startup fee to get them invested. In the long run, you can even have a massive disparity between setup and recurring. A good friend of mine who runs a multimillion dollar online weight loss coaching business charges $5,000 to start and then only $267 a month thereafter. His average client lifespan is more than two years. Compare that with the normal average fitness client who stays four months. This large upfront sum gets the client invested in the process and makes leaving almost insane. And you guessed it, if they leave and want to come back, then they have to pay it again. So this just keeps people committed, especially when they have to do part of the work to achieve the result that you sold them, whatever that may be. Note Be clear about what the reason for the one time fee is. Even though it might be made up, this should not be a fee taken lightly. It's also something that you should bring up with any and every customer. You're doing the work, so you might as well let them know exactly what you're going to be doing for them. So here are four steps to creating your one time fee. Number one Pick your fee name. Number two Pick your fee price. Number three Pick your reason why. Number four start charging it, discounting it or waiving it. Summary Points this play is incredibly flexible. You can use it on top of any business. The big discount can attract lots of interest. These fees will help you offset the acquisition costs of marketing and sales. It works very well with recurring or defined end programs and in general, the larger the one time fee up front, the higher the stick rate. Not only does this help you make money in the front end, it can dramatically enhance the lifetime value of the customer. These fees are also really good to think through even if you don't plan on using this monetization structure as they can provide additional revenue streams for your business. There are lots of things that you're doing as a business owner, you might as well get credit for it. Waiving made up fees can also help you generate more goodwill than just signing someone up directly. You can also leave these fees to the discretion of the salesperson to help them quote sweeten the deal for someone on the edge. Unlimited Uses Here.