The Game with Alex Hormozi

Episode: Throwback: Quick Tips on Pricing to Make More Money This Week | Ep 947
Date: August 25, 2025
Host: Alex Hormozi

Overview

In this episode, Alex Hormozi dives into actionable pricing strategies designed to help entrepreneurs and business owners increase revenue and profit — potentially this week. Alex shares stories, psychological pricing tactics, and straightforward advice, focusing on how fear of raising prices and not implementing smart pricing frameworks can quietly erode long-term profit. The theme throughout: Be bolder with your pricing and use strategic price anchoring to unlock hidden profits.

Key Discussion Points & Insights

1. The Power of Price Anchoring

• Tactic: List an "extremely expensive" product or service that you don't expect anyone to buy (10x or 100x your core offer).
  • Purpose: Anchors the rest of your prices, making your main offer seem more affordable and valuable by comparison.
• Unexpected Outcome: Sometimes, customers actually buy the expensive option, drastically boosting profits.
• Notable Quote:

  “Have something extremely expensive to sell that you never even plan on selling... just by having it there, it’ll anchor everything else...”
  — Alex Hormozi (00:16)

• Illustrative Story: A friend’s online weight loss business added a 6x-price package, which began outselling their original offer, tripling profit overnight.
  • Moral: Some customers (“the whales”) always want the best or most expensive package.

2. Why You Must Overcome Fear of Raising Prices

• Mindset Shift: It’s common for founders to be afraid of increasing prices, but not doing so means leaving enormous value (and profit) on the table.
• Notable Quote:

  “...The only thing worse than making a thousand dollar offer to somebody with a $100 budget is making a $100 offer to someone with a thousand dollar budget. Because in the first scenario, you lose 100 bucks. In the second scenario, you lose $900 of the money you should have made but didn’t.”
  — Alex Hormozi (02:18)

3. Massive Price Testing & Pricing Elasticity

• Be Bold: Don't settle for 10-20% price tests; Alex recommends testing 4x-5x increases to discover true value tolerance.
• Elastic vs. Inelastic Pricing:
  • Elastic: Small changes in price affect sales a lot (e.g., food).
  • Inelastic: Large changes in price have little impact on sales (e.g., lifesaving medicine, high-value offers).
• Application: Many business owners underestimate how resilient their pricing can be.
• Notable Quote:

  “Pricing in many instances is far more inelastic than you think it is.”
  — Alex Hormozi (04:38)

4. Case Study: Doubling Price, Doubling Profit

• Portfolio Example: Alex doubled a sales team’s product price, anticipating fewer “yes” responses.
• Results:
  • Conversion rate dropped by 35%
  • Absolute revenue increased, and profit per sale tripled (higher margins, fewer customers, lower overhead).
  • Fewer customers also means less operational burden.
• Notable Quote:

  “A smaller amount of customers that make more money is an easier business to run than more customers that make you less money.”
  — Alex Hormozi (08:05)

5. The Silent Killer: Inflation & Stagnant Pricing

• Real-World Math:
  • If you charged $100 for a product in 2017 with 20% margins, and didn’t increase the price by 2024, inflation would erode your profit to zero.
  • $79 in 2017 = $100 in 2024 due to inflation.
• Moral: To maintain profitability, adjust prices by 3–6% annually, minimum.
• Notable Quote:

  “Inflation is a compounding threat to your business that every year stacks on top of itself.”
  — Alex Hormozi (11:28)

6. Warren Buffett’s Philosophy on Pricing

• Example: When Buffett bought See’s Candies, he focused solely on annual price increases — 50 years in a row, sometimes as much as 17% in a single year.
• Outcome: This simple focus created a billion dollars in profit for the business.
• Notable Quote:

  “If it was the one thing that he [Warren Buffett] focused so hard on, it might be something worth thinking about.”
  — Alex Hormozi (13:30)

7. How to Roll Out a Price Increase (Tactically & Ethically)

• New Customers: Apply new pricing immediately for new or transactional business.
• Existing Customers (“Grandfathering”):
  • Announce a future price increase, giving them a window before it takes effect.
  • Use a “price increase letter” explaining the value they continue to receive and your commitment to quality.
  • Give them the “gift” of being grandfathered in for a period out of loyalty.
• High-Level Letter Template:
  • Explain the price change, mention combined inflation and value upgrades.
  • Set a future effective date.
  • Highlight the honor of their loyalty via the grace period.
  • Key strategy: Honor current customers but condition for change.

8. How to Evaluate the Impact of a Price Change

• Be Data-Driven, Not Emotional:
  • Know your baseline conversion rates before changing prices.
  • Test new pricing to statistical significance (not just after 2–3 customer responses).
  • Expect more “no’s”—this is predictable, not a sign of failure.
• Notable Quote:

  “Talking to two or three people getting no’s doesn’t mean you need to change your price. It might have just been the no’s you were normally going to get at your lower price.”
  — Alex Hormozi (16:38)

Memorable Quotes

• “Have something extremely expensive to sell that you never even plan on selling... just by having it there, it’ll anchor everything else.”
  — Alex Hormozi (00:16)

• “10% of customers just want to buy the most expensive thing. These are the whales.”
  — Alex Hormozi (02:02)

• “A smaller amount of customers that make more money is an easier business to run than more customers that make you less money.”
  — Alex Hormozi (08:05)

• “Inflation is a compounding threat to your business that every year stacks on top of itself.”
  — Alex Hormozi (11:28)

• “If it was the one thing that he [Warren Buffett] focused so hard on, it might be something worth thinking about.”
  — Alex Hormozi (13:30)

Timestamps of Key Segments

• 00:16 — Price anchoring: introducing an ultra-high ticket option
• 02:02 — The psychology of “whales” & losing out by underpricing
• 04:38 — Elastic vs. inelastic pricing; why bold tests matter
• 08:05 — Case study: doubling price, optimizing customer base
• 11:28 — The cost of ignoring inflation in pricing
• 13:30 — Warren Buffett and decades of price increases at See's Candies
• 16:38 — How to roll out a price increase, and why you must test with a cool head

Final Takeaways

• Don’t fear price increases — strategic jumps and bold anchoring can unlock big gains.
• Protect your margins against inflation with regular annual adjustments.
• Be smart and methodical: measure results, communicate clearly with customers, and always have the confidence to test higher pricing levels.
• Remember: Serving fewer, higher-value customers often means a simpler, more profitable business.