How to Price a Service Business So It Actually Makes Money | Ep 1002

Joey Goon runs Utopia Experience, an event planning company in St. Louis. His average deal size is $44,000, but his margins are thin and his pricing process is, in his own words, "make believe." He has a sales team that converts at a fraction of his own rate, and he is suing a client who didn't pay. Alex Hormozi's intervention starts with a blunt diagnosis: the business has a demand problem, but part of that is because it is mispriced. The fix must begin with the offer, then the price, then the sales motion, and only then the demand generation.

The Five-to-Ten-X Pricing Engine

The core pricing problem is that Joey's team pulls numbers out of thin air for each line item, then adds a retainer on top. Hormozi's solution is to build a dynamic cost sheet that calculates the true cost of delivering an event based on variables like head count, fixed payroll, and variable AV expenses. Once that cost number is known, the price should be five to ten times that cost. "Five is the minimum," Hormozi says, "because it might go over." The sheet should be built with AI or a simple Excel IF-THEN formula so that a salesperson can input parameters and get an instant quote. This eliminates the long delay between the first call and the proposal, which kills deals.