- 4 days ago
It Will Make Even Beginners More Money
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00:00Do you understand rich people? This is really, really critical in my mind for service businesses
00:05and so underutilized. Nine out of 10 small businesses under charge. When was the last
00:10time you raised your prices? Sell expensive things to people who can afford them. I'm
00:13going to tell you how to make any of these make sense to you so you can apply it to your business
00:16and your life right after this. This is the Big Deal Podcast and I'm Cody Sanchez. Welcome back.
00:25Today we're talking to you builders about how to make more money. I call this the sell things to
00:28rich people. They pay more and I know that's true and it's cute but isn't it so easy? Having sold
00:34clients who are both not so rich and rich, there is a truth to this meme which I want to read to you.
00:42You can see it here. It says, $500 client. I just feel as though with this investment I'm about to
00:46make in you that you should understand how our lives are about to change and I need results and
00:51you need to bring them and I'm entrusting you with our livelihood and lives. $50,000 client. Money sent.
00:56Thanks. Anybody who's been in business kind of chuckles at this except it's true. Now here's why
01:02I understand the $500 client. You have to remember that they need that $500 to do something for them.
01:09They actually have a visceral need. That might be what's called last dollar for them. They need the
01:14return on that dollar to be so significant that they hold you to a level that is actually irrational
01:18and so you don't want to just sell things to rich people because you're greedy. You want to sell
01:24things to rich people maybe even because you're not the best to begin with. In order to sell things
01:30to people who don't have a lot of money, you have to sell a huge amount of volume to be able to live.
01:35Volume is hard to get when you're not a very good operator. So rich people want you to sell them
01:40something. Remember that and use it to your advantage. There are two worlds of entrepreneurships.
01:46One world scraps selling cheap products to price sensitive customers who churn the moment they
01:52find a discount. In the second world, sell fewer better things for more money. That volume game
01:59can work. It's built some of the biggest business empires out there. Walmart, Amazon, McDonald's.
02:03Three small issues though. The game is brutally competitive. It requires you to be airtight in your
02:09operations and infrastructure. And even the best eventually move into higher margin products.
02:15So a different path. Sell expensive things to people who can afford them. The question you need
02:20to ask yourself is, when was the last time you raised your prices? Our guess, well, nine out of
02:25ten small businesses under charge. Why? Scary not to. If you start to realize wealthy customers want
02:30to be sold, your entire business can change. The question though is, what do rich people actually buy?
02:36There are five reasons rich people buy. Only five. Every single reason falls into this hierarchy
02:41that I call the rich desire pyramid and teach to all of our portfolio companies.
02:47Number one, status. Status means make me look important. It's the top of the pyramid.
02:53How do you sell it? You position your business as the best, not the cheapest. When they ask,
02:57well, can I get a discount? You say, well, you could, but you might regret buying from that guy. Why don't
03:03you just pay a pro now as opposed to regret an amateur later? You showcase expertise, exclusivity,
03:09and premium service. What are companies that do this really well? Because I always like to imitate,
03:15then I iterate, then I innovate. So you might want to imitate some of the marketing of Hermes.
03:22Limited run purses that are mostly handmade, although I hear there's some confusion about that
03:29by China right now. But let's stick with the plot, which is one person makes each item from start to
03:33finish. It's special and it's a signal. When you carry a Birkin bag, you are saying something.
03:39No one who buys a Birkin bag is trying to ask for discounts. This is a customer that actually wants
03:44to pay more for the alligator extra ridiculous thing on top. Except is it ridiculous if they want
03:51to pay for it? In fact, I think you have to flip your brain about that. Number two in the pyramid is
03:56convenience. That means make my life easier. So if you think about rich people, if they have an
04:01infinite amount of money, they can buy almost anything, right? Except more time. So if you can do
04:08something that allows them to buy back their time, they will pay you for it, potentially up to a
04:14complete no cap at the top, which I really like. So how do you sell something like this? Well, you
04:20eliminate friction. That would be things like white glove service, subscriptions, concierge treatment,
04:26private jets, fast and expensive. For instance, if you go to all major airlines, but we'll use Delta as
04:32an example. Delta has really two classes of tickets, right? They have main cabin and they have
04:37first class. So you might think that the really special people go to first class. Well, actually,
04:41the really special people go to first class and then they get Delta concierge, which is somewhere
04:46between $500 and $1,000 for somebody to get them from the front of the airport, drive them around
04:52through the back, let them load up first and privately. And it's for no different experience. No different
04:58product is sold there as far as the seat. It is literally just that it increases convenience for
05:04them. So that is what you need to think about in your business. If right now you have a landscaping
05:09service, why wouldn't you add a white glove offering to the top? What might white glove mean?
05:14Might mean, hey, one of our portfolio companies, we said, what about for new homeowners in really
05:21expensive suburban neighborhoods? What if you as their landscaping service said, hey, Mr. and Mrs.
05:26Homeowner, I know you're new here. We're happy to give you a landscaping quote and to do your
05:31landscaping for you. Also, we have a group of five other of the top tier service providers in your
05:37area. So if you need somebody for cleaning, I can make a recommendation. If you need somebody for
05:42window washing, roofing, interior design, we have a Rolodex and I can literally do a white glove
05:47introduction for you to all of those people. And what do you do on that? You actually take an affiliate
05:53cut on everybody. So this is not as scalable. But remember, because you have big margins and
05:59because you create convenience, you can have a very sexy business doing white glove service of
06:04existing services. By the way, if you're building a business right now and you're stuck or you want
06:10to break out to the next level, maybe you're not where you want to be today. Believe me, I've been
06:14there many, many times. I want you to know I got you. We help thousands of business owners a year
06:18figure out how to scale to the next level. One of my favorite mentors said, every level you have,
06:24there's just a higher level and a higher devil. And so if you've been in business for a while and
06:29you're doing six, seven or eight figures, there's probably one thing standing in the way of your
06:34next level. That's why we host growth and scale workshops four times a year throughout the year in
06:39Austin, in Miami, in San Diego, and you may be a fit to come to one of them. If it sounds interesting
06:46to you to get help on how to scale your business to the next level, you can reach out to my team at
06:50the link in the show notes. We believe in you builders, but we also believe that it's a lonely
06:54road and you can't do it by yourself. Number three, exclusivity. Let me in, keep others out.
07:00That's what they're saying. This is why there are private members clubs. This is why there are golf
07:06courses because rich people want to feel special, good, bad, or otherwise, like them or don't like them.
07:11This is something that people want when they have a lot of money to buy. So how do you sell it?
07:17Restrict access, invite-only services, VIP tiers. This creates demand. Think about it like, I don't
07:23know, have you guys ever heard of Tiger 21? Tiger 21 is a fascinating community. You have to have $20
07:28million in net worth to be in a community that you pay $30,000 for a year and they validate your income.
07:36They will not let you in unless they can validate your income and also your net worth.
07:41How fascinating is that? And then you're in a room a couple times a year with only other people
07:45that are worth $20 million or above. They don't want any other people in it, so they charge you
07:51a premium for only allowing access to other people just like them. We can hate this and think it's
07:56elitist or we can use it and get rich. It's really up to you. Number four, privacy. Give me some space.
08:03So often, once you have a lot of money, other things come with that. For instance, now that I'm
08:09public on the internet, there's lots of people that get doxed, right? So they want to make sure
08:13that they're protected. There are entire services for scrubbing all of your information off of the
08:18internet. There are services that scrub your businesses off the internet. Don't tell people
08:23about them. You know, supposedly, there's quite a few celebrities who scrub their children's photos
08:28everywhere off the internet. And so as you get more famous and as you get more money, people want
08:33things from you. If you're famous, maybe they want your picture, they want access to you,
08:36whatever. If you have more money, they want some of it. And so if you can create this privacy buffer
08:41space, then you can make a lot of money. So how do you sell it? Well, you offer high trust,
08:46high security, high privacy services. A way to do this across the board might be like,
08:51I have a cleaning company and I only clean really high-end customers' houses. So all of my cleaning
08:57ladies sign NDA policies. They make sure that they understand owner preferences. You can tell us how you
09:04want to be communicated with by our cleaners. So you can do this because you allow absolute
09:09discretion, which builds loyalty. This is really, really critical in my mind for service businesses
09:15and so underutilized. And maybe if you don't have a lot of money right now, this one doesn't make
09:20sense to you, but I'm going to tell you how to make any of these make sense to you so you can apply
09:24it to your business and your life right after this. Five, scarcity. Make it hard to get.
09:28So let's think about this for a second. Why do rich people want something to be hard for other
09:35people to get? Well, they want to feel special, right? So at a certain point, if you have all the
09:40money in the world, it's not just about other people thinking highly of you. It's about you
09:44being able to tell a story about a thing you were able to do or get or see that somebody else couldn't
09:48get. It's almost like a rich person pioneer, right? They're like, I want to be the first one to
09:52plant my flag on a foreign land. So how do you sell this? You limit availability. You do this on
09:58purpose. And let me tell you how rare this is for entrepreneurs to do. What do entrepreneurs want to
10:02do? Sell more things to more people again and again and again because they want to make more
10:06money. It actually doesn't make sense in your head commonsensically to think, well, maybe I should
10:11sell less things at a higher price. But that is what this is. And how you do this is waiting lists,
10:17premium tiers, applications, all drive demand. Think about waiting for the brand new shoe drops or
10:22we talked about Birkin bags before. In fact, you want to actually have things that are a real
10:28commodity, which means they're limited in quantity. I met a guy, I was at this event and this was an
10:34event for a bunch of rich people. And, you know, funny thing about rich people is they have weird
10:39hobbies. And so this guy in particular just exited a second or third SaaS company and I'm sitting down
10:45with him and I'm like, what are you working on right now? Lord, do I wish I hadn't asked that
10:48question? Because I got a soliloquy on crystal marketplaces. He had just started a crystal
10:55marketplace. Now this isn't your ordinary woo-woo Austin crystal. He was showing me his crystal
11:00collection, which was like, I don't know, million dollar crystals. And I felt like that meme where
11:06that like guy is whispering into the girl's ear and she's just dying on the inside as she's listening
11:10to him. And that was me with crystals this day. And so he went on and on about how he's bought this
11:14million dollar crystal and it couldn't be anywhere else. And this is so special. And I feel like he
11:19might've missed the plot about what women care about today because he appeared to be single. But
11:23why would he care about that? Because there's only one crystal just like that in the world. There's
11:29only one diamond just like that in the world. They're buying into a feeling, a position, a lifestyle.
11:34They aren't price sensitive, they're value sensitive. And once you understand this philosophy,
11:39you'll be able to sell to rich people. If you want to sell to wealthy customers, you got to ask
11:44yourself the rule of two. Does your offer hit at least two of these categories? If you're selling
11:50convenience, add exclusivity. If you're selling status, add scarcity. If you're selling privacy,
11:56add convenience. Rich people want to spend money, give them a reason to. Here's the difference between
12:02the two. Selling cheap means you're going to have price sensitive, high churn. You're going to have
12:06harder to scale volume game. You're going to have competitors everywhere. Selling rich means they'll
12:11pay a premium for the right product, no price shopping if they trust you, and will keep spending
12:15if you deliver. The difference between the two is really one singular idea. Do you understand rich
12:21people? And if right now you're like, oh, this sounds great, Cody, but I've never even met a person
12:26who could buy a Birkin bag or wouldn't think a 30, 50, or a $200,000 purse is criminal, then I need you to do
12:34something. You see, what changes when we are around other people who have money? It opens up our eyes to what
12:40is possible. And so what I'd like you to do is I would like you to go to somewhere that rich people
12:44are. If you're in LA, go to Beverly Hills. I just want you to walk around. You don't have to buy
12:48anything. You don't have to do anything. Go to a luxury shopping mall. See how they engage with their
12:53customers there. Try to engage with the people who are there and see how they treat you versus other
12:58customers. What can you do to change the way that they treat you? If you dress a certain way, will they
13:03treat you differently? Go and sit in the lobby of the most expensive hotel you can find, Ritz-Carlton
13:11Four Seasons. Dress how you think is appropriate. You can bring your own food and drink if you want
13:16to. Be sneaky about that. But I want you to watch the people coming in and out of the lobby. How do
13:21they engage? If you get a chance, sit and chat with them. One of my friends, Jesse Eitzler, when he had
13:26no money before he married Sarah Blakely and they became billionaires and he started NetJets and a bunch of
13:31big companies, he used to go to the Beverly Hills Hotel in California. He had no money then, but he
13:38would spend the little money that he had buying the cheapest item on the lunch menu in order to sit at
13:42lunch in Hollywood and meet as many people as he could. Every single day, he would have a goal of
13:48engaging with one or two people there. Then he would see how do these people engage in life? How do they
13:54think about things? How do they build? How do they get opportunities? He credits those conversations
13:58with some of his path to becoming a billionaire. So get around rich people, sell to rich people,
14:04you will make more money. See you next week. I believe you are capable of building big,
14:08beautiful companies.
14:09Hey, I have something special for you for being such a loyal listener because you're here with me
14:14all the time. I get asked by a bunch of you, how do I tell if I should buy a business or not?
14:20Should you buy a business or not? What price should you buy a business at? How do you structure your
14:25deal? I got you, fam. So I'm going to gift you our deal calculator. Every time I look at a deal,
14:30I grab the numbers, plug it in here and see how much money I could make or lose if I did a good
14:35or bad deal. So this is my gift to you. And if you're serious about buying a business, we want
14:39to help you. You can talk to my team about if you're a fit for our business buying community or
14:43curriculum. No matter what, here's your free gift. And if you need a hand to hold, I got you too.
14:48Hey crew, this is so cool. The podcast is growing like crazy and it's only actually because of one thing,
14:53you. I don't know if you know this, but the only way the big deal pod grows is when you share it
14:58with somebody else. We don't do ads. We don't do pay for play. We don't go on other people's
15:02podcasts and talk about it. So if you think there was something helpful here, if we made you money,
15:07we made you think about your business or life differently, the most beautiful thing you can
15:10do for me is share it. And the most beautiful thing you can do for someone that you care about
15:15is to share it with them, help them grow alongside you. So please share the pod. That's how we grow.
15:20And also tag me on anything you share. I love resharing other builders across Instagram,
15:24Twitter, and all other platforms. Thank you from the bottom of my heart. You're super important to me.
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