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Value Equation

How to measure the value of an offer: (Dream Outcome × Likelihood) ÷ (Time × Effort).

Explained simply.

Alex Hormozi's framework from $100M Offers. The value of any offer is: the dream outcome the customer wants, times the likelihood they'll actually get it, divided by how long it takes and how much effort they have to put in. Maximize the top; minimize the bottom. Every 'grand slam' offer wins on all four variables.

An example.

'Lose 20 pounds in 90 days, eating whatever you want, with a 100% money-back guarantee' wins on all four: big dream outcome, high guarantee-backed likelihood, low time, low effort. Same product sold as 'try our meal plan' has a terrible value equation, it's vague on outcome, unsure on likelihood, unclear on time, and requires effort.

Why it matters.

Before writing a single line of copy, run your offer through the value equation. If any number is bad, fix the offer, not the copy. This is the quickest diagnostic I know for why an offer isn't selling.

Related terms

OfferGuarantee

Further reading