Money models

Money Models: design the sequence, not the sale

When to use

Use when the question is "what do we sell, in what order, and how do they pay" — pricing ladders, trials, payment plans, membership billing, or making acquisition self-funding. The unit of design is a sequence of offers, not a single price. A business with one offer isn't a business; it's a front end.

The procedure

Phase 0 — Baseline the cash math. Write down the current offer sequence as-is (most businesses have exactly one step). Compute 30-day gross profit per new customer vs. CAC + cost to serve. The governing constraint: 30-day gross profit per new customer must exceed acquisition + service cost — ideally 2x+, so one customer's profit funds the next on credit-card float. If the ratio is under 1, fix Phases 1–3 before touching continuity. Every decision below is a lever to hit this number.

Phase 1 — Attraction offer (strangers -> customers). Its job is to fund acquisition, not to be the profit. Pick ONE from the catalog below, matched to the business; advertise the benefit, not the features. "Free," "discount," and "$1" are interchangeable frames on one continuum — free is a 100% discount. Discounted offers get fewer leads but higher show-up rates than free; switch to paid-something when no-shows are costly.

Phase 2 — Upsell (spend more). Ask: what problem does the first purchase create? Sell that solution the moment the problem appears — wrong thing, wrong time, or wrong way is why upsells fail. Offer the highest-profit upsell first. BAMFAM: never end an interaction without booking the next one and its reason. Charge for guarantees/warranties (+5–50%) instead of gifting them. Hint at the next offer before selling it.

Phase 3 — Downsell (turn no into yes). A no is to this offer, not all offers. Two levers only: change what they get (feature downsell) or how they pay (payment plan) — never drop the price on the same thing; that reprices the product in public and destroys trust. Downsells are trades: give something, get something. Alternate feature and payment-plan downsells; temperature-check ("1–10, how bad do you want this?" — 8+ keep going, 7 or below ask "why not a 10?" and change the offer). Close each concession with "fair enough?"

Phase 4 — Continuity (keep paying). The last offer in the sequence, funded by the cash from Phases 1–3 — never the standalone attraction offer (it's cash-poor up front). Sell the bonus, not the membership: the join-today bonus must be worth more than the first payment. Upsell a bulk prepay immediately after joining to rescue 30-day cash. Sometimes the right continuity moment is after day 30 — right timing beats forced timing.

Sequencing discipline: build ONE offer at a time, measure in quarters, not weeks. Stage order: get customers reliably -> customers pay for themselves -> customers pay for other customers -> maximize lifetime value -> then scale ad spend. Each stage must pay for the next. Mix-and-match is allowed once the standard arrangement works.

Rules and quick reference

Attraction offers

Offer	Mechanic	Thresholds / math
Win Your Money Back	Pay now; meet tracked action/result criteria -> refund as store credit toward a pricier offer, spread over the term	~10% will claim; only run if base refund rate <5%; credit converts same as cash; effort-based products only
Giveaway	One grand prize; every entrant "wins" a discount on the same thing	Discount = 10–30% of gross margin; 3–7 day window; urgency at enter/claim/use; flop = prize not grand enough; heavily regulated — get counsel
Decoy	Advertise the stripped cheap/free version; present the premium beside it	Huge contrast; benefits in ads, features in the pitch; remove guarantees from the decoy
Buy X Get Y Free	Reframe multi-unit pricing as free ("buy 6 get 12 free" beats "25% off")	Raise prices first; more free than paid; cap existing-customer version at ~10% of base; don't spend delivery money
Pay Less Now / More Later	Full price later with conditional guarantee + card on file, or 20–50% off + bonuses now	Promise a clear yes/no result; >10% cancels = you overpromised; downsell for one-time products

Upsell offers

Offer	Mechanic	Thresholds / math
Classic	Solve the next problem the moment it appears	Burger math: $0.25 -> $3.00 profit through three upsells; say-no-to-say-yes ("you don't want anything else, do you?")
Menu	Unsell what they don't need -> prescribe exactly what they do -> ask "A or B?", never "yes or no?" -> "card on file?"	Economist decoy: price the bundle equal to the pricier single option
Anchor	Show a premium at 5–10x first; after The Gasp, rescue with the main offer	Main offer = same primary features at ~1/5 the price; actually sell the anchor — some buy it
Rollover	Credit past purchases (yours or a competitor's) toward the next offer	Next offer >= 4x the credit (so <=25% off); winback lapsed customers at 6+ months; one-time-only urgency

Downsell offers

Offer	Mechanic	Thresholds / math
Payment Plan	Same total price, staged payments; reward prepay, don't punish installments	Bill on paydays; retry declines same-day (recovers ~1/3); healthy = close rate up while paid-in-full share holds; churn by cadence: monthly 10.7% / quarterly 5% / annual 2%
Trial With Penalty	"Free if you do the work; fees if you don't" — card + initialed terms up front	Last-resort downsell, recurring offers only, effort-based products only; per-miss fees beat one lump; "$1 first month" beats free for card capture
Feature	Remove features (highest value first), lower price, "fair enough?"	Often re-sells the original at full price; name tiers, cheapest = "The Minimum"; downsell current customers before they churn

Continuity offers

Offer	Mechanic	Thresholds / math
Continuity Bonus	Free valuable thing (worth > first payment) for joining today	Standalone priced at 1.33x / 1.66x / 2x / 2.33x / 2.66x monthly -> 50/60/70/80/90% choose continuity; 1-in-8 bulk-prepay takers = +50% 30-day profit
Continuity Discount	Free time for commitment: up front / earned at end / spread over term / after 1–2 payments	Lifetime discount earned at your peak-churn month; cancellation fee = discount received; exit interviews save ~1/3
Waived Fee	Month-to-month + setup fee, or fee waived on a 12-month commitment; fee owed only on early exit, forgiven after a full term	Fee = 3–5x monthly (1.5–3x for more up-front cash); >5% early cancels = product problem, not pricing

Mechanical money rules (cheapest wins, no trust risk): bill per-4-weeks (13 cycles/yr = +8.3% revenue); add a 3% processing fee; collect two payment methods, prefer ACH; keep raising prices until revenue falls; affiliate products fill empty model slots; automatic renewal turns attraction offers into continuity.

Where it doesn't transfer

• Provenance filter first: every number above is one operator's self-reported funnel data from high-ticket, high-margin, human-closer businesses (gyms, coaching, info products). Treat stats as hypotheses to test, not benchmarks. The taxonomy is durable; the scripts are not.
• Keep the structure, rewrite the script. Several tactics trade long-term trust for short-term conversion: holding a customer's ID, "that's just how we've always done it" deflections, penalty fees framed as free trials, scraping competitors' negative reviews, donating cancellation fees to causes the customer hates. Use the underlying offer structure; rewrite the words to something you'd be comfortable seeing quoted publicly.
• Low-ticket / consumer SaaS / communities: the whole live-downsell machinery (7-step payment plans, seesaw, temperature checks) assumes a human closer justified by a high-ticket price; at $10–50/mo it doesn't fit, and aggressive card-capture poisons word-of-mouth. What transfers down-market: continuity-pricing ratios, 4-week billing, bonus-led membership offers, lifetime-discount-at-the-churn-point, payday dunning, exit-interview saves.
• B2B with procurement: anchor-gasp theatrics and one-time-only urgency read as manipulation. Translate the structures instead: pilot-with-commitment = Trial With Penalty; implementation fee waived on annual = Waived Fee; tiering = Feature Downsell; expansion revenue = Classic Upsell; crediting a competitor's remaining contract = Rollover.
• Thin margins: the model runs on margin — if gross margin can't absorb a 10–30% discount plus CAC, raise prices first or don't play. Trust-first / regulated categories (health, finance, education): giveaways, "free" claims, and review-gated refunds carry legal edges — counsel before deploying. Passive products: effort-based guarantees (Win Your Money Back, Trial With Penalty) only work where the customer must do work to get results.

Relation to siblings

The offer-design skill ($100M Offers) covers what a single offer IS — value equation, guarantees, bonuses, scarcity. This skill covers the order offers are sold in and the cash-flow math that makes acquisition self-funding; an attraction offer is roughly a Grand Slam Offer placed at the front of a sequence.

Source

Compiled from $100M Money Models — Alex Hormozi (2025). The skill is the procedure; the book carries the depth (worked examples, edge cases, the author's reasoning). If this stage is where your venture lives right now, buy and read it.