# Alex Hormozi's 12 Rules of Thumb (The Mathematics of Business) Here's a recap of each rule from the [video](https://youtu.be/A_tx40lNpf8): **1. Close Rate vs Pricing** Your close rate signals whether you're priced correctly. Closing 80%+ means you're underpriced by 3-4x. Closing 60-80% means underpriced by 2-3x. The sweet spot is 30-40% with a proper sales process—that's appropriately priced. Below 30%, fix your avatar or sales process before lowering price. **2. LTV to CAC Ratios** The ratio you need depends on how many humans are in your business model. Zero humans (pure SaaS) = 3:1 is fine. One human in the loop (sales or delivery) = target 6:1. Two humans = target 9:1. Three humans across attraction, conversion, and delivery = target 12:1. The padding accounts for inefficiency when scaling. **3. Rule of 100** Do 100 actions per day on one acquisition channel for 100 days. That's 10,000 deliberate actions in one direction. Most people get their first customer by week three. Feast-or-famine revenue is a symptom of insufficient volume—compress what you do in 10 days into one day. **4. Lead Response Time** Call leads within 60 seconds. Waiting lets prospects cool off, shop competitors, and enter pricing wars. Slow response costs you 4x what you should be paying per customer and tanks close rates. **5. 70% Calendar Utilization** Keep sales calendars 60-85% full, with 70-75% as the sweet spot. Too full = further-out bookings, lower show rates, no time for pipeline work. Too empty = reps lose momentum and get "commission breath." When in doubt, hire more salespeople. **6. Payback Period** Recover customer acquisition cost within 30 days. Why 30? Because credit cards give you 30 days interest-free. If you can spend $100, acquire a customer, and get that $100 back within 30 days, you can scale infinitely without outside capital. **7. Gross Margins** Target 80%+ gross margins for service businesses—this is the minimum, not the goal. At 70% margins, a $100 cost requires $333 in revenue. At 90%, that same cost requires $1,000. The difference between 70% and 90% gross margins is massive in actual dollars. Low margins usually mean you have a commoditized offer. **8. 30-Day Cash Collected** Collect enough cash in the first 30 days to cover both your cost of goods sold AND your customer acquisition cost. When gross profit in month one exceeds COGS + CAC, you can immediately reinvest to acquire another customer. **9. Lead Conversion Benchmarks** Some rules of thumb: Meta leads for in-person services should convert at ~10%. Cold webinar leads convert at 2-3% (broader markets) or up to 5% (niched). In-person salespeople should close 35%+ with a proper process. Web pages typically convert 1-2%. **10. Customer Retention** For B2B, target 80%+ annual retention of your original cohort. Measure the specific customers you started with, not total customer count (which hides churn with new acquisitions). 50% retention = 2x annual revenue in LTV. 80% retention = 5x. That's a 2.5x difference in customer value with similar acquisition costs. **11. Front Load Payments** Offer prepay options with discounts and bonuses (priority access, dedicated support, extended guarantees). Expect 15-20% uptake on a "pay 10, get 12" deal. Add ancillary benefits and 30-40% will prepay. Use layaway: customers pay first, receive later—this pulls cash forward and makes collections easier. **12. Industry Averages Are Dumb** Don't benchmark against industry averages. The average business is mediocre. Winners don't measure themselves by the same stick as their competition. If physics allows the outcome you want, pursue it regardless of what's "normal" in your industry.