💰The $1.50 Secret To Millions

Hey friend,

Today we're exploring why some of the most profitable businesses lose money on purpose, how a $1.50 hot dog hasn't changed price since 1985, and three ways to turn access into profit. Let’s dig in.

The Story

Last year, I'm sitting at this café in Buenos Aires, ordering my second cappuccino of the morning.

When the bill comes, I notice something strange: the price had gone up 10% from my first cup. In one hour.

'There must be some mistake,' I tell the waiter.

'No mistake, señor. That's just inflation. Check back in a few hours - it'll probably be up another 20%.'

Turns out, inflation in Argentina was so out of control that prices were changing by the hour. 

Nobody really knew how much anything cost anymore.

Menus were handwritten to save on reprinting costs. Price tags were becoming fiction, not a clear indication of cost.

Meanwhile, 7,000 miles north, Costco was doing something that seems impossible to Argentinians: Their hot dog and soda combo has cost exactly $1.50 since 1985.

Not a penny more. For almost 40 years.

Their profit margins on rotisserie chicken? They lose money on every single one. Millions of dollars every year. And they do it all on purpose.

It's called a loss leader strategy - you lose money on certain products to get people through the door.

I used to do this with playing cards on my website. Sell some decks at $2 (making zero profit) knowing that most customers would add other items to their cart where I'd actually make money.

Obviously, Costco took this concept further. See, they're not really in the business of selling chicken, or TVs, or bulk toilet paper - they're in the business of selling memberships.

Everything else? That's just the reason you keep renewing.

While every other retailer lives and dies struggling to get pennies of profit on products, Costco makes most of its money before you even walk through the door. Their annual memberships are priced between $60-120 - and that’s pure profit.

Meanwhile, they're selling premium electronics at cost. Expensive wines at warehouse prices. And let me tell you about their white t-shirts - legitimately the best in the world, and I'm willing to die on that hill.

And then there’s the scarcity trick. No price tags on the website. Randomly disappearing inventory. Limited-time deals that might never come back. You walk in for a rotisserie chicken and leave with a kayak, because, well… it was there, and it might not be next time.

It's a perfect win-win: Customers save money on everything they buy, and Costco gets guaranteed membership revenue plus enough margin on regular sales to make it all work. Because they offer everything at such good prices, people keep renewing. Works like clockwork.

Now, I know what you’re thinking: ‘Cool story bro, but I don’t have a warehouse full of bulk toilet paper.’ 

Well, that’s not the point. 

The genius isn’t about WHAT they’re selling - it’s HOW they’re selling it. 

And here’s how you can do the same…

How To Profit

• The Membership Flip 

Let's start simple: Find something of value people buy repeatedly.

Could be specialty coffee beans, premium t-shirts, board games - anything with a passionate customer base who buys frequently. The key is picking items where saving 30-40% per purchase makes an annual membership worthwhile.

Start by sourcing products from existing manufacturers and sell them at your cost. You’ll make zero profit in the beginning - your money comes purely from memberships. Your prices are so good, people can't help but tell others.

But here's where it gets interesting: once you've built a solid membership base, start producing your own products. Now you're selling at "cost," but that cost includes a small profit margin.

Your prices are still way below competitors, your members still feel like they're getting a steal, and you're making money from both memberships and products.

Don’t just think about it as another way to sell, think bigger - you're building a community around your niche.

Host events. Create exclusive content. Give members early access to new products. When you're saving people serious money on things they already buy, that annual membership fee becomes a no-brainer.

• The Artisan’s Circle

There’s more than one way to skin a membership model: create an exclusive club that gives access to luxury goods at insider prices.

Think high-end products that people aspire to own. Limited edition watches. Bespoke suits. Premium cigars, fine wines, artisanal leather goods - all the trimmings that make people feel fancy. 

There are a tone of really good small luxury manufacturers. Partner up with them. Offer to be their exclusive distribution channel. 

You sell their items at just above cost but wrap it in an exclusive membership experience. 

The key - and I can’t stress this enough - is to make it feel exclusive. Limited memberships. Private showings. Members-only events. 

As you learned so far, people will pay good money not just for the deals, but for the feeling of being on the inside. 

• The Service Flip 

Here's where it gets interesting - take the Costco model and apply it to services.

Let's call it arbitrage without the arbitrage. Here's what I mean:

Most agencies play the arbitrage game: Get hired for $1,000, outsource the work for $500, pocket the difference. Basic business, nothing wrong with it.

But what if you flipped it?

Instead of marking up services, charge a membership fee that gives access to "at-cost" rates. Let's say you run a design agency. Members pay $500 annually to get all services at your actual cost.

Need a website? $500 instead of $1,000.

Landing page? $250 instead of $500.

Email template? $100 instead of $200.

Your clients save money on every project, and you get predictable membership revenue. Plus, because they're saving so much, they're likely to do more projects.

You can still outsource the work, still pay market rates to good contractors, and make most of your profit from memberships rather than markup.

Who wouldn't want to get the exact same service for half the price?

Bonus: I’ve Got Some News!

Speaking of membership models - I had an idea…

What if I built this business completely in public and shared everything along the way? On Patreon, you’ll get a behind-the-scenes look at every decision, every win, and every failure as we grow LZY MNY CLB from scratch. I’ll be sharing real revenue numbers, the strategies we’re testing, and exclusive insights you can use for your own business. Every dollar we make goes right back into growing this business—and you’ll see exactly how we do it. If you want a raw, unfiltered look at building a business in real time, you can check it out by clicking below. Thank you…let’s continue…

The Ace Segment

Before Costco, before Sam's Club, even before the idea of membership retail, Ace Victoria was experimenting with a similar model in the most unlikely place - farming communities.

Back in 1903, Ace noticed something interesting about his cousin's struggling farm.

Every farmer in the area was buying the same supplies, selling to the same markets, and getting squeezed on both ends. 

Each working alone, none doing too great.

So he asked a simple question:

"What if farmers paid a membership fee to access wholesale prices on supplies and guaranteed buyers for their crops?"

In hindsight, the idea seems obvious.

But back then it was truly revolutionary.

He started small - just ten local farms. 

Each paid an annual fee to join what he called a "purchasing collective." 

With their combined buying power, they got better prices on seeds and equipment.

With pooled resources, they could negotiate better deals with buyers.

The farmers saved money on supplies and made more selling crops. The suppliers got guaranteed bulk orders. 

As for Ace? He made his money from membership fees instead of margins.

As he wrote in his newsletter: "The trick isn't to profit from every transaction - it's to profit from making every transaction profitable for others."

Until next time,

Alex

Founder //LZY MNY CLB