Should You Offer Payment Options?
What do you want? How badly do you want it? What are you willing to give up to get it?
Those thoughts go through your mind – whether you realize it or not.
And those exact same thoughts go through your customer’s mind – whether you realize it or not.
And when your customers are choosing – they are choosing to do business with you – or they are choosing not to do business with you.
And your goal is to provide them with the most value possible, and deliver the best experience possible.
So how do you continually add more value?
One way is to continue to add choices.
Initially, the decision is typically YES or NO? Do I want this thing?
But all things are not created equal. Some things are better than others.
And we, as humans, have been trained to distinguish and choose from the moment that we first opened our eyes.
So what if we could make it even easier for them to choose?
Think about it for a moment. Imagine that you just had an amazing dinner at a great restaurant and your server walks up and and says “would you like your check?”
It’s super easy to answer Yes… but that makes it hard for the server to provide additional value and have you order more stuff.
Instead, what if the server comes up and asks “Which flavor of ice cream would you like? Chocolate, Vanilla, or strawberry?” All of a sudden the choice matrix has been flipped from yes or no to A, B or C.
You may be thinking, “But Rachel, my business isn’t about food.” And I understand that. However, this concept is super important for your business and your customers – regardless of what who you serve.
The easiest way to increase choices – without offering more products – is to offer additional payment options.
Yes – you read that correctly – increase the number of payment options that you offer.
First, if you don’t accept credit cards – you need to. A service like Stripe or Square can get you set up immediately – and they also offer card readers that plug into your smartphone.
Second, if you don’t accept Paypal – you need to. You may not actually use PayPal in your life – but a lot of your potential customers do. And if you’re working with international customers, or people that don’t like the concept of credit cards – Paypal is a huge win because it allows them to extract funds directly from their bank account to pay for your product.
Third, if you don’t offer to split a high-ticket item into payments – you need to. I’m not talking about making a $10 purchase into 12 payments of $.99. This is about making an item that’s over $100 into payments that make sense. Most people can come up with $100 if they want to. But to pay for a $997.00 product, or a $10,000 product – they may not have the savings or the cash flow to be able to dish out that much money all at once. Does that make them bad customers? Not at all. It just means that they are not as well leveraged at this particular moment.
What are the pros and cons?
PAY IN FULL: Fixed price with a single payment
- Business benefits – payment is upfront, there’s only one transaction (no need to track down delinquents).
- Customer benefits – the purchase is guaranteed, buy it now and forget about it.
- Example – The price of your course is $1,000. Make one payment, get the product, and move on with life.
PAYMENT PLAN: Fixed price split across multiple payments.
- Business benefits – more customers, predictable recurring revenue and price markups.
- Customer benefits – lower perceived risk, more affordable in the short term, protects customer’s cash flow.
- Example – The price of your course is $1,000 but you add an additional $200 or 20% for the industry standard markup. Then split the payments into monthly installments – You can do 4 payments of $297 or even 12 payments of $99. The business will receive an extra $200 which helps to offset customer service.
It’s important to note that you won’t get rich on the markup from offering payments and financing – but instead you will sell more from making it more affordable to more people.
Do you have to offer payment plans? No. Absolutely not. Is it a tool that you can use to help provide more value to your customers? Yes, absolutely.
Changing the question to “which one is right for me?” will help your customers win every time. And when your customers win, you win.