Wondering if you should use payment plans when pricing your offers?
In this training, we will discuss the pro’s & con’s to payment plans so that you can make a wiser decision on whether or not you want to make this an option for your clients.
When Are Payment Plans Used?
Payment plans are a wise option when you want to have more clients.
Obviously, this means anyone can use them at any time if desired in business.
The great thing about being the CEO of your small business is that you get to decide what is best for you & your business at any given moment.
If you are just starting your business, this could be an opportune time for a payment plan as it could help your business to get off the ground & gain more clients quickly.
When Are Payment Plans Not Used?
As your business grows, you may find that the clients who pay via payment plan aren’t the best clients & don’t put in the effort to get the results you wish to provide.
At that point, you can then decide whether or not you wish to keep the option available or if you only want to offer it when a client asks for it.
Who Are Payment Plans For?
Not all of your clients will have the same buying habits.
There are 7 Different Types Of Buyers. Knowing this then allows you to serve each type of buyer in your business differently attracting a more diverse set of clients who all want your offer.
A great example is a circus. Some circuses put out tickets at gas stations for free child admission with a paid adult. On this ticket, they promote that if you buy your ticket online it’s $9.99 for x amount of people. If you show up at the circus & don’t have the free admission child ticket, you are paying for the child & yourself at full price.
So with this example, you can see why the circus is FULL of people. The circus has intentionally given more people the opportunity to attend. Some don’t mind paying full price & others have to take the extra steps to get in for cheaper.
That brings us back to the question, “who are payment plans for?”
They are for the population who are having financial struggles.
Having payment plan options allows you to meet them where they are without furthering their financial stress or omitting the opportunity to work with you altogether.
The Pros Of Payment Plans
There are good reasons to have payment plans.
First, think about your business & creating consistent income, payment plans are a great option for this.
Offering payment plans allows you to have a truer projected income month after month.
Second, offering a payment plan allows you to make more than when someone pays in full.
When offering payment plans typically most business owners add 10% to the overall cost.
This encourages buyers to pay in full but again gives more of your ideal clients the ability to have the opportunity to work with you.
The Cons Of Payment Plans
One major thing to consider about payment plans is the ability for the client to cancel in between payments thus not getting full payment for your offer.
This is where it is wise to serve them once they have paid in full or after they have made a few of the payments so that you don’t lose as much money if they stop paying.
Not all clients will do this but for the sake of your business, you do have to consider the possibility that it can happen.
How Many Payments Are In A Payment Plan?
There are a few ways to determine how to set up your payment plan.
First, consider what type of offer it is & the time frame the membership, program, or service lasts.
You can then take the following formula (pay in full price + 10% / number of months the offer exists) to calculate the price of your offer in payments.
For example: If it’s a 3-month program or service they would have 3 payments.
Alternatively, if they are buying a course or product then you just have to make the wisest choice for your business & take into consideration where your ideal clients typically are financially.
This is why market research & sales calls can come in handy because you can customize offers specific to your potential client’s needs.
I personally have had some clients create 3-year payment plans with me but those were very special cases and there was a lot of trust and relationship built there. Those clients actually paid off early once they had the money readily available.
Conclusion To Payment Plans
When it comes down to it providing payment plans within your business is really just a matter of decision.
It’s totally your choice what you are willing to make available for your clients to be able to work with you.
Keep your business & your client at top of your mind.
Then ask yourself, “what gives my business the ability to grow right now without compromising the quality of the offer & my sanity”?
When push comes to shove you always want to make the decision best for your business while also creating the ability to serve & impact all the lives you desire to.
One last thing to remember, you are in control.
If you start implementing payment plans & it begins hurting your business instead of growing it, then, you can take the plan options away but you might just discover it is the best option you could have implemented.
You won’t truly know until you try it.
Need Extra Support With Pricing Your Offer?
Schedule a consult call to discuss the best options for creating & pricing your offer.
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