It's where 40 years of experience as a CFO and business consultant becomes your essential business read.
What flexible ways can you find to meet your customers' payment preferences? What options can you offer to help them decide to buy?
In this article you'll discover:
If customers come to you to look at what you have to offer, then it means that they are already interested in buying. Your job now is to make it easy for them to buy. Introducing options on price and payment methods makes it easier and is a way of increasing your prices too, so everybody wins!
Think about how you pay for things for a moment. Is it always cash? Probably not, as not many people use much cash these days. So do you usually pay by card? Credit or debit card? An online payment system? Do you have a car loan or a home loan?
Many people buy on credit; they have store cards, cards for petrol and certainly bank cards. You may have several methods you prefer to use depending on the outlay. Your customers are no different.
Some people prefer to lease rather than to buy and then upgrade regularly to the latest model. Some may like to 'try before they buy'.
You're there to sell so how can you meet these differing preferences?
The Psychology of Options
So you've got a whole bunch of people who like to pay in different ways, at different times which automatically points to options (and we'll come to practical tips a bit later).
But there's another aspect to options in this context. We looked at some pricing psychology in http://pricingpsychology.com. There's lots of psychology that goes with the idea of offering options.
Dr Rafi Mohammed, author of The Art of Pricing, says in his book, The 1% Windfall,
"Better pricing is more than simply raising prices. The key is to offer customers a variety of pricing options."
Let's take this key and see what it unlocks. If you offer one price, then the customer is faced with a simple decision, to buy or not to buy. But if you offer two prices or more usually two packages with rather different content, then the mind switches from making the decision 'Shall I buy or not?' to 'Which shall I buy?' and your sale is more than half made!
We human beings are weird, huh?
With this wild bunch of buyers out there, you need some strategies to meet everyone's needs:
Introduce payment plans. Make monthly payments possible, offer a three-pay option or whatever's appropriate. You charge more for this service, of course, which offsets your costs but could also be a bit more profit in your pocket. Some studies show that people will pay significantly more for a product if they can pay for it over time.
Offer two or three options to the buyer, each one at a different price and with a different level of value. When you quote for a job, put in three prices not just one – the one in the middle can be the closest fit to what they say they need with a more basic option at a lower price and a deluxe version at a higher price. There's less chance that they will try to bring the price down because, if they want to spend less, you've already given them a less costly option.
More buying options - Could you offer a free trial period of your product or service as a try-before-you-buy option? Could you lease your offering instead of selling it? Could you offer a licensing agreement so they buy the licence, not the product?
What are some of your ideas? Let me know in the comment box below.
Geoff Vautier is an 80-20 guru and pricing specialist. He successfully helps businesses of all sizes to find ways to increase their profits and grow.
“Boost your profit: Understand, and charge for, the value you provide”
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