I understand that it’s appealing to have predictable, ongoing revenues every month. I get it. If your business is set up for recurring revenues like subscriptions, I’m not saying pull the plug.
But some entrepreneurs think of payment plans as sources for recurring revenue and encourage their clients to use them.
I really believe that practice is a disservice because paying-in-full is so much better for everyone.
Here’s why:
1. When a client pays-in-full, they put both feet in. I’ve now had three rounds of offering my mastermind, and, while there are exceptions to this, I’ve found that the people on payment plans generally are the ones who struggle.
It’s really just about human nature — when clients pay-in-full, they don’t reevaluate their decision every month when it’s time to make their payment. They’re fully committed from the start. They jump in and never look back!
2. Paid-in-full clients tend to get more out of the experience and better results. Again, drawing from my experience with my mastermind, the people who find a way to pay-in-full end up saying, “I paid for the buffet, I’m going to consume it! I’m going to get everything from it that I can!”
And then they do! They milk the experience for everything it’s worth.
When they bring that kind of full-force energy to their investment in themselves, how could that not show up in their results?
3. Your clients paying-in-full is also better for you. Theoretically, yes, you could make more money by having people on payment plans that cost a little more, but do you really want to deal with all the extra work and hassle that goes along with payment plans? I don’t want to spend my life energy that way.
Even if you’re not the one handling the accounting, trust me, the “exceptions” will always land on your desk and, in many cases, you’ll be spending more time on them than on your revenue-generating activities!
I know that offering payment plans makes it possible for some people to participate who otherwise would not be able to, and that’s why we still offer that option. But believe me when I tell you that if the irresistible offer to pay-in-full is truly irresistible, people will find a way to make it happen, even if they don’t have the money in their sock drawer. I’ve seen it year after year with my amazing mastermind members.
It’s far more profitable in the long run for you to have clients who are setting their industries on fire. Their success makes your reputation gold and secures your future income far better than anything you’d get from a few extra bucks on a payment plan!
You are right on both counts, Lisa. Paying in full stimulates full commitment, rather than monthly reevaluation.
Breaking it up into payments makes the program affordable to more people.
But making the total of payments too much higher also eliminates budget conscious people who object to paying substantially more for amounts that are probably going to be put on an interest-charging credit card anyway.
AND payments encourage people who really can’t afford the program to sign up for it…hence the monthly re-evaluation, expecially if the promised transformation isn’t happening as quickly as expected.
Transformation usually takes some time!
It appears to me that payments offer a viable solution if you want as many people as possible to sign up for the program.
If you only want the ones who identify the program as exactly what they need, don’t offer payments.
If they can’t put the entire payment on a credit card, they really can’t afford it, as the card is already maxed out–and probably therefore all the cards are maxed out.
I don’t sign up for payments. If I can’t afford it, I’ll wait until I can.
In the meantime, I take other actions to get the information I need.
Thank you,
Ann Bell
I agree. I’d much rather have a pay-in-full client. They’re invested and they’ve given you trust upfront.
Amen. I would distinguish between “recurring revenue”
and “payment plans.” I think payment plans suck because
of all the reasons you mentioned, and they seldom
really benefit anyone.
Recurring revenue, such as subscriptions and memberships,
can work well for companies and customers alike.
Ever hear of Costco? They collect cash when you buy,
AND they have a subscription (membership) plan. Nice.
I think you’re right that more people on payment plans struggle. However, I’ve also seen the opposite–folks on payment plans who really felt they couldn’t do the program otherwise–and they’re 100% in. I think it’s still helpful to have that multi-payment option.
Very interesting perspective. I think there really is something to what you’re saying. There really is something to the idea of being fully committed (financially and energetically) to something.
With Love and Gratitude,
Jeremiah