MBA2142 Should You Offer Payment Plans for High-Ticket Offers? + Free Ride Friday

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Hey oh welcome to the Hundred dollar R Show Business Inspiration and motivation to keep you going every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014 and today's episode is Free Ride Friday. On Free Ride Fridays we give away a lifetime membership to one of our programs. We're giving away our Automated webinar challenge, our 30 day course on how to grow your leads and sales with automated webinars. It retails for $500 over at webinarninja.com awst see or you can win it for free. Just leave us an Apple Podcast rating and review and you enter our weekly random draw we call Free Ride Friday. We announce this week's winner a little bit later in the episode. In today's episode you will learn should you offer payment plans for high ticket offers? If you sell a product or service or coaching program or course. Should you offer payment plans to break down the high ticket price? Whether Your offer is 1,000, 2,000, 5,000 10,000 3040 $50,000 10. Some businesses like to offer a payment plan rather than force every customer to pay the total amount in One payment. Is this a smart idea? Does this work for every situation or every offer? In today's episode we're going to explore this topic. Where are some of the advantages and disadvantages or challenges you're going to face by offering payment plans? What price points do I recommend? You should start thinking about offering a payment plan and which ones should you just offer one payment? And in what situations do I think you should absolutely charge everything upfront. So let's get into it. Let's get down to business.

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Sell high ticket items or plan to, you're probably considering offering a payment plan. This is quite common for any kind of content or coaching or events. Like I mentioned. Now you might be saying to yourself, omar, what's the disadvantage by having a payment plan? I can even offer a payment plan and charge a little bit more since it's over a series of payments. This is quite popular where they say you can pay $2,000 or pay four payments of $600. This means the total price is actually $2,400 for somebody who's paying in payments. So let's take a deep dive on this option. Number one, there's nothing wrong with offering payments, but you have to understand they're not without their risks or challenges. This is why you're going to learn in this episode if you can avoid payments in any way. I would, but if you feel like the benefits will outweigh the negatives or the drawbacks, then payments are the way to go and I'll explain how to gauge that. So let's talk a little bit about offering payment plans and what it entails. What are some of the drawbacks? Yes, you are allowing people to join your program or sign up at a lower cost of entry or a lower barrier of entry. So instead of somebody having to shell out $2,000, right now they only need to pay 600. In the example I gave as you the business, there are no guar is that the customer is going to pay every one of those payments, all four payments. Often you'll see that their credit card might fail or they'll quit or they'll want to cancel. In some scenarios, this can really backfire on you because what if it's a course that could have consumed all the content already? What if it's a live event and you've already paid for the cost of that attendee? If it's a physical product, then you're going to have to find a way for them to return it back to you. And if not, you're going to have to go into another world where you're going to have to hire a collections agency to make sure they collect. And most likely their chances of collecting are slim. So payment plans, in my opinion, are a green light if it's a continuity program like coaching or like a live course where they pay and then they no longer get access to any additional content if they don't continue to pay their payments. Very similar to a SaaS business or a software subscription business. This is why these payment plans for high ticket items are very popular in coaching, where the coaching program might be $10,000, but if you don't want to pay $10,000 straight up, they'll charge you monthly for $1,000, meaning you're going to have to pay $12,000 in total. This allows you to offer flexibility and kind of a try before you buy mentality for your customers so they can say, hey, I could pay monthly. Yeah, I'm going to pay a little bit more over time, but I can pace myself and it's not a huge financial burden. And in my opinion, this makes a lot of sense for any kind of product or service that is over the threshold of $1,000. Now, the only product or service I actually staunchly am against payment plans are live events. There's a lot of upfront costs you have to pay for with live events. Often people sell tickets way in advance to kind of COVID that cost. This is why you'll find in live events or retreats or masterminds or whatever they are, payment plans are really just not that popular. And it's to lower the risk of the company that's throwing the event. On top of that, you'll also notice that refunds are rarely offered because when an event organizer sells tickets, they're banking on these people being here and are paying for things to cover the cost of those attendees, whether it's lunches, whether it's. It's the venue itself, where there's transportation if needed. So even if your event ticket price is $2,000, $5,000, $10,000, even paying for it, asking the customer to pay for it in advance, in full is what I recommend. And yes, I've seen events that charge $10,000, $15,000, $20,000, and they ask for that amount in advance, not a deposit, no payment plans. This also ensures that you're getting people that are very comfortable with money and see the value in what you offer. This means you're going to deal with less headaches dealing with customers because they're comfortably spending this money.

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It's very important to make sure in your mind you differentiate payment plans from a subscription. They're not the same thing. A payment plan is a set of payments that they have to pay to pay for a product or service in full. A subscription is a pay as you go type of offer where they get to use something as long as they're paying. When you make sure you make that distinction in your brain, you start to realize, I need to capture the total amount that I'm charging as quickly as possible to lower my risk of failed payments. This is why I recommend try your best to not spread payments out for too many payments. So for example, if you have a product that's $2,000, four payments of $600 is going to lower your risk versus 12 payments of $200. You might be thinking that you're making it more appealing by lowering the price and spreading it over more time. But what you're actually doing is you're subconsciously sending the message that this is not a commitment. You want people to make a commitment as soon as possible. And that's why paying as soon as possible helps them commit. But if you are giving them 12 months to pay for, then they're not really committed to whatever you're offering because there's so much time that's going by, people forget. People just kind of feel like, okay, I have to pay this of a debt rather than the feeling of I just dropped some significant amount of money I need to get the most out of this program or this product. You want people committed. You want people to actually have skin in the game and want to take advantage of what they just bought. Lastly, make it simple for the customer to understand that if the total amount is going to be more via the payment option that you make it clear so they can see the value of the one payment option. So for example, if you're charging $2,000 as a one payment option but $600 for payments, put it in BR a total of $2,400 so they could see, oh, I'll be paying $400 or more if I go with this option. I might as well just go with the 2000 and save myself 400 bucks. This is good for you and the customer that wraps up today's episode. Thanks so much for listening, but today's episode's not over. It's Free Ride Friday. Let's see who won this week's Free Ride. And the winner is Chandler Hutchinson. Chandler says Dave Charis, Episode 5 stars. While I love this show, some episodes speak to me extra. I really took what Dave said to heart. Dave Charost, a guest teacher of yours. I felt like he articulated his thoughts so well. I love how there are so many mentors this show provides. Thanks so much, Chandler for that amazing review. And thanks for giving us feedback on our extended interviews and guest teacher episodes. Well, Chandler, you just want a free ride. You want lifetime access to our automated webinar challenge that retails for $500 over at webinarninja.comawc if you want to win a free ride, just leave us an Apple Podcast rating and and you enter our weekly random draw. Listen in on Friday just like right now to see if you won. It's that simple. Before I go, I want to leave you with this one quick tip on the receipt that the customer receives when they're paying for a payment, give them a reminder of what they're paying for that this is a payment for this program. Make sure it's in the receipt and it shows up on the credit card statement. Because sometimes people forget they're paying for something, especially if there's several payments and they see it. And they might tell her credit card company, I don't recognize this payment. So make sure it's clear and you add that descriptor in your payment processor. Thanks so much for listening and I'll see you on Monday's episode where I sit down with Patrick Campbell, the founder of Profitwell who just sold his company to paddle for $200 million. We talk about that experience and what he learned in the process. Can't wait for that. See you Monday. Take care.

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