Increase Profits by Offering Multiple Payments
Sometimes a customer will be very interested in your higher-ticket products, but they won’t be able to pay for them up front. You can use a couple of multi-payment options to help them afford and benefit from your product right now, while still giving you the income you want to make from your product.
Offering Your Course in Multiple Parts
The first option is to offer half the product for half the price. This is a really simple concept. If your online course has 10 lessons, they get the first 5.
And, if they purchase it, they will get offered the next 5 lessons later on. I would wait 7 – 10 days, then offer them part 2. They’ve experienced part 1, now here’s this opportunity to purchase part 2 for say an additional $497 (whatever they paid for part 1).
If you’re planning this as your strategy, you could offer part 1 for $597, instead of $497, then you could offer part 2 at a $200 discount for $397. Your total revenue would be the same. Within a few dollars. If we’re rounding 7’s you would be at $994, if they purchase the first part at $597, and the 2nd part at $397 which would be a $200 discount.
Using a Multi-Pay Option
Another option, especially with higher ticket products, is to give them the whole product but split it into payments. 2 or 3 payments is really common. There can be a risk with this. I do recognize I’m not going to get every single payment from every single person. I’m going to get most payments, but I’m not going to get every single payment. It just happens that way, people. You’ve got to understand, if somebody takes your payment option, the reason they didn’t pay you the full $997 or whatever you’re charging, is usually because they don’t have $997 on their credit card.
That’s the biggest reason. Sometimes it’s because they don’t trust you enough, but if you do the kind of marketing that I do with trust at the front end, and they buy a product and have 7 – 10 days to consume it, they like it, they trust you. In my opinion, the biggest reason that they take a payment option is because they simply do not have $997 in the bank. But they do have $335.
Now, if they don’t have $997 in the bank, then they’re pretty much spending what they take in every month. Economically, that’s what’s happening to that person.
They fully intend to make payment #2 and payment #3. Let’s say month 2 comes along and they barely have enough money to pay you, but the payment’s coming through, they’ll make it happen. Month #3 comes along, they’ve already scrunched in month #2 to try to make sure the money’s there, and when the month 3 comes along it’s just not there. The payment’s going to fail.
When a Payment Fails
Okay, now, a lot of times, if you write that person and say, “Hey, I noticed that the payment failed, how are things going with the product?” They tell you that things are going well, and they’re really sorry they couldn’t make that payment. You say “Let me ask you this, John, it’s $335, what if I split that into 4 payments, we’ll do $87/month for the next 4 months, would that be okay with you?”
Most people will say, “Yeah, that’ll be great. Thanks for working with me.” It’s not that they don’t want you to get paid – it’s that the reason that they took payments in the first place is because they have a finance challenge. If you make it now more affordable for them to make the last payment, they’ll make it for you. Now, I’ve done that before, repeatedly in the past. I’ve refinanced my financing with somebody because something happens in their life. You simply have to recognize this. Sometimes that won’t work. They just don’t have the money. Something happened, they thought they were going to have the money, they don’t have it. So, you aren’t going to make quite as much on your payments.
But, remember this! They weren’t going to buy in the first place. So, whatever payments they make, is additional revenue for you, because it’s a digital product, it doesn’t cost you anything else to allow one additional person to purchase that product.
Even if everybody only made 2 payments, then you would still be ahead of not giving that payment plan at all.
Other Concerns with Offering Payments
Usually you offer a payment option later in your email sequence, after someone has already said “no” to a single payment.
You don’t want to be unethical: if somebody paid $997, and sees that now there’s a payment option for $337 they usually don’t feel cheated. They simply didn’t have the opportunity to finance it, but remember, they paid the payment, so if they don’t have the money they financed it probably on a credit card anyway, so to them, it’s no different. They’re going to make the same credit card payment every month as if they were to make you monthly payments, by breaking it down.
Now, that’s another value of having a higher price for monthly payments. I think most marketers do a higher price for monthly payments. It helps you cover the fact that you don’t get all of your payments, all of the time. It also makes it more reasonable for that client that does pay full price, that the incentive to pay full price is that it’s really a lower price. I mean, really, it’s $997 if you pay for it in full, but if you make payments, it’s going to end up being $1150 or $1200.
You can split test that. Everything you do should go into a split tester. So, you could split test what’s the conversion rate between $337 and $377. 3 payments of $337 and 3 payments of $377, what’s the conversion rate? Is there a significant difference? Well, if there is, maybe you go with $337. Split test that vs. 4 payments of $250, what worked better? 5 payments of $197. I have this set up so that, I mean, the key here is that, and I see so many marketers, they want to do all of this at one time, they want to have a $997 offer, and a 3 times $337, and a 10 times $120, and then people choose one of the three.
I personally believe that total conversion rates are greater if there’s a payment option for some people. I don’t have to get paid today – it doesn’t make any difference to me if I get paid today, or in 7 days. I don’t care if somebody buys today, or in 7 days. Doesn’t matter to me, the money’s going to be spent exactly the same when I get it.
If they’re not going to buy in 7 days, yeah, I want them to buy today. But if we have multiple opportunities for people to buy, we’ll maximize the people that will buy at $997, maximize the number of people who’ll by at 3 payments, maximize the people that’ll buy at 10 payments, maximize the people at $497, maximize the people at 3 @ $170, maximize the people at 5 @ $97… whatever it is… then I’m able to generate the maximum number of sales in 21 days, instead of the minimum number of sales all on day 1. And, I would rather take the maximum number of sales, spilled out over 21 days, than the minimum number of sales, spread out over 3 days. Can you see the power in that? Test it in your own funnel and see how it goes.