What’s an Installment Plan
If you have an expensive product you may want to offer your customers the option to pay by installments. Installments enable your customers to pay a recurring fee to pay off a higher ticket item. This way they don’t have to pony up the cash all at once. There are several benefits to offering installment plans, but the most important benefit is increased sales. Some customers may not have the cash on hand when they want to buy; others might feel more comfortable paying for your product over time. These customers could have very likely passed you over in the past in search of a cheaper alternative. Instead of chasing them away with your price tag, you can offer an installment plan and make the sale. For the purposes of this post, we’ll pretend your product costs $100.
When Do You Want To Get Paid
There are a few things to consider when designing your installment plan. The first thing you should do is decide how often you want to get paid. It could be weekly, monthly or yearly depending on what you’re selling. For this example we’ll go with monthly.
If you want to get paid monthly, decide how long it should take your customers to pay off their purchase. If you have a lot wrapped up in inventory costs it could be beneficial to have a shorter time period. While this may be a good idea you may end up converting less customer.
If you stretch out your plans too far, you risk chasing people away who are afraid of making a commitment.
I suggest you choose 3 plans that cover all the bases but don’t leave you broke. So for the $100 product, you might offer a 2-month plan for $50 per month, a 4-month plan for $26 per month, and a 6-month plan for $18 per month. This not only gives your customers more option but also rewards you for waiting on your money by slightly raising the price for the longer the financing periods.
When Do You Ship
Another important consideration is your shipping. If you are selling a physical product, you will most likely need to ship it to your customers. It is up to you whether you ship on the first payment, the last payment, or little by little as you go along. What’s important is that you convey your shipping schedule to your customer.
Shipping on the first payment is great for your customer, but they could leave you hanging if they fail to make future payments. If you wait until the end, your customer may lose interest in your product and ask for a refund. If you ship piece by piece as they pay, you will have a bit more work and incur higher shipping costs; however, your customer’s interest will be renewed each month they receive a package from you.
Installment plans work alongside your regular plans in PayWhirl and you can choose your shipping rules when you create your plan. Creating your own “layaway” system can help you boost sales and increase your gross revenues without having to change a lot of your business practices. If you’re selling something that’s on the expensive side and want to sell more, you should try offering installment plans to your customers.