A question about residual income

13 years ago

Originally Posted by maxp76

Hello everybody,
Here Massimo from Italy.
In these days I'm learning a lot of things about Offline marketing, thanks to all the WF members

I've a question, perhaps a silly question: that's about the payment of a service.
Most of you say that prefer to be paid with a one time payment plus a monthly fee.
I think that you prefer to be paid in this way because you dont have to ask for a big fee.. I mean, a fee of 197$ per month could be feel more 'light' than a single payment of 2300$.
Is there another reason?
From my point of view, the only problem is that not every person could appreciate this form of payment.. the easiest way to process a monthly payment is via Paypal, but not everybody own a credit card..
Let me know your thought.
Bye,
Massimo

Typically the monthly investment (not a fee!) is for ongoing service and maintenance of the account, rather that a payment plan.

There are ways (at least in the US) to automatically debit a checking account if the client doesn't have a credit card.

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maxp76

13 years ago

Hello RRG,
and thank you for your reply.
Yes, I understand that the monthly investment is for ongoing service and maintenance, but I think, in case of low payment, it could be easy to be paid in one time...
I mean, if I want for example 300$ plus 30$/mo, I may think that the businessman prefere to pay 660$ instead of multi micro-payment of 30$, because he could save time to make every month a check... Am I wrong?
Thank you for your feedback

Massimo

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origin

13 years ago

Originally Posted by maxp76

Hello RRG,
...if I want for example 300$ plus 30$/mo, I may think that the businessman prefere to pay 660$ instead of multi micro-payment of 30$..

Hi Massimo!

You get both types of business people, those who want to pay once of (to keep their monthly costs down) and those who prefer low monthly costs. Especialy very small busineses may prefer the low monthly fee above the once off big fee.

Myself hate the monthly fees, because it all adds up in the end.

Why not offer 2 payment plans and see which one your customers prefer? I know that some will go for low monthly fees and others will go for large once off...

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midasman09

Banned 13 years ago

Hey Massimo...I saw your post and thought I'd chime in on what I've done, and am still doing with....MONTHLY....RESIDUAL....Payments from Clients.

I've been helped by many people over my Entroopeneerial Career so......I will NOW....Reveal a way where I got 42 business people to pay....$400 every 2 weeks;.....B4 PayPal!

Waaay Baaack in 1995....I created a "Promotion Program" whereby I had certain businesses pay me $20 a Day...$100 a week for an "electronic Service" I handled from my HOME PC!

Well...instead of asking my customers to pay me $20 x 5 = $100/wk.... which I felt was too small....(and asking customers to pay $20 x 20 = $400 a month)...which I felt was TOO MUCH to ask a business to pay me monthly.....I decided that "Paying every 2 Weeks....$200 every 2 weeks...would....Maximize....my "Closing Average" .....so....

HOW....do I get biz owners to pay me $200 every 2 weeks?

Well....I did NOT want to "Bill my customers every 2 weeks.... HOPING....they'd pay my Invoices!

Yeah...Right! I've had "much experience" Billing customers! Some pay on time....the "average" DON'T!

So.....I hunted and researched a way to ....Collect from my customers every 2 weeks....WITHOUT having to send out Invoices (that might and maybe won't ....be paid....on time)

Then....I FIND IT!

It was a Software Program called ...."Checks By Fax"! (There's many similar programs now (2011) )

So...what "Checks By Fax" gave me was a way to Present My Program and....instead of saying I will "Bill You $400 every month" (again...Hoping they will pay me on time)....I told them my "Fee" was just $200 Every 2 weeks and I would "Automatically Deduct from their Bank Account"....all they had to do to participate was....give me an Initlal Check for $200 and I would have MY Bank automatically deduct $200 every 2 wks from THEIR Bank Account (I had a short statement they had to sign at the bottom of my order form)

So.....out of the 42 biznesses who agreed to pay $200 every 2 wks .... sold in 1996.....guess how many are STILL allowing $200 to be removed from their bank accounts in August of 2011?

Answer! ALL!

So....get yourself a "Check By Fax" or sometimes called "Phone By Fax" software program that you can install on YOUR pc and.... automatically print out checks on YOUR Inkjet....which you then Stamp and Deposit....just as if you had received the check in the mail.

The REALLY neat thing about using this kind of software (no matter which Check Software you use).....is....your customers LOVE it!

The Agreed amount is deducted from THEIR Bank Account and transferred to YOUR Bank Account...electronically.

Your customers DON'T have to do a thing!

However...we do send a "Paid Invoice" whenever money is deducted!

And....besides making Sales....EASIER.....this also RETAINS CUSTOMERS/CLIENTS.....LONGER! Because there's NOTHING for them To Do! NO Making out a Check....NO Mailing a check! They just get a statement in the mail...from you....which they pay attention to...or not!

Anyway.....maybe this will give you another option (which I think is the BEST way to go. it's been working for us for many yrs)

Don Alm

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maxp76 13 years ago

@origin : Hi Origin yes, I think it could be a good idea to offer 2 plans. Again, the problem is to collect the money is a good way.. just check the next reply..

@Don Alm : Hello Don! It' a pleasure for me to have a reply from you! I've learn a lot of things from your posts
Wow, I didnt hear anything about this software.. but I dont know if this could work in the 'ooooooold' Italy.
But... after a little search, I've found another way that is a recurring payment directly from banks.
That could be a solution.

Another way to be sure that the businesses pay the bills is to have..something that belong to them!
I mean, if I'm the webmaster of their site (o something similar) I can shutdown the site until the payment is done... or stop the Google ADW campaign..

Ok rude way, but effective..

Massimo
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krzysiek

13 years ago

Wow Don! What did you sell them on that they STILL are paying for it??? Amazing!

Originally Posted by midasman09

Hey Massimo...I saw your post and thought I'd chime in on what I've done, and am still doing with....MONTHLY....RESIDUAL....Payments from Clients.

I've been helped by many people over my Entroopeneerial Career so......I will NOW....Reveal a way where I got 42 business people to pay....$400 every 2 weeks;.....B4 PayPal!

Waaay Baaack in 1995....I created a "Promotion Program" whereby I had certain businesses pay me $20 a Day...$100 a week for an "electronic Service" I handled from my HOME PC!

Well...instead of asking my customers to pay me $20 x 5 = $100/wk.... which I felt was too small....(and asking customers to pay $20 x 20 = $400 a month)...which I felt was TOO MUCH to ask a business to pay me monthly.....I decided that "Paying every 2 Weeks....$200 every 2 weeks...would....Maximize....my "Closing Average" .....so....

HOW....do I get biz owners to pay me $200 every 2 weeks?

Well....I did NOT want to "Bill my customers every 2 weeks.... HOPING....they'd pay my Invoices!

Yeah...Right! I've had "much experience" Billing customers! Some pay on time....the "average" DON'T!

So.....I hunted and researched a way to ....Collect from my customers every 2 weeks....WITHOUT having to send out Invoices (that might and maybe won't ....be paid....on time)

Then....I FIND IT!

It was a Software Program called ...."Checks By Fax"! (There's many similar programs now (2011) )

So...what "Checks By Fax" gave me was a way to Present My Program and....instead of saying I will "Bill You $400 every month" (again...Hoping they will pay me on time)....I told them my "Fee" was just $200 Every 2 weeks and I would "Automatically Deduct from their Bank Account"....all they had to do to participate was....give me an Initlal Check for $200 and I would have MY Bank automatically deduct $200 every 2 wks from THEIR Bank Account (I had a short statement they had to sign at the bottom of my order form)

So.....out of the 42 biznesses who agreed to pay $200 every 2 wks .... sold in 1996.....guess how many are STILL allowing $200 to be removed from their bank accounts in August of 2011?

Answer! ALL!

So....get yourself a "Check By Fax" or sometimes called "Phone By Fax" software program that you can install on YOUR pc and.... automatically print out checks on YOUR Inkjet....which you then Stamp and Deposit....just as if you had received the check in the mail.

The REALLY neat thing about using this kind of software (no matter which Check Software you use).....is....your customers LOVE it!

The Agreed amount is deducted from THEIR Bank Account and transferred to YOUR Bank Account...electronically.

Your customers DON'T have to do a thing!

However...we do send a "Paid Invoice" whenever money is deducted!

And....besides making Sales....EASIER.....this also RETAINS CUSTOMERS/CLIENTS.....LONGER! Because there's NOTHING for them To Do! NO Making out a Check....NO Mailing a check! They just get a statement in the mail...from you....which they pay attention to...or not!

Anyway.....maybe this will give you another option (which I think is the BEST way to go. it's been working for us for many yrs)

Don Alm

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midasman09 Banned 13 years ago

OK....I'll "spill da beans";

This was in 1995....b4 the Internet, I was at a Chamber of Comm Lunch and the speaker asked "How Many in the room Have a FAX Machine?'

Most hands went up and....I happened to be sitting at a table with 3 Restauranteurs. I said to the restaurant owner sitting next to me; "Hey Chuck! You oughta get ALL the Fax Numbers in the room and Fax them your Daily Specials! Since these are "Office" people....I'm sure you'll get MANY Lunch Orders every day.

Chuck said; Hey Don! Why don't YOU put something together and I'll be your FIRST ACCOUNT!

So....I put together a Sample Fax Sheet....made some calls to local Biz Offices...saying, "I'm putting together a "Daily Fax Sheet" with Restaurant Specials...if you'd give me your Fax #...I'll send you over a Sample when I'm ready.

I got 60 Office Mgrs to agree to receive my Daily Special Faxes.

So....I had restaurants and bakeries PAY me to send faxes to my list of offices.

When the dust cleared....I had my "Daily Fax" program going in 5 towns.

Then....I discovered that some Deli's "were already Faxing Daily Specials to local offices....so....I simply phoned Deli's and asked a simple question;

"Are you sending out Faxes to local offices?"

Those that say, "No!"...I thanked them for their time and phoned the next Deli.

With the Deli's that said, "Yes! We are!"....I'd tell her I'd like to stop by and show her I can show them...HOW THEY CAN SAVE MONEY with their "Daily Fax" prgram.

The Deli's were usually using one of their waitresses to send out the Daily Fax to local offices and ....not only was it Not Done right....but the girls "Hated" doing this extra "work".... so....I offered to do the Faxing FOR THEM for $20 a day....$100 a week.

They agreed. Thus was started a NEW MONEY-MAKING VENTURE for me.

Instead of trying to find Deli's that weren't Faxing and trying to SELL them on the "Idea" of Faxing...then...Selling them on allowing ME to do the faxing for them....I BYPASSED those and went directly to those who ALREADY knew the Value of Faxing their Daily Specials to local offices....and just convinced them that I could do a better job.

It's called...."Taking It OFF their Hands!" They were in the Deli biz...NOT the Faxing Biz!

And....the great thing about using a software program to Automatically deduct funds from clients Bank Accounts is....they DON'T have to do anything but Open the "Paid Invoice" we sent every 2 weeks....so...they DON'T NOTICE the funds being transferred.

Don Alm....innovator and action-guy
Note: I sold this biz some yrs ago and the guy who bought it is STILL doing it.
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- tampamike 13 years ago
  
  Massimo,
  
  I would consider letting your clients pay you the monthly payment for service in paypal, where you can setup automatic payments.
  
  Most of my clients prefer this, since they have the ability to stop payment if necessary.
  
  Thanks
  
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  Magnus Koenig 13 years ago
  
  I would definitely go for the monthly fee/investment. It will boost the conversion rates because it's not so much of a risk to the business owner, and if you do a good job then in the long term you may end up getting more for it than if you just had a one time payment-plan.
  
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Mac the Knife

13 years ago

I prefer getting paid monthly but I will make deals with clients if they pay upfront. For instance, one client that has been paying me $500/month was happy to give me a check for $2800 to cover the next 6 months so he could save $200. Depends on the client, but I think it is wise to offer additional options ONLY if you need to in order to lock in a sale. Otherwise, lead with YOUR preferred method...after all, it is YOUR business...good luck!

Mac the Knife

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John Durham

13 years ago

Its always better to get your money upfront where possible, this just makes good common sense. A bird in one hand is better than two in a bush... Even with residual models, if you can get them to pay the whole year upfront thats all the better...

I tried to get the owner of a call center to do a residual model... and he explained to me that if he had to he would, but why do that if his customers already pay 100 bucks upfront, why schedule it out over 10 months when you can get it all now...?

Whats the point? Its not more money, but it IS more risk.

Granted , selling with loss leaders is effective... but if you are building a 2k website, you need to get paid upfront.

Residual models are great , and some of the best opportunities I know, but dont turn away money you can get upfront if the possibility is there, theres no insurance that your customer will pay you beyond the first month, especially if its into the hundreds of dollars and sticks out on their credit card statement like a sore thumb.

My two cents.

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midasman09

Banned 13 years ago

In my post above I was referring to a time when "PayPal was just an Inkling in it's founders brain"!

We got an UPFront SetUp Fee....and....$20 a Day HOWEVER....If I had charged the Deli's $20/day x 5 days/Wk = $100 x 52 = $5,200 PER YEAR...I would NOT have gotten ONE Deli to participate!

As it was....$20/day x 5 days/wk = $100/wk....which was too little for me and....$20/day x 20 days/mo = $400 a Month....was too much for my accounts....Sooo....I comprised with $200 , automatically taken out of their Bank Accounts every TWO wks!

Which has NOW WORKED FOR YEARS!!!

So....it ALL boils down to....ya do what ya gotta do...with whatcha got.... to GIT DA JOB DONE!

Don Alm.....STILL finding ways to "Git Customers To Pay!"

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John Durham

13 years ago

Originally Posted by midasman09

In my post above I was referring to a time when "PayPal was just an Inkling in it's founders brain"!

We got an UPFront SetUp Fee....and....$20 a Day HOWEVER....If I had charged the Deli's $20/day x 5 days/Wk = $100 x 52 = $5,200 PER YEAR...I would NOT have gotten ONE Deli to participate!

As it was....$20/day x 5 days/wk = $100/wk....which was too little for me and....$20/day x 20 days/mo = $400 a Month....was too much for my accounts....Sooo....I comprised with $200 , automatically taken out of their Bank Accounts every TWO wks!

Which has NOW WORKED FOR YEARS!!!

So....it ALL boils down to....ya do what ya gotta do...with whatcha got.... to GIT DA JOB DONE!

Don Alm.....STILL finding ways to "Git Customers To Pay!"

First of all thank you. What a refreshing post! Great Biz model.

There are some industries and models where you CANT get the whole thing up front understandably, but if someone offered you the whole enchalada... taking it would be a good thing. lol

I love this business model, it really fits my own personal style of thinking about business models... There are ALOT of little niches a person can get into... I guess todays version is SMS.

Very refreshing. Thanks again.

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Warrior Ben

13 years ago

The reason I charge a monthly fee is not for a payment plan, but for ongoing maintenance. And in all honesty I do it because I can smooth out my sales. What I mean by this is that because I've built up a monthly residual, if I happen to be slow on sales one month, I don't have to worry about not paying my bills because I have the monthly money coming in.

I also always give my clients the option of pre-paying for a year and I give them 2 months free. Quite a few clients will do this, especially if you require them to sign a year long contract for hosting or something along those lines.

-Ben

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maxp76 13 years ago

Hello everybody!

@tampamike: Yes, I'm just using Paypal for two clients, and it works like a charme.
Also, it's possible to use it if he doesnt have a credit card, just using a bank account or a special credit card

@Magnus Koenig: Oh I understand your idea. If you have a monthly payment, you could 'attach' another payment for another service easily. Like an Upsell

@Mac the Knife: ok, I'll try different method of payment.

@Warrior Ben: yes that's true. With a monthly 'check' everything is more easy !

Thank you for all of your input, I'm just writing a plan, and I'll keep the forum informed about it.

Massimo
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- TribalStyleMarketing 12 years ago
  
  I'd guess that this model still works pretty well. Asking people if they read the email you sent them (even friends/family) is literally a joke unto itself!
  
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guyd

12 years ago

Strangers to friends friends to customers using baby steps

1) give them something of value first,

2) go for a small ticket up sell

3)Big ticket offer

4)then continuity!

simples...

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danielkanuck

12 years ago

Most people you will come across will have a credit card. It's just like copywriters who charge $15,000 up front, and then 5% of the royalties that the sales letters make for their clients. It's the gist of the business, and is the most familiar way of getting paid as a consultant.

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