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Explaining monthly payments?

by DoubleOhDave
17 replies
Hey guys,
just wondering if any of you ever get asked why a client needs to pay monthly instead of a once off payment and what you tell them?

(I understand, but wouldn't be sure of how to explain it properly - and i also wonder if offline clients fail to grasp the reason and what explanation works best)..

Thanks
Dave
#explaining #monthly #payments
  • Profile picture of the author Anthem40
    Originally Posted by DoubleOhDave View Post

    Hey guys,
    just wondering if any of you ever get asked why a client needs to pay monthly instead of a once off payment and what you tell them?

    (I understand, but wouldn't be sure of how to explain it properly - and i also wonder if offline clients fail to grasp the reason and what explanation works best)..

    Thanks
    Dave
    That is entirely subjective. Some people I know love the cash flow of monthly payments. Some people prefer having the liquidity to invest in various accounts in the mean time.

    Why is it exactly that you prefer monthly payments, is there a reason you don't want a one time payment?
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    • Profile picture of the author DoubleOhDave
      Originally Posted by Anthem40 View Post

      That is entirely subjective. Some people I know love the cash flow of monthly payments. Some people prefer having the liquidity to invest in various accounts in the mean time.

      Why is it exactly that you prefer monthly payments, is there a reason you don't want a one time payment?
      Hi Anthem - I have no preference myself (OK I lie - I would err towards the 'somewhat' more secure idea of monthly payments) but from all I have read about offline it seems most marketers mention monthly payments. Maybe i haven't delved deep enough into it to see otherwise...
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  • Profile picture of the author Aaron Doud
    "We are providing a service that requires work year round to maintain. Of course we understand that some clients would rather not be billed monthly and for those clients you offer pay in advance. This is normally done yearly. We offer those who choose yearly billing a discount that reflect the time savings for our accounts billable department."
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    Aaron Doud - Sales & Success
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  • Profile picture of the author vndnbrgj
    It depends on what service you are providing that requires a monthly fee.
    Different services can have a different explanation.

    What service is it?
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    • Profile picture of the author socialbacklink
      Originally Posted by vndnbrgj View Post

      It depends on what service you are providing that requires a monthly fee.
      Different services can have a different explanation.

      What service is it?
      Yes. Depends on the service and the value you can show the client over time. Also, I never use the words pay, payment, fee, etc. I always say investment.
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  • Profile picture of the author Jason Kanigan
    "A dollar today is worth more than a dollar tomorrow."

    Basic accounting principle.

    If someone wants to give you all the money up front, why stop them?
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  • Profile picture of the author Paulz
    I agree with Jason
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  • Profile picture of the author Devin2290
    This depends on what service you're offering / talking about.

    SEO? Explain how building SEO is a process that takes time, months, and offer to show them reports of the work being done every month. Also, explain how if SEO is not continued, your website can fall off the rankings to other sites.

    Other things like SMS campaigns should be easy to explain. They use your service every month, you charge them every month. Like cable or internet.
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    • Profile picture of the author jimbo13
      Ongoing service = monthly.

      Fixed timeframe service or product = fixed. Monthly comes into play if they can't pay whole amount upfront. eg £150,000 computer system

      Business owner will already know which based on what you are selling so nothing to explain.

      Or, do you mean how to explain why something like SEO will not be a fixed cost but an ongoing service hence PAYG format.

      Dan
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      • Profile picture of the author David Miller
        Much of it depends on what it is you are offering. However, in many cases the monthly payment offers a client two things:

        1. Lower cost of operation. These days most small businesses operate on a monthly budget. It's easier for them to justify a monthly expenditure of 50.00 than it is to justify 600.00

        2. An important reason for a monthly payment is to allow the new client to test the waters and develop trust in his new vendor without the need for a long term committment.
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  • Profile picture of the author Hugh
    I love the residual income. Customer gets used to it (If it is not burdensome)
    and you avoid having to do a major close-job every year.

    Hugh
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    • Profile picture of the author Aaron Doud
      Originally Posted by Hugh View Post

      I love the residual income. Customer gets used to it (If it is not burdensome)
      and you avoid having to do a major close-job every year.

      Hugh
      Why do you assume major close-job yearly?

      If you invoice them yearly as long as you are producing results and the price doesn't change in a major way they will likely pay it just as easy as a monthly bill.

      Major close-job yearly just means they don't see the value in what you are providing them. This means either your prices are too high(honestly unlikely) or you are not providing a service with a visual return. This is where monthly reports, tracking numbers, and such come into play. Hell have the reports I get from web services I never read. But the fact they are sending them and i can skim them to see the metrics shows value. And if I start to question the value I can get deep into the content of the reports and see if I am getting the leads to justify it. Also in our business I check to see if the leads are of value. We had a service a few years back. It was only like $300 a month but every lead we got from them was only after our junk trailers. The $300 was nothing from a budget stand point but the leads were junk. So even though the price was right the value wasn't there when you audited the leads we got.
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      • Profile picture of the author jimbo13
        So double Dave is this just some sort of hypothetical question because it just wouldn't come up.

        Dan
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        • Profile picture of the author DoubleOhDave
          Sorry guys
          for some reason I didn't get a notification of answers till the last one..

          thank you all for getting back to me - much appreciated!

          And to the last question - no, not hypothetical - I am trying to learn as much as I can about offline because I plan to start my own offline venture as soon as I can get everything about it straight in my head... this forum seems to be full of really helpful people so I thought I'd as around (my other thread here is about a name for my offline business - still haven't figured that out!)

          Thanks again guys
          I think I understand how to explain it now...


          Dave
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  • Profile picture of the author DoubleOhDave
    oh and sorry - I didn't answer a couple of those questions - I am aiming at both website creation and SEO (Google places, facebook fan page and youtube vids)
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    • Profile picture of the author abbot
      Banned
      Your website is your car. I'm your gas to get to work and back. What happens if you run out of gas?
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