Is a Knee-Jerk Reaction Killing Your Deals?
Car shopping is a pastime of my husband’s. From all our time spent in car lots and show rooms, one resounding thought comes to mind when I see the price tag for a vehicle we like:
“We are not paying the asking price for this!”
My response to the price is a knee-jerk reaction caused by what seems like a lifetime car shopping. But if I think about it, the price on the vehicle is often within reason.
Once the car price is in a comfortable range, I figure out what the monthly payment would be and ask myself if it’s in my budget.
This same scenario could be playing out with technology buyers after you slide your proposal across the table. Their first thought when they see the cash price? “I’m not paying the asking price for this!”
Your customer gets blinded by the cash price of your technology solution. They’ll ask if you can cut them a deal, or they’ll tell you they haven’t budgeted for the proposed cost. Before you know it, your margin is gone and they’ve removed the ancillary products and services that would have made the solution meet their stated needs.
How can you avoid this sticker shock? What if you showed a monthly payment up front instead of that big lump sum on your proposal? The smaller number could be more appealing and make more sense to your customer’s cash flow. You could change their initial reaction from, “I’m not paying full price!” to “Can I afford that on a monthly basis?”
In a recent case study, Mitch Miller with Dynamic Computer Solutions revealed he only gets between 20% – 25% margin on cash deals, but 35% - 50% margin on deals sold as a monthly payment.
Think about the reaction your customer might have the next time you decide to present a monthly payment option as opposed to a cash option. You just might make their day. . .and yours!
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