It doesn’t really matter how much value you deliver, how far ahead of deadline you deliver it, or how above and beyond the agreed-upon scope of work you go. Getting your clients to pay up can sometimes be a challenge.
Any measure you take to reduce friction along the way can help, which is why allowing your clients to pay you via credit card straight from your invoices is so important. There are also things you can do with your proposals ahead of time to help get your clients in the right mindset about paying you – before you even get their green light to start working.
If you get bold and start to experiment with unconventional ways of linking deliverables to dollars, you might find your customers suddenly losing their grip on their purse strings. Leverage the below three pricing models to improve the overall experience of doing business with you, effectively minimizing friction to your billing processes.
- Delayed Payment
The credit card industry is among the most profitable in the world, and there’s a key psychological principle that explains the success of credit cards among consumers. This principle is what makes gift certificates and subscription billing so successful as well. By disassociating the purchase commitment process from the payment process, we avoid the emotional baggage that goes along with handing over our money and are suddenly free to spend more.
This same principle can be applied to freelancers and small business service providers. When your price quote’s payment terms stipulate a delay of weeks between committing to a work order and actually paying for it, your prospects will be more likely to agree. They might have to pay before they get what they ordered, but it doesn’t matter – by disassociating their commitment from their wallets, you’re maximizing the chances that they’ll close, that they’ll be happy and that they’ll pay up on time.
As a solution for a freelancer, either have your client pay up-front or bill after the fact, so that the goods or services you provide are distanced from the experience of paying for them. If you offer ongoing services, consider adopting a subscription model for a monthly retainer. Make your actual work as separate as possible from invoicing processes, and you’ll likely both increase satisfaction and reduce payment lag times.
- Combined Payment
Why are people interested in doing business with you? Do they want you to take care of each and every element in your project’s scope of work? Of course, but that’s not why they’ve turned to you for help. They want to feel that they’re being served well – that a significant aspect of their business is off their plates and that they can rest well knowing that you’re on the case.
This is why freelancers find so much success by diversifying services, offering their clients a variety of sometimes remotely related types of work. Once your relationship is blossoming and you’re building a strong sense of trust, there’s so much more that you can do together. And when the patterns start to emerge, you can start to offer bundles of services as products unto themselves.
If you’re a designer, for example, you might do well to combine logo design with business card design and printing. When you bundle products or services together so that people can commit to pay just once for several different items, your customers have a more positive purchasing experience. Because the items are all purchased together, your clients will face fewer individual decisions to buy. That makes it both easier on the buyer and on the seller, as the risk of the buyer walking away from some of those purchases is not on the table.
Of course, bundling is at its most effective when the bundle of goods or services means that the buyer is getting a good deal – where the cost of the individual items would indeed have been more than the bundled package. But that’s more a matter of value presentation than actual savings. Experiment with bundling your services into products, and you’ll increase your likelihood of conversion, satisfaction and efficient collections.
- Contextualized Payment
Nobody is buying anything in a vacuum – not even if they are buying a vacuum cleaner. Psychological pricing is all about signposts that allow your prospects to compare apples with oranges. A good deal on an apple might seem like an overpriced swindle if you don’t show your prospects how much better of a deal the apple is than the orange.
People will spend more on artisanal bread than on regular supermarket brand bread, for example. Exactly how much they will spend, however, depends on the baseline they are exposed to in their purchasing environment. If the no-name brand costs $1.69, then the special loaf might pull in $3.25 – but $5.00 would be pushing it. If the no name brand costs $3.19, however, then that premium one starts to look like less of a markup.
This practice is known as “anchoring,” whereby the first price shown sets the expectations for the range of what’s going to appear around it. Parting with money is much easier when we feel that the amounts are negligible, so anchoring effectively amplifies this impression.
Since freelancers aren’t supermarkets, the idea of providing context for your own pricing may a bit of a challenge. If you can provide a context for your clients, comparing your pricing to less useful options that are only slightly less expensive, then they’ll feel like they’ve found major value by making the purchase.
Feed Your Bottom Line
Even when people purchase things that they truly want, and are truly excited to buy, the challenge of making that purchasing experience a positive one remains.
The best you can do for your customers is to make it easy for them to make a decision. If you can accomplish this, then you’ll be far more likely to close deals, get paid quickly and acquire repeat business.