Saturday, 21 July 2012
Discounts Vis-à-vis Visa
I know that some of you have straight-up pricing policies, and I admire the brave commitment you’ve made. I almost say that tongue-in-cheek because there are always sales where some negotiation comes into play. My favorite strategy for dealing with those who ask for a deal is to first ask them what method of payment they’d like to use. In fact, I got good at consciously avoiding the issue of payment method until after they’d asked the inevitable, “so what’s your best price on this.”
Now, I know your service agreement says that you can’t levy a surcharge for the use of credit-cards. I never did-so, but who hasn’t given a couple percent higher discount for cash or cheque? When they ask the question, “what’s your best price,” I’d reply, “how do you want to pay?” The fact is that most of our clients either need to use their credit card or want the reward points for doing so. To say, “well if you’re using Visa, that’s going to cost me 2.15% (or whatever you’re paying), and I’ve rounded up the price by $120 to get to that $3,995 price point, so I’ll give you the $120 back for Visa or I’ll give you $200 off if you give me a cheque.
When you approach discounts in this manor it starts you off in the region of 5% rather than 10 or 20%. It gives the client and either/or choice with a higher discount available for their less-preferred payment method. This method also acknowledges what consumers expect; that your nice round numbers probably aren’t generated in their favor.
A recent class action suit in the US has punished credit card companies for prohibiting retailers from charging premiums for credit card purchases. Because it’s already a pretty well-anticipated cost of doing business, I don’t expect you to begin announcing surcharges for credit card use. Knowing that you could if you want will help you fine-tune discounts without worrying about contravening your credit card service agreement.