As a business, you have two goals: increasing sales and lowering costs. Providing your customers with financing options can definitely help you close more deals, but it can be costly. In the process, you’ve probably wondered “Why are point-of-sale financing options so expensive?” Finding the right balance between giving your customers more freedom and keeping your costs low is a fine line to walk.
That doesn’t have to be the case, though. There are low-cost financing options that don’t make money off of your business. You can provide pay-over-time choices that both serve your customers and keep costs down if you’re careful. Here are five strategies you can use to make your customers happy with point-of-sale (POS) financing solutions while keeping costs to a minimum.
1. Offer Financing Only on Select Items
One easy way to keep your costs low is to provide customer financing on high-value items only. Sticker shock is much more likely to hit people when they’re looking at expensive items. By offering a pay-over-time option on these goods, you can close more sales on the products that provide you the most profit.
Meanwhile, you can choose not to offer financing on less expensive goods. Splitting a $10 payment into several monthly installments won’t make as much difference as breaking down $1,000. Meanwhile, you won’t bear the costs of many smaller financing deals, so you can manage the cost of financing more easily.
Choose a solution that allows you to select exactly which products are eligible for financing, so you never need to worry about skyrocketing fees. This strategy results in lower costs for your business and more high-value sales.
2. Provide Special Terms Only on Select Items
Just like you can pick and choose the items for which you want to offer financing, you can select a few things for which you provide special financing terms. If you have a specific, high-value product that’s linked to continuing sales over time, you might choose to offer 0% same-as-cash financing on it, to close more deals. It’s an easy way to manage the cost of offering terms in the first place.
While this may raise costs on sales of that item, in return, you get more sales in the future. A great example would be an air purifier that needs monthly filter changes. If you sell the air purifier with 0% financing, your costs go up on that appliance. However, you are likely to make back those costs and more on the monthly filter purchases the customer will make. Look for a financing solution that makes it easy to be precisely this selective throughout your product catalog.
3. Connect with Co-Brand Cards
If you want to directly offset the cost of financing, you can also connect with co-branded cards. These cards are hybrids of store cards and rewards cards. By working with your financing provider, you can access these co-branded cards and potentially take advantage of cost-saving opportunities.
Many co-brand card providers will offer you a “spiff,” or a small bonus for every customer who signs up for the card through your website. If customers use the co-brand card to make their purchases, you also save on the financing costs. This gives you and your customers alike a selection of low-cost financing options that make sales more likely.
4. Charge Marketing Fees
Just because products are your primary focus doesn’t mean you should turn down other opportunities to increase your cash flow. Many companies are willing and able to pay if you offer the chance to market on your website.
For example, you can charge marketing fees for your financing company to put their banners on your site. That can quickly make up for any costs associated with the financing itself. You can also work with other companies that are related to your own but not in competition to cross-market their products and bring in fees or percentages of sales.
5. Minimize Maintenance Costs
Finally, the simplest way to cut costs is to reduce overlap between your vendors. Using different providers to offer the same service to B2C and B2B markets is unnecessary. By choosing the right solutions, you can make sure each provider covers as many needs as possible.
A solution that offers multiple loan providers all in one place allows you to skip the need to find unique POS financing solutions for different markets. Instead, you can reduce your tech maintenance costs by consolidating to a single service that meets the needs of all your customers at once.
Save Money and Increase Offerings Today
Sometimes, you can keep your margins stable and increase sales — it just takes some strategic planning. With the right tools, like Skeps, you can give your customers everything they want without breaking the bank. Take the next step for your business today with the low-cost financing options that make a difference.