How Payment Plan Software Helps You Close More Deals

Discounts attract customers and close deals, but they only work as a short-term fix. eCommerce merchants who rely solely on discounts unintentionally train their customers to always expect price reductions and pay less. This can damage revenue in the long-term by reducing the already narrow profit margins.

Payment plans offer the better alternative to this. Instead of lowering purchase prices, they simply make them more manageable. This enables the merchant to sell more products while maintaining their profit margins, reputation, and perceived value of the product.

Good payment plan software makes installments, checkout, payment gateway integration and automatic billing easy for unparalleled convenience for the merchants and customers.

Why Discounts Don’t Always Work

eCommerce websites use discounted prices in the form of limited-time offers, flash sales, and coupon codes. The idea is to reduce cart abandonment rates by making it easier for the maximum number of customers to purchase. Although this strategy is effective in the short term, it creates issues in the long run.

Lower AOV

Discounted products are sold at cheaper prices, making average order value (AOV) low. eCommerce merchants already have thin profit margins, and discounts make them even tighter. They can be damaging in the long run as their impact is short-lived, and doesn’t guarantee future customer purchases at full price.

Lower LTV

Lower AOV eventually leads to lower customer lifetime value (LTV). If the purchase is one-time, meaning there’s no recurring customer commitment, then LTV is negatively impacted by flash sales.

Customers always wait for discount to purchase

It becomes your customers’ habit to wait for a sale. They hesitate purchasing products from your store at full price when they know they can buy them at a discounted price after a while. It hurts the perceived value of your products as customers begin viewing the discounted price as the actual price.

Affordability doesn’t always mean cheap prices

It’s wrong to think of only low-cost goods as affordable. Affordability comes with manageability. And manageable purchases don’t always mean cheaper purchases. Manageability can be achieved by making the purchase seem less daunting.

Customers are often intimidated by high upfront charges, as they might not be capable of paying in one go. But this situation doesn’t always call for a discount. It can be resolved through a carefully designed payment plan as well. Let’s discuss this in the next section.

What Payment Plan Software Actually Does

Payment plans exist to make payment easier and more manageable. A payment plan basically allows users to pay in multiple installments until their full cost is covered. Payment plans can be custom, i.e. users can define their own installment schedule and down payment, or fixed, i.e. there is already a fixed schedule in place by the merchant.

You have done your part.
Let SubscriptionFlow take it from here!

Let us help your business grow with our powerful
subscription management software.

In both cases, payments are simplified as customers aren’t required to pay full amounts in one-go. Another advantage is that payment plans preserve the full price of the product, unlike discount. So, purchases become more affordable without any reduction in pricing. Meaning, no profits are eroded.

This automatically increases sales as customer hesitation is reduced, and they are incentivized with flexible installments. But that’s not where the benefits end. A key benefit of payment plans for merchants is that they become independent of BNPL providers.

Typically, BNPL providers are used to make purchase installments possible. However, this isn’t always ideal because BNPL providers impose their own payment rules, such as down payment, installment frequency, payment period and interest. Meaning, your customers are left to deal with a third-party installment facilitator on their own.

With payment plans, that’s not the case. Such plans allow merchants to keep their customers and their cash flow in their own hands. They also don’t have to pay any BNPL fees.

How Payment Plans Help Close More Deals

This is how ecommerce businesses sell more by giving customers payment plan options:

Cart abandonment reduces even without coupons

Coupons don’t remain the only way to reduce cart abandonment. Even if customers end up with a large total price, they can easily pay it off in chunks. There’s no pressure to pay in one-go which automatically makes purchases seem more manageable.

Premium stays premium

Discounts damage your products’ value perception, because customers start associating them with lower prices. It becomes harder for them to justify the original prices. But payment plans don’t allow any room for this perception. Since no price reduction is offered, your products easily retain their premium image.

AOV increases

Customers are encouraged to buy more, especially high-tier products since they can pay for them eventually. This boosts AOV and overall revenue.

Customer’s decision-making speeds up

Customers don’t have to struggle with budgeting just to buy one product. They can instead think like: “I handle this monthly”. They are empowered to pay according to the payment schedule they are the most comfortable with.

Where Payment Plan Software Fits into Your eCommerce Stack

A payment plan software is just what merchants need to enhance sales without discounts. This software allows them to set up installment plans on their own terms. Payment plan software like SubscriptionFlow is designed to work with:

Multiple ecommerce platforms

SubscriptionFlow works with a wide network of ecommerce platforms like Shopify and WooCommerce. Merchants using any platform can utilize SubscriptionFlow to create payment plans for one-time purchases. They can customize their plan as they wish, and enable it for the products of their choice.

Hybrid models (one-time purchases & subscriptions)

Even if a merchant deals with both one-time and subscription payments, they can still manage everything inside SubscriptionFlow. Payment plans and subscriptions can operate side by side without causing any system inefficiency.

This software enables all these options for merchants:

Easy conversion of one-time purchase into a structured payment plan

Huge one-time purchases can be simplified through flexible installments options. Merchants get paid as the customers pay them over time.

Automatic installment collection

Merchants aren’t left at just payment plan creation. SubscriptionFlow helps them collect their plan installments on an automatic basis, according to the payment intervals they defined.

Generation of invoice upon each installment

After each successful installment collection, the software generates an invoice which is sent to the customer automatically. Invoices serve as payment proofs, and make it easy for customers to check their plan progress.

Application of fees upon late payment

In case a customer delays installments, vendors can set late fees in place. They ensure that the installment deadlines aren’t violated.

Payment link generation

SubscriptionFlow allows you to generate payment links to be sent to customers. They serve as automatic billing alternatives. If a customer doesn’t want to commit to recurring billing for installment collection, they can pay manually using these links.

Payment reminders for smoother collection

Payment reminders play an important role in smooth payment plan progress. hey remind customers of their installment due date so that they can prepare for it beforehand.

How SubscriptionFlow Simplifies Payment Plan Billing

Basic payment plan software only allows the creation of payment plans and payment links. SubscriptionFlow takes you a step further. Perks of having SubscriptionFlow as your payment plan software:

Work with as many payment gateways as you want

You get connected with gateways that work with your ecommerce platform. SubscriptionFlow gives you access to a large network of gateways that target international and region-specific audiences both. Use any gateway to accept installments. If that gateway isn’t already available on your ecommerce platform, you can easily connect that through SubscriptionFlow.

Implement no-code checkouts

Give customers payment plan-oriented checkouts. Since these checkouts are no-code and simple to implement, they can be set up fast for quicker down payment collection. On the checkout, the customer agrees to paying the set down payment and the recurring installments that come after it.

Enable dunning

Make sure your customers don’t miss their installments. Enable dunning so that whenever a collection fails, it is immediately retried. Retries are structured and effective against installment delays and revenue loss.

Create easy payment plans with SubscriptionFlow, and close more deals without reducing product prices. Book a demo and learn what SubscriptionFlow has in store for your business.