How to Always win on Affordability

No Matter what your business, your customer always wants the same thing; quality products or services, professional results and affordability. This article will focus on affordability.

The #1 mistake business owner's make when thinking about affordability is how to lower their overall price point. You can't provide quality products and services by lowering your price point to the consumer and therefore lowering your profitability.

Providing affordable solutions doesn't mean lowering your price point and sacrificing your service or your profit. It means delivering what they want, in a package they can afford and are happy to pay!

When people buy a house, what are the two most important numbers they focus on? The monthly mortgage payment and the mortgage interest rate, right? These two numbers, more than any other, is what drives their buying decision. What about when most people buy a car? Is it any different? Nope! People will buy what they want and will spend more to get it, if you make what they want, "more affordable".

So how do you accomplish this as a business owner? You think backwards with your financing! Again, most business owners are so conditioned to control costs, that this one trips them up almost every time. With lending, you must seemingly, willfully take on additional costs, in order to deliver more affordability for your customer and more overall profit for you. But that additional cost is a myth. I'll explain below.

Example: You need to sell a product for $7,000 to make good profit.

1. You can ask for $7,000 cash for your customer. Good luck with your closing success and holding your price point though.
2. You can take a credit card. Not bad, but less than 20% of credit card holders have an available balance of $7,000 and even fewer have a willingness to use up that credit on their high interest credit card. They'll want to continue shopping for the best deal.
3. You can offer bank-based financing that does't cost you anything and spit out some exciting numbers like 14% - 18% APR, $100 - $150 a month, and a predetermined term of 6 to 10 years. This doesn't cost you, but the terms suck and still don't deliver what the customer wants or needs. They'll continue shopping.

Winning Option: Use backwards financing and invest a little to gain a lot!

Start by charging more for your product. Increase your sales price by $400 to $7400. [Stay With Me] Then use that measly $400 creatively, with the right lender like #ISPCFinancing, in order to drive the numbers way down to benefit the customer. At your new selling price of $7400 your offer could sound more like this:

No money down. Only $74 a month. Only 0.83% interest per month. First payment in 30 - 45 days. No pre-payment penalties. That's only $2.46 a day to purchase what they want at your full profit margin. What do they spend on a cup of coffee each day?

Which is more appealing? $7,000 at any of the first three examples I shared, or $7400 at the terms immediately above. For less than a cup of coffee at Starbucks per day, they can have your solution. The payment doesn't scare them. The interest doesn't scare them. The selling price isn't the focus at all because you're no longer asking them for $7400. And after paying the lender less than $400 for the right to offer these sexy terms, you still net more than $7,000. That's a Win / Win.

Sell the best products you can find, provide exemplary service, charge more, not less, but learn how to solve the affordability problem forever, by investing a little to make a lot. In the end, the consumer pays for the cost of the lending, not you. You increased your selling price, in order to afford the creative solution. People are conditioned to pay attention to the monthly payment more than any other number by far. Next, they pay attention to the interest rate. By paying the lender a little to buy those two numbers down you make your product offer super affordable, and nobody has to sacrifice.

Want to get started quickly with offering these types of lending solutions to your customers? Just contact me, and I'll get you started right away.

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