Get your customers to pay in advance, they will enjoy it

Paying a bill in a restaurantWhere do people argue most about what they have to pay? The chances are it is in a restaurant. Eating out is generally a pleasurable experience. You spend an evening chatting with friends, laughing, smiling and having fun. You choose your food carefully and savour every mouthful, saying “this is lovely” and “what’s yours like?” Then, with a warm replete feeling you sit back in your chair. You are nice and relaxed and suddenly along comes the waiter with your bill.

You take one look and go “how much?” Then you notice that those cheese and biscuits you had were more expensive than a pudding. Ouch. All of the feeling of warmth and comfort has been eradicated because you now need to get out your credit card and pay “extra” for having cheese and biscuits instead of a pudding. Or worse than this, you are all paying your own way and an argument ensues as to who owes what; “remember I only had two drinks while the rest of you had three”, or “don’t forget I didn’t have a starter”. Goodness me, you were having a lovely evening and the bill has spoiled it completely.

Imagine doing something else pleasurable and paying for it afterwards. You could go to the theatre and have a lovely evening enjoying the show then have to queue up to pay. You might then think, “hang on, I didn’t quite get some of the lines in Act 2, why am I paying for them?” And what if you went to the cinema and had to pay for your pick and mix sweets after you had eaten them? “Wait a minute,” you think, “I didn’t really like those chocolate mice as much as I thought I would; shouldn’t I pay less?”

Paying after the event, lessens our enjoyment because it makes us focus on aspects of what we were doing that we do not consider if we pay in advance. Restaurants would almost certainly do much better if they had fixed prices that we paid in advance.

For online businesses, this is a lesson we can learn from. When you get the “money bit” out of the way quickly and seamlessly, you can then get people to focus on the pleasurable aspects of whatever it is that you are selling. Even online, businesses seem to labour the “this is what you will get for your money” aspects of what is on offer, thereby focusing people on the money, rather than the pleasure.

However, at least if you are selling digital goods you do have to get them to pay in advance. But if you are selling services, perhaps “business to business”, there is often the “call us and we we will quote” kind of system in place online. So they call you, then you quote. They accept the quote, you start the work, then you invoice them. Oh dear, all the pleasure of what you did for them is forgotten and now they start picking at your bill, line by line, thinking negatives about your service, rather than the positives.

Get your customers to pay in advance; they will enjoy it much more – plus because they remain positive about you they are likely to come back.

[box type=”note” style=”rounded” border=”full”]The research that backs this up is explained in the book, Happy Money.[/box]

2 thoughts on “Get your customers to pay in advance, they will enjoy it”

  1. That’s a really good thought, Graham. Sort of take the pain (pay) and then get the pleasure or reward.

    I could see some people not liking paying up front to a new supplier, but many would put up with it.

    Any suggestions on how to use that psychology for suppliers who charge by the hour?

    • Thanks for your kind comment Tash. For “pay by hour” people I’d suggest working out how many hours you are prepared to give, then give a fixed price payable up front. For instance, if the work is going to take four hours this week and six hours next week, charge for five hours a week. Swings, roundabouts and all that. Tell customers they get a fixed price and don’t need to worry about how many hours the work will take – you will do the work for the price no matter how long it takes, implying that you will be the one who loses out and that the customer can only win…!

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