Now and then I see opportunities and notice a pattern with consulting clients. Right now, there’s an underlying need in the marketplace which can produce extra money for those who fill it: financing hardware. How to Sell Merchant Services in 6 Steps If I could write an eBook knowing what I know today and […]
Now and then I see opportunities and notice a pattern with consulting clients. Right now, there’s an underlying need in the marketplace which can produce extra money for those who fill it: financing hardware.
How to Sell Merchant Services in 6 Steps
If I could write an eBook knowing what I know today and then go back in time and deliver it to myself 10 years ago when I first got into this industry, this would be the one!CLICK HERE TO DOWNLOAD
Small business owners recognize their need for technology. However, they are usually cash strapped.
I know three options you can structure to help these small business owners while also increasing your profits.
#1. Offer In-House Rental
This has been extremely effective for some processors. If you have access to capital, buy the hardware and rent to businesses.
Renting hardware is a great model. If there are problems, the equipment is returned. By renting more advanced POS hardware, you would have very low attrition. Nobody wants to cancel if that results in losing the POS. When a business closes and must cancel, equipment can be refurbished and rented to someone else.
Here is the pitch: “We offer great software for $99 a month. Obviously, you need the hardware. You can buy it for about $7,000. Then, of course, you would pay for service and repairs if anything should go wrong. But we offer another option – a hardware software bundle for $297 a month, which includes that $99 software AND the hardware. The great thing about that, Mr. Jones, is you’re only renting the hardware. If there are any problems whatsoever, those are not your problems. We’re like the landlord of your POS system. Now, that also obviously means if you cancel, we get our equipment back. We guarantee you’ll get new or totally refurbished equipment. If it breaks down, we’re the ones that have to fix it.”
This arrangement is great for the merchant – no money up front and assurance of good hardware. And it is an amazing investment for you. You might spend $2000 on hardware for a merchant but get upwards of $150 a month rent forever. In seven, eight, or nine years you still have somebody paying $150 a month for something in which you invested $2000.
An 80% or 90% annual return is a great investment! Can you refuse an opportunity like that?
Rent smaller equipment (smart terminals, smaller POS systems, tablet POS systems) and still get recurring revenue by making a one-time investment and then refurbishing as needed.
#2. Offer In-House Financing
You pay $2000 for hardware. Offer to finance for $3999 and only 10% interest.
That way you’ll make money from the mark-up AND a bit of money from the interest spread, as well.
Small business owners ARE leery of borrowing money. Thus, I think this option puts up an unnecessary barrier to entry; why not just rent?
If a business stops paying, the owner will more likely send back a rental. However, if there’s a debt involved, the owner will default and may not want you to find his/her location. This option doesn’t offer an orderly transition.
#3. Outsourced Financing Options
Don’t have any access to capital? Find companies who offer capital options. This isn’t the same as a terminal lease. Go online and look up “equipment financing options.” There are definitely companies who will do minimum $3000 financing type arrangements. They will pay you the money up front and collect payments directly from the merchant if they are approved.
If you’re trying to sell something involving technology to business owners right now, make sure you’re giving them access to capital. Otherwise, you’re probably not going to sell very many of them.
Find ways to enable business owners to buy your technology with lower barrier to entry.
I promise you’ll be making a lot more money and a lot more sales.
Do you already have experience with some of these solutions? We all want to hear your thoughts and feedback in the comments section! Have an awesome day!