If you own a children’s activity or education business and you are looking for ideas on how to increase your revenue and enrollment numbers, offering flexible payment options might be a good one to explore. When you provide pay over time options to parents, you open up new ways for them to purchase your activities.
At Sawyer, we work with children’s activity and education business owners every day to help them make smart decisions and create opportunities for growth. To help you do the same, this article will outline flexible payment structures, explain how payment plans and installment buying work, and go through the benefits of offering this option.
Flexible payment options
- Flexible payment structures
- ~How do payment plans work?
- What is buy, now pay later (BNPL)?
- ~Buy now, pay later popularity
- ~How does buy now, pay later work?
- Installment buying: Benefits for businesses and customers
Flexible payment structures
Payment plans, such as installment buying and buy now, pay later have become increasingly common. Previously, customers were only offered flexible payment structures on large purchases like cars and televisions. Now, as companies like Klarna, Affirm, and AfterPay have skyrocketed in popularity, customers are expecting to have this flexibility in all of their purchases.
In order to meet an increasing demand for payment plans, the team at Sawyer recommends that our providers explore flexible payment options. In fact, we have monthly billing, weekly pricing, payment plans, and more structures built into our platform so that providers can easily offer these options. Providers can even incentivize upfront purchases by adding in payment surcharges for any of their flexible options further increasing revenue. And, after analyzing 5.1 million bookings processed in 2021, we found that 34% of parents who were given a pay over time option took it. Likewise, it is growing amongst our providers with 62% of providers offering installment plans. Learn more about these insights in the Sawyer Children’s Activity Business 2021 Trend Report.
How do payment plans work?
When customers pay for an item using a payment plan, then they are agreeing to “pay a fixed amount of money every month until the balance is cleared”, according to the definition written by BNPL company Jifiti. For example, if you are running a semester of chess classes that costs $1,000 overall, you can offer a payment plan to customers where they pay 10 installments of $100 rather than paying $1,000 upfront.
What is buy now, pay later (BNPL)?
Buy now, pay later (BNPL) is another flexible payment structure. Typically, an outside company is the one who covers the BNPL transaction, not the retailer itself. BNPL is extremely popular with shoppers.
Buy now, pay later popularity
In March 2021, The Ascent surveyed 2,000 Americans to learn about their habits and found that 55.8% of consumers had used a buy now, pay later service. When broken down by age, 60.08% of respondents aged 24-34 and 60.58% of respondents aged 35-45 had used BNPL. This is a high percentage of parent-aged individuals looking for flexible payment options in their everyday life.
Another interesting fact that came from their survey is that “61% of buy now, pay later users would rather use a BNPL service offered directly from the retailer they're buying from than going through a third party.” This is beneficial for providers on Sawyer who can use the built-in installment payment plans, including deposits, monthly billing, and more, on the platform so parents feel more comfortable making use of the flexible payment options.
How does buy now, pay later work?
Buy now, pay later works by allowing customers to make a purchase and pay back the money in interest-free installments (as they are paid on time). However, depending on the BNPL program in place, if customers do not pay on time, they can be reported for the missed payments, which may trigger fees and affect their credit score.
Installment buying: Benefits for businesses and customers
It is clear that buy now, pay later and installment buying is popular. But, what are the benefits for both customers and businesses?
Benefits for customers
- Increased flexibility. Letting customers spread their payments out over weeks or months gives them more opportunity to make purchases that might not have fit into their budget in a lump sum.
- Protected cash. In the same survey from The Ascent, they asked customers why they were choosing BNPL options. 41.31% of respondents said it was to conserve cash in case of an emergency. This makes sense given that 64.43% of respondents reported using BNPL more since the pandemic began.
- No hard credit check or interest. While BNPL services do check into the consumers, it is considered a soft credit pull and does not impact a customer’s credit score. BNPL programs take into consideration different factors than a larger bank loan, which means they may be more accessible to people who might not have the best credit score. Similarly, installments paid through BNPL are typically interest-free as long as they are paid on time.
Benefits for businesses
- Increased revenue. By offering installment buying, you make your bigger ticket items more accessible to more families. In doing so, you increase your revenue because more parents are booking full semesters rather than one-off drop-in classes.
- Increased customer satisfaction. As more and more millennials enter the parenting space, they are looking for businesses that understand their purchasing behaviors. Offering BNPL is a great way to keep your customers happy while contributing to your bottom line.
- Increased conversion rate. Adding a buy now, pay later option to your offerings can increase your conversion rate at checkout. RBC Capital Markets estimated that a BNPL option increases retail conversion rates from 20% to 30%.
If you are looking for more guidance on flexible payment offerings for your business, check out our article on cash vs credit card payments so you can make informed decisions that will increase your revenue over time. If you are looking for support on the administrative side of running your children’s activity or education business, Sawyer is the best class registration software for businesses of all sizes. See how we can help you grow by scheduling a demo or signing up for our free trial.