Sales – How to ask for a deposit or an upfront fee
You might be reading this because you work in a sector that requires you to ask for a deposit an upfront fee or down payment for the services you offer. This can be tricky as client can often push back as it is not something they are keen to part with their money for or they may feel they do not wish to pay for something have not yet received.
Lots of companies ask for this type of payment, from a gym membership asking for a joining fee, a tenancy agreement on a house, a web design company asking for a percentage up front, or a SaaS (Software as a Service) business asking for an upfront fee for the services they provide to a bathroom design business looking to secure a deposit. Whichever way you slice, this is money in advance. In my business SerialTrainer7.com I ask for full payment up front for specific types of training, and for project-based work a design fee, I have also worked with a lot of businesses that have this deposit, upfront fee system in place.
What you as the sales person are truly looking for is the decision making process to be going on in the clients mind, thinking how you can influence it in your favour by differentiation and substantiation of your products and claims, and then acting on it, by asking for the business.
You will notice that when you are talking to the client, they have a definite need for your product, they love you and they love your product, and yet you need to broach the subject of the fee. When you do, you see a cloud fall across their eyes, and you might find your own sales confidence slip as your tone becomes almost apologetic. Be careful. Don’t lose your nerve or confidence, the client can see it and smell it like blood in the water, and they will pounce with objections if they think you are weak.
Your client could give you specific objections like these.
- We are not comfortable with the deposit amount or the upfront fee.
- We have researched the market and your competition do not charge a set up fee or ask for a deposit
- Could you make an exception for us?
- We want to try it first before we make the commitment.
- We have not factored in a set up fee in our budget.
- We will want additional functionality
There are things you need to be aware of when you are selling in this space and these points will help to you get over the objections too.
- The product or service usually requires commitment, either through a subscription as with SaaS, or in terms of time as with designer. That means you are probably working with high priced items that require serious investment. Get into a sales negotiation until you are sure that your product or service meets the required needs.
- You could also be dealing with multiple buyers all with their own agenda. Be sure to address everyone and their concerns in the room individually so that they feel heard. Do not start negotiation until each person is fully on board.
- Your service or product has a high value and is worth the investment, do not try and cheapen it in any way. Maintaining price and value is everything. Ensure that your product is fully positioned in terms of value and benefit. Remember sales 101, features tell, benefits sell.
- Being able to secure the fee or deposit will ensure that your business has the funds to start working with that client and investing back into their project.
- Be open and honest about any fees early on so that you manage expectations; keep it front of mind by reinforcing it on literature or quotes so that it becomes the norm. Many companies will operate such a scheme and choose to hide it, springing it on the client at a later date; this can cause resentment and mistrust. When you are talking about the logistics of the transactions, build in it in and navigate the way. “Now we have discussed how the project will work, let us move onto our pricing and payment structure. Work on your project begins once we have you deposit/down payment/commitment fee in place, you will then receive an invoice for the completed work once it is in place and payment is requested within 30/60/90 days.” It doesn’t need to be any more complicated than that.
- If the client wants try things first, before making the big commitment, embrace it, walk away, tell them you are happy to wait until they are in a position to commit. This stops you having yet another time waster who could be looking for freebies and stalling in a move to get you to drop on price. Explain how other clients have found the product and service exceptional and ensure you have a testimonial to hand to prove it.
- If a deposit is required, then stand firm. The deposit is the initiator of the commitment being made, therefore once the commitment is secured; there is less chance of the client pulling out. Paying a deposit demonstrates that the client is sure you are the correct solution for them. Anything less is not qualified and therefore needs to be questioned further to establish that the client understands the value being offered.
- The overall budget for your product or service needs to be established very early on in the sales conversation. Be honest at the start, inform the client that what you offer requires significant investment of time and money, if it is a SaaS solution as an example, the whole benefit and value of investing can affect the culture of a business as well as the infrastructure, so therefore the budget conversation needs to addressed early.
- Think of deposits and down payments as a sieve. The sorts outs those clients who are not prepared to commit, leaving you with the clients that your business can commit to fully and exclusively, therefore giving them the very best you have to offer.
- Deposits and down payments often sit in the high end of the markets they operate in and this premium status needs to be reinforced to the client.They are embarking on a journey with you, a premium business, offering them, the premium client with the very best you offer. It is perfectly acceptable to expect the client to make a financial commitment in order to access you.
I hope you have found this article useful, it really is about being confident and I can totally empathise with anyone who struggles with it, however businesses do require it, and once you get your head around and in time see how your client can benefit from your product it is well worth the effort.
Simon at SerialTrainer7.com offer comprehensive, practical and relevant sales training for businesses internationally. With over 200 LinkedIN testimonials, you can be confident your team are receiving sales training that can make a strong impact. Get in touch at Simon@serialtrainer7.com