One of the cases for premium pricing is that some people just ain’t gonna pay. They may start off strong and then are a couple of days late, then they make one on-time payment, then their two weeks late. Along the way the psychic drama extracts a cost. They complain about quality, or a late delivery but ultimately they don’t have the money to be in your circle.
If you are running a recurring system, you have to figure on at least 10% of your customers being late. Or if you do auto-bill before they get their product, you will have denied credit cards which is the same thing. You just aren’t out the time or product but basically they are deadbeats.
So this is ability to pay attrition on top of normal attrition from people who lose interest or have found the new thing they want to try.
As mentioned you can stop the bleeding by having an auto-pay setup, either via credit card or automatic bank ebit. But you are still going to have he ability to pay attrition, aka deadbeat.
So you can do a couple things:
- Raise your prices
- Offer autopay if you don’t already
- Offer pre-pay of 6 month or 12-month increments with a discount. Getting money in the door in advance even at a discount will help you deal with those months when a bunch of customers go south in a cluster.
- Screen more effectively. You can do this by touting your exclusive nature, by talking about your waiting list, by making them fill out questionnaires or applications, by presenting them with an auto-pay form before they even start, etc.
- Make sure you are constantly marketing so you aren’t dependent on the customers you do have. If holes open up in your schedule due to non-payment you want to be able to fill them without losing sleep.