» Does Your Wedding Business Take Credit Cards?

This article was written by WeddingWire Education Guru Alan Berg, CSP. Alan has over 20 years experience in wedding related sales and marketing, and is an author, business consultant, a member of the National Speakers Association, and the wedding & event industry’s only Certified Speaking Professional®. Learn more at alanberg.com.

“Do you take credit cards?” seems to be an unnecessary question, but it’s still a common one on forums and social groups. With the cost of transactions ranging from just over 1% to as high as 4% (or more with additional fees) it’s certainly a subject worth talking about. It’s a cost of doing business, but can you (or should you) try to mitigate that cost?

Common types of credit cardsI think it’s as much a mindset as a real cost. In my article, You can’t save your way to prosperity, I talked about cost-saving strategies and how most are misguided. There’s a limit to how much you can save. You have to have electricity, gas for your truck, supplies, payroll and taxes. No matter how hard you try, you can’t reduce your costs to zero. Are the efforts worth the savings?

Let’s do the math

Recently I was consulting with a wedding professional and he was lamenting how it costs him 4% when he receives funds through his website. If he does $100,000 in collections, that’s costing him $4,000 per year in credit card fees. If he does $200,000 in collections through credit/debit cards, it costs him $8,000 per year. The only way to reduce that to zero is to stop accepting credit cards. These days that’s also likely to limit your sales as some people only want to pay with their credit or debit card. You also get the funds now, as opposed to waiting for a check or cash, as you can accept the cards remotely, but cash would be in person and checks are becoming a much rarer form of commerce for today’s generation of wedding couples.

I asked my client how many of his customers he might have lost if he didn’t take credit cards, and while it’s hard to say, it’s likely he would have lost a few. The most he can save is $4,000 or $8,000, depending upon his collections. It’s very likely that the lost sales would have cost him more than the credit card fees are costing.

A different approach

We both agreed that telling the customer they have to pay the credit card fees on top of their purchase wasn’t a good idea. None of us likes that when we’re the customer. So I asked him a different question: Assuming an average sale of $1,000 (for ease of discussion), how many of his customers would have balked and not bought if his price had been $1,050? In other words if he had raised his rate by 5%, would any of his customers have walked away? He said that he felt all of his customers still would have bought. What about $1,100? He said they all still would have bought. So I told him to immediately raise his rate to $1,100 and stop worrying about the 4% because he’s now covering the fee and making more on top of that. And that extra is all profit (after taxes, of course).

Change your mindset

The approach I take for my business is to assume that all of my collections will be via credit/debit card, so I add 5% when I’m doing my projections and budgeting. I know that I’ll get checks and cash from some clients and that my actual processing costs less than 5%, so the real number will be lower. When someone pays me with check or cash I look at it as making 5%, as opposed to looking at credit card transactions as costing me 5%. It’s a mindset shift; I’d rather look at profits than costs.

Is saving bad?

Should he look for a better deal on credit card processing? Sure. But a better use of his time is marketing, evaluating his pricing strategy and pricing power, and working to increase his average sale. The amount you can save is always limited to what you spend, but the amount you can make is unlimited. And you don’t want to save your way to oblivion. If you stop marketing and reign in your expenses too much you’re likely to hurt your business’ potential earnings. I’ve said it many times, but you have to invest in your business first if you want others to invest in you!

Over time the savings will add up, but I contend that a better use of most of our time is in making more dollars, rather than trying to save pennies.

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