POP QUIZ: What is the biggest similarity between your home improvement business and every other business on the planet?
Unless you are some sort of remodeling Johnny Appleseed, spreading vinyl siding and asphalt shingles throughout the land for free, you’re going to want money for your services.
In a recent article for Profesional Remodeler, Jim Cory points to a Reddit thread from just a couple years ago. A homeowner asked the question: “What’s the best way to pay this large expense [15k bath remodel] using a credit card when my contractor doesn’t accept credit cards?”
This started a conversation which ranged in responses from “It’s 2016, he should accept credit cards” to “The contractor would have to eat a $400 fee”. And of course, since this was on Reddit, I’m sure the conversation devolved from there to a series of GIFs featuring kids on skateboards face-planting into the sidewalk.
Memes aside, this raises a good point. Should all contractors be taking credit/debit cards as a form of payment, or only accept cash or check?
How expensive are your services? If what you do costs a couple thousand dollars or more per project, do you expect your customers to have all that cash on hand? Some companies offer financing, but what if the job is too small to finance? The customer might not be able to qualify for financing. If they do, do you take down payments? What if it’s an emergency, like a highly damaged roof that is leaking? It needs to be fixed immediately, but the customer doesn’t have the money in savings. Sometimes the customer simply prefers to pay with credit card. Do you walk on down the road and let your credit card-taking competition make the sale?
There are solid reasons why a company wouldn’t want to take credit cards. It takes time to get the equipment and systems necessary to take payments up and running. Then the staff needs to be trained on how to use those systems.
There is also the expense. If your card service charges a 2.8% fee, that is extra money removed from your gross profit.
So How Do We Make It Work?
There is a fine line between better serving the homeowners in your area and effectively mangling your bottom line. The need is there though. People are ditching cash for cards all the time. The percentage increases the more expensive the purchase. Using a form of payment that people are already gravitating to just makes sense.
When it comes to managing those pesky service fees, you do have options. If you are reporting on how your remodeling projects are being paid for, you could calculate what percentage of your business is paid for by credit cards and build the fees into your gross margin. Spreading those fees out among all your customers.
Or if you don’t like the idea of raising all prices by a minimal amount just to allow certain customers to pay with cards, you could simply add a convenience fee to card purchases equal to the fee you pay.
Finding a payment service that integrates with your current business platform will make your life a lot less stressful. For example, improveit 360 has an integration with PaySimple. This allows our clients to easily take payments from their improveit 360 mobile app or even directly on their website. They can also easily collect subsequent payments or set up payment plans with securely stored customer payment information. All the while, they are reducing payment acceptance fees and costs. Not to mention the time saved tracking down or following up on payments…it’s all right there!
The odds of credit/debit cards being a fad that will go away are slim to none. In fact, the evidence is the opposite. Cards are replacing cash in more and more transactions. You would be doing yourself and your home-pro business a great service by figuring out how to integrate these payment types into your day to day business.
If you have already done this? Congratulations! You’re doing a great job…carry on.