How Adding A Payment Plan Can Affect Your Sales – The Good, The Bad And The Ugly

Are you considering adding a payment plan for your digital product or service? Then you must consider these pros and cons before you pull the trigger.

When I first launched my Create A Profitable Online Store Course in 2011, the price was only $299.

But as I continued to add content to the class and as the value of the course continued to rise, I began raising prices as well.

Today, the cost of my class is more than 5X the original price and it’s likely to increase again.

Here’s the thing. Whenever you sell an expensive product, there are always going to be people who will be intimidated by the price tag even if deep down they know that the cost is worth the money.

That is why it’s important to make your products as obtainable as possible by breaking up the costs into smaller, bite sized chunks.

This not only makes your product more attractive but it can often mean the difference between a customer leaving or making a purchase.

Today, I want to talk about all of the pros and cons that I personally experienced when I began offering payment plans for my class. It hasn’t been all sunshine and roses and at times, taking on payment plans has been a major pain in the butt.

Here are a list of things you need to consider if you plan on accepting payment plans for your products. When I first started, there was (and still is) very little information out there on the topic.

So everything that I’m writing about today is based on my own experiences and data. Enjoy and take everything I say with a grain of salt!

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The Good: You Will Attract New Customers Who May Not Have Made A Purchase Otherwise


The biggest plus from accepting payment plans is that your sales will most likely increase dramatically.

Today I offer 2 different payment plans for my class which has allowed me to attract approximately 27% more customers than if I only offered a single, lump sum payment. 27%!!!!!

Here’s how my plans are currently structured.

  • 4 Payments of $225
  • 10 Payments of $99

Can you guess which plan is more popular?

90% of customers who pay in installments opt for the 10 payments of $99 plan even though it results in paying 100 extra dollars over the other plan.

Here’s what’s even more interesting.

When I experimented with the dollar amount of the “cheap” plan and increased the payment from $99 to $125, the overall percentage of payment plan customers went down dramatically even though the total overall cost was less.

I also tried small experiments of $79 and $89 respectively but they seemed to behave on par with the $99 price point.

So in my limited testing, I noticed that any price that crosses a double digit boundary elicits a strong negative psychological response.

Apparently, going from $99 to $100+ makes a huge difference from a mental standpoint and the number of payments involved does not seem to play as large of a part in the outcome. The per payment price matters more.

So if you plan on implementing a payment plan for your products, you’ll get dramatically more signups if you keep your payment amount under 3 digits.

The Bad: You Will Get More Returns


Whenever a customer buys my class with a single lump sum payment, that customer is usually here to stay. The percentage of people that pay in full for my course and decide to make a return is extremely low (single digits).

In fact, I love it when someone makes a lump sum payment because it means that they are committed and the quality of the student tends to be higher on average.

On the other hand, the return percentage of students signing up for my class under a payment plan is significantly higher.

Looking at my stats, I would say that a payment plan student is almost 3X more likely to request a return at the end of the 30 day trial period.

Now that’s not to say that all payment plan students are bad. I have many students on payment plans who are doing extremely well but generally speaking, the level of commitment tends to be proportional to the monetary investment.

Here’s another interesting observation. Those that do make a return of my course usually do so in under a week and 90%+ of these people don’t bother watching more than a single video lesson (I keep track of what everyone watches in the class)

This implies that my payment plans may be attracting impulse buyers that may not be 100% serious about starting a business.

Overall, there’s clearly a tradeoff between making sales with a payment plan and attracting real committed customers.

By charging too little, you may attract people who won’t make good customers. But by charging too much, you might be missing out on a star pupil.

It’s definitely a delicate balance.

For me personally, I ALWAYS want to attract committed students.

After all, I want everyone to be successful so I can brag about my students and generate more sales through word of mouth. It’s in my best interests to make sure EVERYONE does well.

The Ugly: Accepting Payment Plans Will Result In More Administrative Headaches

One thing that I did not anticipate was the increased administrative overhead involved in accepting payment plans. Not only do you have to worry about extra returns but you also have to worry about credit cards being declined as well.

Every single month, there are always a few “failed payments” that I have to deal with which involves the following

  • I have to temporarily deactivate the student’s account
  • I have to email the student for a new card
  • I have to reactivate the account once payment is made

Sometimes I feel like a glorified collection agent which is very annoying. Thankfully, I have managed to automate the entire collection/deactivation/reactivation process by writing some custom code in my backend website.

But be aware that you will have to deal with extra administrative headaches if you ever decide to take on payment plans.


If you are willing to accept the good with the bad, then payment plans are a great way for you to increase sales of your products. As I mentioned earlier, I’ve managed to acquire 27% more signups simply by accepting multiple payments.

If you are interested in implementing a payment plan for your product, then consider this…

If you are just starting out, then keep the number of payments low to reduce the level of administrative headache.

For example, I’d start out with just 3 payments at first and then gradually increase this number as you become more comfortable with the process.

The dollar amount matters.

If you can keep each payment in the double digits, then you will make significantly more sales than if you cross the 3 digit boundary.

But on the flip side, you also want to consider the types of customers you might attract with lower prices. Overall, I would not recommend setting your price too low otherwise you’ll end up dealing with more troublesome buyers.

Also, I would not set the number of payments beyond a 12 month period. Otherwise, the total number of in flight customers may become too much to manage over time.

Take things slow, gradually work your way up and look for your sweet spot.

Do you accept payment plans for your products? Please share your experiences in the comments.

photo credit: Making Money Revenue Returns

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About Steve Chou

Steve Chou is a highly recognized influencer in the ecommerce space and has taught thousands of students how to effectively sell physical products online over at

His blog,, has been featured in Forbes, Inc, The New York Times,  Entrepreneur and MSNBC.  

He's also a contributing author for BigCommerce, Klaviyo, ManyChat, Printful, Privy, CXL, Ecommerce Fuel, GlockApps, Privy, Social Media Examiner, Web Designer Depot, Sumo and other leading business publications.

In addition, he runs a popular ecommerce podcast, My Wife Quit Her Job, which is a top 25 marketing show on all of Apple Podcasts

To stay up to date with all of the latest ecommerce trends, Steve runs a 7 figure ecommerce store,, with his wife and puts on an annual ecommerce conference called The Sellers Summit.  

Steve carries both a bachelors and a masters degree in electrical engineering from Stanford University. Despite majoring in electrical engineering, he spent a good portion of his graduate education studying entrepreneurship and the mechanics of running small businesses. 

7 thoughts on “How Adding A Payment Plan Can Affect Your Sales – The Good, The Bad And The Ugly”

  1. Dale Reardon says:


    Thanks very much for sharing your pricing insights. Data on these payment options is hard to come by.

    We are going to launch a course in the next few months and this insight is very valuable.


    1. Steve C says:

      Thanks Dale!

  2. Grant Baldwin says:

    Good stuff Steve! We just added a payment option to our course, so this was timely 🙂

    1. Steve C says:

      Cool. Do you have any stats to share?

  3. Online Store Help says:

    Your administrative overhead would be a lot easier by using a proper membership system such as Digital Access Pass or Amember Pro which will shut down access when a card is declined. Both of them work with wordpress and would make your life significantly easier.

    1. Steve C says:

      I just ended up coding that part myself and it ended up only being a few lines of code. My entire setup is a bit convoluted due to a few special things that i do on the backend. But I agree. Most membership plugins have this built in now

  4. Nick says:

    Fantastic insight! I wish payment plans were more common but it definitely does seem to open a lot of can of worms. Sometimes it’s hard enough to make the sales you want without having to worry about delinquency AFTER the transaction.

Comments are closed.