Flat Rate Pricing Pitch

I just got an email from a sales agent with these questions:  “One of my telemarketers spoke with a  prospect who is open to seeing what I can do, but it seems that he wants a “flat bundled rate.”  What exactly is “bundled flat rate pricing?”  Who is it good for?  How would you handle this phone call?”

A flat bundled rate pricing plan alternates between being a terrible deal for the processor and a terrible deal for the merchant, but it is never a win win.  Ninety-nine percent of the time it is a terrible deal for the merchant.  A true bundled, flat rate is plain and simple.  There are no extra fees or surcharges, regardless of card types or payment method.  If the merchant does $10,000 with a flat rate of 2.5%, there are $250 in total fees.

Unfortunately, most merchants who think they are on a flat rate are not.  Rather, they are on a flat rate plus surcharges.  This means if a transaction is not “Qualified” for the “Discount Rate,” the merchant gets charged a surcharge which makes this pricing platform a complete joke.  It is basically three tier pricing, but the rep pitches tier one and bundles all the tier two and three charges into a “Surcharge Table.”  In this way the rep doesn’t have to talk about those tier two and three charges.

You can easily find out if the merchant is on true flat rate pricing by the following conversation:

You ask: “What is your rate?”

The merchant answers proudly, “1.9%”

You:  “Okay and how much revenue did you do last month?”

Merchant:  “$10,000.”

You:  “So your total fees were $190, right?”

Merchant (with a confused look) slowly answers:  “No…they were around $300.”

I love watching the light come on as the merchant realizes he is not really on flat rate pricing.  Then the anger dawns as the realization comes that while the other guy told him or her there was 2% flat rate, he or she is actually paying 3% in total fees.

Here is how I would pitch it.  “I would be happy to do a flat rate quote for you.  I will obviously need to see your recent processing statement so I know your average ticket size and revenue, etc., etc.”  After you get the processing statement and do the analysis, this might be your next conversation with the merchant: “I was able to get you a flat rate of mark up that is 0.25% on every transaction, no matter how much revenue you do.  This may look a little different than other flat rate pricing plans. We actually pass through the wholesale rates from Visa and Mastercard and just charge one flat rate of 0.25% on every transaction.  This is a true flat rate; our mark up never varies at all.”

So basically, rather than spend an hour showing the client he is wrong and not really on flat rate pricing, I personally prefer to just speak in a language he understands and wants to hear.  After all, we do have flat rate mark up, don’t we?

Hope this is a help!
Email me with questions james@ccsalespro.com.

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