With the price decided, the final step for the marketer is to determine in what form and in what timeframe customers will make payment. As one would expect payment is most often in a monetary form though in certain situations the payment may be part of a barter arrangement in which products or services are exchanged.
Form of Payment
The monetary payment decision can be a complex one. One issue marketers face is deciding in what form payments will be accepted. These options include cash, check, money orders, credit card, online payment systems (e.g., PayPal), and digital currency (e.g., Bitcoin). For international purchases, currency issues and other uncertainties may require the use of alternative payment options including bank drafts, letters of credit, and international reply coupons, to name a few.
Handling of Payment
Marketers must also decide how the actual payment will be handled. While some forms of payment are obvious for certain transactions (e.g., retail stores accept payments by cash, credit card, debit card), others may limit payment options (e.g., cash payment not accepted for orders placed over the phone). Additionally, in business-to-business transactions, payment may take place in the form of bank transfers. In the retail environment, one of the fastest growing methods for making payment is through mobile devices. Mobile payments using mobile devices (e.g., phones, watches) allow customers making purchases by simply holding their device near an electronic reader on a payment terminal.
Time Frame of Payment
One final pricing decision considers when payment will be made. Many marketers find promotional value in offering options to customers for the date when payment is due. Such options include:
- Immediate Payment in Full – Requires the customer make full payment at the time the product is acquired.
- Immediate Partial Payment – Requires the customer make a certain amount or percentage of payment at the time the product is acquired. This may be in the form of a down payment. Subsequent payments occur either in one lump sum or at agreed intervals (e.g., once per month) through an installment plan.
- Future Payment – Provides the buyer with the opportunity to acquire use of the product with payment occurring some time in the future. Future payment may require either payment in full or partial payment.