Purchasing department people: Credit card or purchase order?

January 23, 2009 7:50 AM

I'm going to be selling two downloadable information products to businesses. One will be priced (at most) $495. The other will be more, about $1200. I hope customers will use credit cards, not purchase orders. Do I hope in vain?

I can accept credit cards, so ideally the customer will enter their corporate card info and download the product.

Is either of these prices likely to be problematic for corporate credit card users? For example, are companies wanting the $1200 product likely to send a purchase order rather than just putting it on a card? If so, is it common or classy to give a discount to customers who use credit cards instead of purchase orders?

(Until now, I've sold only services, using invoices.)

Thanks!

posted by PatoPata to work & money (10 comments total)

Maybe make "downloadable" only available for credit card purchases. If they want to use a PO, they have to get CDs or DVDs, mailed after the money clears to your account. That provides a clear benefit for using the CC, and a time/ease-of-use detriment to the PO.
posted by catlet at 7:53 AM on January 23 [1 favorite]

I wouldn't be surprised if many organizations have a approval required north of $1000, so maybe $999 instead of $1250 would sell more. I would look for some hard data on that before sacrificing 20% however.
posted by These Premises Are Alarmed at 8:02 AM on January 23

One data point: I'm at a major .edu; purchasing card users have to jump through annoying bureaucratic hoops to make purchases over $1k.
posted by buxtonbluecat at 8:30 AM on January 23

If the information packet is already done, and the cost associated with creating it already realized, are you making it unduly difficult for some corporate customers to pay you?

Is there a reason you don't want POs other than immediacy of payment? POs can be a pain when you have to wait for reimbursement of specific work product, but if that work is completed and you are now going to be making sales off of it going forward, the convenience to you for immediate payment may turn off potential customers who *have* to go through a PO process.

I used to hate having to use POs, but that was the only way I could buy certain items over $1,000 (as TPAA pointed out) in my previous company.
posted by qwip at 8:38 AM on January 23

Most corporations I work with will choose $2000 they can pay by check over $1200 that is credit card only. Credit card only is a major pain for big business.

Also, TPAA is dead right that $1000 is a common cutoff. Consider $950 or whatever indeed.

If you wish to sell to big business, you really need to support purchase orders.
posted by rokusan at 8:41 AM on January 23

We sell downloadable research reports, anywhere from $300 - $1200, and accept credit cards only. We've gotten the occasional request to take a purchase order, but it's been very rare.
posted by jbickers at 8:42 AM on January 23

For that amount, we'd use a PO. We could use a corporate card, but it would be a massive bother.
posted by 26.2 at 10:11 AM on January 23

Thanks for the comments so far. Since some answers here suggest that companies will want to use a PO for the bigger purchase, I have another question: How common is it for a seller to insist on receiving payment before (instantly) providing the product?

My concern is that my corporate clients feel they should have at least 30 days to pay any invoice and, increasingly, take longer. So from my perspective, the PO process could look like this:

1. Company wants to buy. They send me a PO.

2. I obediently send them the product (an access code for the download), accompanied by an invoice.

3. 30 days later, I still haven't been paid, while they've been using my product all this time. I send them another invoice. Rinse and repeat.

So is it highly unusual for a seller that accepts POs to insist on payment before "sending" (instantly) the product? In other words, I'll accept POs if the buyer accepts that they will get the product when I get their check.
posted by PatoPata at 11:15 AM on January 23

You're currently selling services? IME, corporate clients expect 30-day terms for services, but are oddly OK with paying in advance for product.

Even if you are selling product to existing customers for your service, it's OK to have different terms for each.
posted by catlet at 12:29 PM on January 23

Is there a similar product to yours? What are their terms?

What you're proposing is not a PO sale. You're proposing that all orders are prepaid by credit card or by check. That's going to be a real obstacle - I now need to get a check cut, but I don't have an invoice. You can't send an invoice since I haven't made a purchase. Accounts Payable isn't going to cut a check without an invoice which I don't have.

Honestly, if there was something else available, I'd buy that even if it cost more. After 12 years in 3 large corporations, I don't hassle with AP any more than I absolutely must.
posted by 26.2 at 9:40 PM on January 23