Dual Pricing Program: What to Know About This Cost-Saving Strategy

Cash may no longer be king when it comes to consumers’ choice of payment methods, but it isn’t going away anytime soon, despite the increase of cashless retail outlets nationwide.

If you’re a merchant, promoting cash payments might be a way to increase profits, bolster your bottom line, and enhance the money available to reinvest in your business. How? A merchant dual pricing program allows you to offer a lower price on certain items if customers pay with cash.

If you’re wondering, “What do I need to know about dual pricing programs?”, this article will explain the basic concept and provide some detailed best practices.

What Is a Dual Pricing Program?

Dual pricing programs offer customers who choose to pay in cash a lower price than those who pay with a credit card. The key to successfully implementing such a program is to include the cost of credit card fees in the initial advertised price.

As a merchant, you’re undoubtedly familiar with the fees credit card companies charge for processing credit card transactions. Those fees typically range from 2% to 4%, and credit card companies continue to raise them constantly.

The cost of these fees either eats into your revenue or gets passed along to your customers. If you’re like most merchants, you’ve already updated the cost of your products or services to account for them.

How It Works

With a dual pricing program, you simply eliminate the card-processing fee from the cost of an item for customers who pay with cash. It’s relatively easy once you’ve decided to operate a dual pricing program and set your business up for it.

Here are the five keys to making a dual pricing program work for your business:

1. Create a transparent pricing structure that shows the regular price for credit and debit card purchases and the discounted price for cash purchases
2. Post signage about the dual pricing program on your storefront and at check-out locations
3. Provide customers with information about the program at check-out
4. Train your staff to handle cash transactions efficiently
5. Make sure you have enough currency in paper and coinage on hand for cash transactions

Now that you know how these programs work, you might wonder if it’s the right approach for your business.

Deciding Whether a Dual Pricing Program Is for You

Dual pricing might make you seem customer-friendly to some, but it also could alienate customers who prefer paying with a card. Additionally, you may not like the prospect of raising your prices initially.

Other important considerations include whether other businesses like yours offer dual pricing programs and how much the credit card companies charge for processing.

You might also have concerns about your payment processing hardware and software handling dual payment methods. A company like The Payment HQ can set you up with a system that quickly toggles between the two popular payment methods.

Learn More

Have any questions or comments? Contact us now to get started on a merchant dual pricing program.