The Payment Paradox
Your less expensive product. The higher monthly payment.
This is the transaction most equipment dealers know by heart: the one they lost. The numbers are real. The math is unambiguous. The customer's more expensive product came with a lower monthly payment, because one OEM controlled the instrument that set the payment, and the other did not.
Your product: the one that lost
- Product price
- $45,000
- APR
- 12% standard rate
- Term
- 60 months
Monthly payment
$1,001
per month
Total customer cost
$60,060 $15,060 in interest on a lower-priced product.Competitor: the one that won
- Product price
- $50,000
- APR
- 0% promotional
- Term
- 60 months
Monthly payment
$833
per month
Total customer cost
$50,000 No interest. No overage.Discounting the product permanently reduces your margin. Engineering the payment through rate buy-downs, promotional APR programs, term optimization, and payment structuring achieves the same monthly payment without changing the price. Your customer gets the payment they wanted, your margin stays intact, and the deal closes.