Payment Plans and you

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This post has 134 Replies | 16 Followers

Posts 3938
abondservant | Forum Activity | Replied: Wed, Nov 11 2015 6:16 PM

James Taylor:

Bob Pritchett:
we're just asking that the first payment be 25% of the new purchase.

I don't think that it is illogical for you to ask for 25% down, it will just mean saving up to buy bigger ticket items, which just means hopefully we could get some advanced notice or extra time frames on promotions/sales. But IMO it is completely understandable for Faithlife to make adjustments to be sure their bills get paid.



I agree, bills have to be paid. Its not too much to ask. But it will price me out.

L2 lvl4, L3 Scholars, L4 Scholars, L5 Platinum,  L6 Collectors. L7 Baptist Portfolio. L8 Baptist Platinum.

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Jack Caviness | Forum Activity | Replied: Wed, Nov 11 2015 6:17 PM

Bob Pritchett:
Just to be clear, we aren't charging a new fee -- we're just asking that the first payment be 25% of the new purchase.

Interesting post, Bob. The new policy makes it appear that FL is in a serious cash-flow bind. That creates a bit of uneasiness concerning the long-term viability of our investments.

Bob Pritchett:
Unfortunately our sales model has become 'addicted' to payment plans, and they now represent too large a percentage of our sales.

Every time I click on a fairly large resource/bundle, I am given the price in monthly payments. This makes it look as if FL prefers that we purchase on payment plans. I personally don't want to see a payment plan unless I specifically request it.Just tell me the price, and I will decide how to purchase. Payment plans have become such a large part of your sales because your marketing department has been pushing them over one-time charges.

I fear that this new policy will cost you many thousands of dollars in sales—Is your cash-flow that poor?

Posts 1049
William Gabriel | Forum Activity | Replied: Wed, Nov 11 2015 6:20 PM

Thanks for the explanation. That's all understandable, and you may want to post the policy clearly on the website. The email to some users and responses here show that there is a lot of confusion.

Is this policy for add ons or all payment plans?

Posts 80
EX | Forum Activity | Replied: Wed, Nov 11 2015 6:22 PM

Bob Pritchett:

Unfortunately our sales model has become 'addicted' to payment plans, and they now represent too large a percentage of our sales.

That is the key phrase. Logos is only asking for a 25% downpayment.

I applaud this move 👏. Cash flow is king!

PCA Church
L4 Platinum, L5 Reformed Platinum, L6 Reformed Diamond, Reformed Studies XL, Platinum, Logos Now

Posts 80
EX | Forum Activity | Replied: Wed, Nov 11 2015 6:31 PM

Jack Caviness:

Bob Pritchett:
Just to be clear, we aren't charging a new fee -- we're just asking that the first payment be 25% of the new purchase.

Interesting post, Bob. The new policy makes it appear that FL is in a serious cash-flow bind. That creates a bit of uneasiness concerning the long-term viability of our investments.

Not necessarily. If FL wants to be aggressive with growth, especially in the emerging markets outside of the US, they would need the cash upfront to make it work. Personally, I would love to see FL make it to Korea, China and Brazil. Which bible software will win the race? It is TBD. (FYI, the market in the US is shrinking).

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Posts 8967
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Matthew C Jones | Forum Activity | Replied: Wed, Nov 11 2015 6:36 PM

Jack Caviness:
Interesting post, Bob. The new policy makes it appear that FL is in a serious cash-flow bind. That creates a bit of uneasiness concerning the long-term viability of our investments.

My thoughts too. 

Logos 7 Collectors Edition

Posts 637
Frank Sauer | Forum Activity | Replied: Wed, Nov 11 2015 6:42 PM

Is it just me or when I read Bob's post, I can't help but wonder if this wasn't foreseen considering how many emails many of us get containing more offers to upgrade and extend our payment plans.

I rarely receive a special offer email any longer that is not an offer to upgrade my base package and extend a payment plan. So it didn't surprise me at all when I read the statement that payment plan sales are to high of a percentage of sales.

I wonder if this will have an adverse effect on sales though as many may avoid the bigger purchases, though the monthly payments would be shorter and less $ per payment on average.

Posts 5249
Dan Francis | Forum Activity | Replied: Wed, Nov 11 2015 6:43 PM

Bob Pritchett:

Just to be clear, we aren't charging a new fee -- we're just asking that the first payment be 25% of the new purchase.

So if you bought something for $800, the first payment would be 25% = $200, and could then be $100 / month (plus $5/mo fee) for six months for the remainder.

This makes sense and is understandable... although if I get around to Anglican Portfolio I am still a little scared... lol

-Dan

Posts 2331
Ronald Quick | Forum Activity | Replied: Wed, Nov 11 2015 6:48 PM

From Bob's post (and I just quickly skimmed it), there is a lot of upfront costs on their end when a resource/bundle is sold.  It sounds like there is a lot of outstanding cash that they're waiting to receive that they've already paid out.  So I understand their position, but depending on the cost I may have to pass on some bundles/packages.

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Jack Caviness | Forum Activity | Replied: Wed, Nov 11 2015 6:59 PM

FOB:

Jack Caviness:

Bob Pritchett:
Just to be clear, we aren't charging a new fee -- we're just asking that the first payment be 25% of the new purchase.

Interesting post, Bob. The new policy makes it appear that FL is in a serious cash-flow bind. That creates a bit of uneasiness concerning the long-term viability of our investments.

Not necessarily.

Note that I was speaking of appearances, for I am not privy to FL's financial position. Quite often, reality takes a back seat to appearances.

Posts 1049
William Gabriel | Forum Activity | Replied: Wed, Nov 11 2015 7:17 PM

Super.Tramp:

Jack Caviness:
Interesting post, Bob. The new policy makes it appear that FL is in a serious cash-flow bind. That creates a bit of uneasiness concerning the long-term viability of our investments.

My thoughts too. 

The concerning part to me is that they've had this up and running for a while now yet the current cash flows aren't enough to adequately cover new plans. It's not like they're starting from scratch. They ought to have quite a bit in the pipeline right now.

Posts 80
EX | Forum Activity | Replied: Wed, Nov 11 2015 7:31 PM

Jack Caviness:

FOB:

Jack Caviness:

Bob Pritchett:
Just to be clear, we aren't charging a new fee -- we're just asking that the first payment be 25% of the new purchase.

Interesting post, Bob. The new policy makes it appear that FL is in a serious cash-flow bind. That creates a bit of uneasiness concerning the long-term viability of our investments.

Not necessarily.

Note that I was speaking of appearances, for I am not privy to FL's financial position. Quite often, reality takes a back seat to appearances.

Yes

PCA Church
L4 Platinum, L5 Reformed Platinum, L6 Reformed Diamond, Reformed Studies XL, Platinum, Logos Now

Posts 2331
Ronald Quick | Forum Activity | Replied: Wed, Nov 11 2015 7:33 PM

I wonder if there are a lot who have been unable to maintain their payment plan?  And if so, I'm guessing that Logos is still responsible for their cost.  Maybe there is a lost cash flow from this.  

Posts 2331
Ronald Quick | Forum Activity | Replied: Wed, Nov 11 2015 7:35 PM

I completely understand the need for a portion of the resource cost upfront.  I just hope it doesn't hurt sales too much.

Posts 2825
Michael Childs | Forum Activity | Replied: Wed, Nov 11 2015 8:24 PM

It appears that Logos is tightening their credit policy.  That is a business decision, and FL should do whatever they feel is in the company's best interest.   

However, it seems to me that if this has become a problem, it is a problem that FL created through their own sales agents.  The sales agents aggressively contact customers through email suggesting resources that could be added to their payment plan with just a little increase.  I regularly receive such emails, and I imagine everyone on a payment plan does.

In the long run this may not be such a bad thing.  Large purchases will have to slow down and be delayed until the 25% down payment  can be saved.  If someone is in seminary, or serving a small church with a small salary, they will delay these purchases.  Frequently they will not make the purchases at all.

Of course, this applies only to adding a second payment plan.  It will not impact the first payment plan, as I understand.  But that still will greatly reduce the number of payment plans, in my opinion.

Actually, the delay will give more time to reconsider whether one really needs, or can afford, the purchase.  Many purchases will just no longer be made.  There is a lot of difference in a person with really tight finances buying a $1600 set of resources by coming up with $89 to begin an 18 month payment plan verses coming up with $400 to begin the payment plan. 

Perhaps this will prevent people from making purchases that they really can't afford, and that will be a good thing.  I would predict that this change of policy will greatly reduce payment plans in general, which apparently have become too large a portion of Logos' business.  Payment plans in genare about to become a much smaller part of a smaller pie of Logos' business overall.

"In all cases, the Church is to be judged by the Scripture, not the Scripture by the Church," John Wesley

Posts 1690
LogosEmployee
Bob Pritchett | Forum Activity | Replied: Wed, Nov 11 2015 9:33 PM

Jack Caviness:
Interesting post, Bob. The new policy makes it appear that FL is in a serious cash-flow bind. That creates a bit of uneasiness concerning the long-term viability of our investments.

We're not in any danger of disappearing. We're a significant business with a wonderful, active customer base (thank you!) that still makes a profit.

We're just managing cash. Yes, we promoted payment plans. They work great to a point. 

This isn't a crisis, or an emergency, or even the end of tweaks to the program -- it may tighten more, loosen in other ways, etc. 

This is just a math problem. 

I don't wish to share all our internal accounting -- and it's crazy complicated with lots of variables -- but I think that if you look at even simple scenarios you can see how this can be a problem. Now that most active purchasers have a payment plan going, most people just buy new things by extending their payment plan. That means that this month's sales -- which we expect, at some level, to use to pay this month's bills -- are effectively being pushed out 2, 3, or even 15 months from now. So TODAY we get a new cash obligation, but TODAY we get no cash. And last year didn't have the same ratio of payment plans, so its delayed payments aren't equal to what we're deferring today.

It's not a big corporate secret that our royalties are generally due every quarter, and that paychecks are due every two weeks. Our royalties range from zero (public domain content) to as high as 70% (in some very unpleasant cases).

So if you buy a $1,000 of product on 24 months (thank you!), you have a $41.67 + $5 = $46.67 first month payment. 

We may owe royalties of $500 on this purchase. The royalties are due at the end of the calendar quarter, which is at max 90 days away, but on average 45 days away. (It could be tomorrow.) 

So let's say we've collected two payments by the time royalties are due. We've got $93.34 from you so far, and make a $500 payment. Now our cash position is DOWN over $400. At the end of a YEAR we'll have collected $560.04 but by then will have had to pay taxes (let's say we're 10% profitable, so we pay the IRS 35% or more of the $100 profit -- another $35).

A year after you start the payment plan we're only $25.04 ahead in cash (on a $1,000 sale) and we haven't considered payroll and other expenses!

(Even if our royalty was only $200 on this particular purchase we'd be underwater for more than four months.)

Yes, like many businesses paid over time we can take our receivables to a bank and borrow against them, but you can't borrow against the whole balance (more like 60-75%), and now you're also paying interest (thankfully low right now), etc.

This is why credit cards exist, and why many products sold with time payments have another company manage the payments. It's because time payments is its own business... and while a producer like Faithlife can 'do a little bit', if it becomes too big a part of their business, they have to either reign it in or push it off on another company whose financial model -- and backing -- is designed for it. 

I'm sure you're thinking that we can 'make it up in volume' or 'once it starts going payments from last year will cover costs for this year', and that's all true, to a point -- except that if your profits aren't outrageous (ours aren't) and your growth isn't a rocket ship (ours isn't) and you aren't rolling around in excess cash (we aren't) and don't have a venture capital fund backing you (we don't) and you can't borrow 100% of your receivables (we can't) and you are deferring revenue but not expenses, you can hit a math wall.

For what it's worth, we are both profitable and growing this year. We're just tweaking our payment plan system so that we can continue to serve you well without having to borrow future receivables from someone we meet in the alley behind the dumpster. :-)

Posts 383
Danny Parker | Forum Activity | Replied: Wed, Nov 11 2015 10:40 PM

It seems to make sense from a Logos view, but likely takes me out of this payment option all together. Probably just as well to avoid the $5 a month charge anyway. Keeps me from spending more than I can afford. Not a bad situation. Just different than the past.

One might argue many things, but a company needs to do what it has to do as it reviews business models. However, as much as the current model was used, it seems it would have been better to communicate this better up front. Good communication is one area that seems to be lacking in a number of instances in the past. This leads to confused and unhappy customers. This is a trend that good companies can run aground on - just look around at numbers of once great companies.

But better to keep a healthy model than to run into trouble. It may impact some revenues as well initially, although likely everyone just adjusts to the new reality. Living within one's means is not a bad thing. Angel And book addicts will likely still spend dollars.Zip it!

Posts 383
Danny Parker | Forum Activity | Replied: Wed, Nov 11 2015 10:42 PM

Note: I am cancelling an imminent $400 order, because I just cannot incur the additional upfront costs before the end of the year. Do wish there had been more notice.

Posts 503
Sarel Slabbert | Forum Activity | Replied: Wed, Nov 11 2015 10:51 PM

The explanation makes sense, but unfortunately I concur with many here: it will make it very difficult to use the payment plan in future, especially for large purchases.

Posts 184
LogosEmployee
Dan Pritchett | Forum Activity | Replied: Wed, Nov 11 2015 11:00 PM

Michael Childs:
Large purchases will have to slow down and be delayed until the 25% down payment  can be saved. 

Many book lovers that discover they're spending the same book budget amount on Logos books each year will find that using Logos Book Cache is the answer, to not only the Pre-Pub problem of having cash up front, but will also find it solves this 25% down payment issue as well.

The added bonus to using Logos Book Cache is that they are saving the $5/mo. payment plan fee every month.

It won't solve everyone's issues, but for those who aren't sure what they will buy in the future, but know they are going to spend a set amount, they can start a Logos Book Cache subscription now, avoid the $5/mo. payment plan fee and be well ahead of the game when they find the next title they want.

https://www.logos.com/book-cache

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