Alongside the question of pricing is the question of how your customer pays you? In other words, you need to decide a payment model for your business. Do you charge upfront for your product, or can you allow your customer to pay you in instalments over time? For goods that have a high cost relative to customer income, some kind of ‘payment over time’ may be more affordable.  

Here are six typical payment models: 

1. Give for Free: most charities offer a ‘give for free’ model. They fund all of their costs through donations, and provide the services for free to their beneficiaries.
2. Pay on Delivery: the customer pays you a single fee once the product or service is delivered.
3. Pay with a loan: the customer receives a loan (either from you or from a partner bank) so that they can buy your product upfront and pay back the loan over time.
4. Hire / Purchase: the customer receives the product or service for free upfront, and makes monthly payments over time. After a certain number of payments, the customer owns the product outright and ceases further payments.
5. Leasing: the customer never actually owns the product, but makes monthly leasing payments. The social business retains ownership of the product, and takes responsibility for ongoing maintenance. The business takes back the product when leasing stops.
6. Pay for Service: instead of buying a product, the customer instead pays for services from the social business. For example, some solar companies don’t actually sell panels to their customers. Instead, they set up kiosks in villages where customers can come to charge their batteries. So what they sell are ‘energy services’, rather than actual energy producing products. Many communities find this a much more affordable and effective model, with the customer only paying for services when they have the cash.  

The key to payment models 3-6 is helping your customer to spread out payments over time. For many customers, the biggest challenge to affordability is how much they can spend per month. By helping customers spread out cost over time, you might be able to greatly increase the number of customers who can afford your product.