Comment on Kalzumeus Podcast 3: Growing Consulting Practices, with Brennan DunnparentComments−pc8613yWhy would you not punish people for late payment?−adrianhoward13yBecause it's more effective not to (in my experience anyway). Instead use the same numbers and make it look like a great deal. So rather than."Your bill is $10k, pay after Dec 15 and you get fined an additional $5k"say"Pay by Dec 15 and get our discount rate of $10k, otherwise get our standard rate of $15k"Numbers are the same. Very different reaction from people.Discounts are something people want. Having time-limited discounts is a classic sales technique. People don't want to lose out.Some departments are required to take discounts, but encouraged to fight late fees.Fines are annoying, but the effectively give you a structure and excuse for doing the bad thing.There is no logical difference - but people aren't logical.
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Why would you not punish people for late payment?
Because it's more effective not to (in my experience anyway). Instead use the same numbers and make it look like a great deal. So rather than.
"Your bill is $10k, pay after Dec 15 and you get fined an additional $5k"
say
"Pay by Dec 15 and get our discount rate of $10k, otherwise get our standard rate of $15k"
Numbers are the same. Very different reaction from people.
Discounts are something people want. Having time-limited discounts is a classic sales technique. People don't want to lose out.
Some departments are required to take discounts, but encouraged to fight late fees.
Fines are annoying, but the effectively give you a structure and excuse for doing the bad thing.
There is no logical difference - but people aren't logical.