Wednesday, November 21, 2018

Not Using Email Marketing Yet? Here Are 7 Reasons to Start

As an entrepreneur, you probably hear about email marketing a lot. It outperforms social media, resulting in three times more conversions than Facebook, and implementing email marketing has become incredibly simple, even for non-techies. But yet less than 30% of small business owners in America are investing into this channel.

If you, too, are still hesitant about using it for your business, we’ve gathered seven reasons that should convince you to start building an email marketing strategy today.

1. Email shows the highest ROI of all channels.

It is only natural to question the affordability of a new channel, especially when it comes to small and medium business. Yet, investing in email as your next marketing effort is probably the safest bet because its performance numbers are truly impressive. For every dollar spent on email marketing, the ROI is an average $44 in the US, and it’s growing every year.

reasons to start email marketing

Campaign Monitor

Of course, that number varies by industry, as well as whether you’re in the B2B or the B2C sector. However, multiple research shows that email remains the key channel for the businesses using it.

For instance, WordStream data illustrates that every third retail brand email subscriber eventually makes a purchase, and those making a purchase through email tend to spend 138% more than non-subscribers. Email is also the most effective revenue generating channel for B2B and works extremely well for all pet-related services.

2. You don’t need a design team.

For years, email marketing was a prerogative of tech companies simply because it often required coding skills, the knowledge of HTML, and web design. Today, to send out a newsletter, all you need to have is a message, a few visuals, and a list of subscribers (we’ll talk about getting subscribers next). The technical process has been simplified and automated, and what used to be a job for three professionals, can now be performed by just one.

Modern email marketing services such as Mailchimp, Drip, Active Campaign, Constant Contact, and others allow you to build professional-looking and mobile-friendly newsletters using drag-n-drop editors, themes, and templates. With these tools, sending out a special offer to thousands of customers is just as easy as sending an email to a friend. Most importantly, you get detailed statistics on your campaign performance in a user-friendly format and can adjust your future emails based on results.

start email marketing

3. Building an email list is easier than before.

Some business owners are reluctant to use email marketing simply because they lack subscribers. But all you need to start growing a list is a website with decent traffic. Along with email marketing, the process of email list building has evolved greatly over the past few years. Even if you have no coding skills, there are a few solutions for you to quickly add email opt-in forms to your website and start collecting subscribers. If you haven’t done this before, a subscription form like this one from GetSiteControl might be a great fit for you.

This is how it works: Once signed up, you can create smart email subscription forms that will be displayed on a website under the conditions you choose. For example, you might prefer popups that appear after a visitor spends a certain amount of time on the website, or a lightbox to stop those abandoning a webpage. You might want to display different forms to different groups of visitors based on their location or device. It all depends on your strategy.

The subscribers collected from your website will automatically be sent to your list based on which email marketing service you connect it to. The entire process takes a few minutes and given that a well-targeted popup can convert from 3% to 9% of your website visitors into subscribers, it’s definitely worth the effort. If you’re looking for inspiration, here is a list of email newsletter signup examples that work on successful websites and can be replicated on yours.

4. Email marketing fosters long-lasting relationships.

The cost of email marketing leads is typically much lower than lead acquisition cost on other channels. But that’s not the only reason email marketing can be a game-changer.

You’ve probably heard about the cold, warm, and qualified lead types. Cold leads are those people yet unfamiliar with your business. You may be trying to reach them via cold calling or cold emailing, PR, and ads – but unless they respond to your message and show some interest in your products or services, they won’t be considered warm prospects. And even if you eventually convert them into customers but fail to capture their email addresses, you’re leaving money on the table.

Now, we’ve already spoken about the ROI of email marketing, and the main reason for such high numbers is that people on your email list are already warm and qualified leads. They subscribed voluntarily because they liked what you offered. That means when you send your first email, they might even be ready to make a purchase. And most importantly, having them on your email list, you have a chance to develop long-term relationships and foster repeat sales.  

5. Email brings dozens of tactics for various business types.

A decade ago, most email campaigns included blasting a large group of people with one-size-fits-all messages – mainly company news and special offers. Clearly, that wouldn’t be an ideal scenario for many businesses. Today we have email marketing automation that shifts the focus of campaigns from the brand to the customer’s needs.

reasons to start email marketing


Online, you’ll find various automation strategies proven to work for specific businesses and broken down into steps. For example, you can run drip campaigns which is where you send emails based on user behavior on the website or their reaction to the previous newsletters. You can send out emails based on customers’ purchase history, recover abandoned carts, warm-up prospects who haven’t been active for a long time, and much more.

Another tactic, called segmentation, allows you to send custom emails to the groups of subscribers based on their demographics, interests, location, or customer journey stage.

6. Email marketing gives you the power of personalization.

Personalized messages will always be more effective than generic ones because they stand out and look relevant to the prospects. And email is the only channel providing you with such in-depth personalization possibilities. According to Campaign Monitor, personalized emails lead to higher click-through rates, increase conversion by 10%, and deliver six times higher transaction rates.

Typically, we’re talking about a set of rules allowing you to tailor messages based on who they are sent to. And it goes far beyond using subscriber’s first name in the subject line and sending birthdays coupons. For example, based on your customer’s location, you can personalize the time of the day they receive an email. You can also send personalized recommendations related to the customer’s interests.

If you need inspiration, here is an excellent roundup of personalized emails collected by HubSpot.

reasons to start email marketing

7. You can easily reach a mobile audience.

Internet traffic is going mobile, so businesses are looking for ways to target smartphone users through social media ads and mobile search engine optimization. But given most consumers’ brief attention span, the task might seem challenging.

Email appears to be just the right channel to reach mobile audience for a few reasons. First of all, 75% of consumers tend to check email on their mobile devices to sort and preview the important messages. That provides brands with the highest chances to get seen by the prospects. And what’s noteworthy, marketing emails viewed on a smartphone often drive to planned purchases. According to WordStream, “when a prospect or customer who opens an email on a mobile device opens that same email again on another device, they are 65% more likely to click through to your site/offering.”

Getting Started With Email Marketing for Your Small Business

Email marketing is a powerful tool that is now affordable and accessible for small and medium businesses. It has huge potential that’s growing every year and unfolds numerous tactics for increasing sales. If you’re ready to start developing your strategy, start with the best email marketing platforms and find one that will will work for your business.

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BMO Online Business Banking Reviewed for Your Small Business

Getting a business checking account is a big step toward becoming a credible business with organized finances. With a business bank account, you can officially separate your personal finances from those of your business, and have a designated place from which to pay expenses and save money for future costs. A business checking account also makes financial management and recordkeeping easier, which can save you headaches come tax season. On top of all of that, the right bank can offer the tools and support you need to grow your business.

Different business checking accounts have different features and services, so you’ll want to consider your options to ensure you choose the bank that’s right for your business’s needs. If you’re a small business owner, particularly one in the Midwest, then BMO online banking for business might be worth checking out. The bank has more than 570 locations across Illinois, Indiana, Arizona, Missouri, Minnesota, Kansas, Florida, and Wisconsin. The bank’s branch and ATM locator can help you determine if there’s a location near you.

At BMO Harris, there are four business checking accounts to choose from. The options range from BMO Essential Business Checking, an account designed for growing businesses focused on minimizing costs, to BMO Non-Profit Small Business Checking, an option designed specifically to meet the needs of non-profit organizations. Below, we provide overviews of each BMO online business banking option to help you figure out if they’re the right options for you.

Choosing the Best Business Checking for Your Small Business

When shopping around for a business bank account, there are a few factors to note to ensure the account you choose suits your business’ needs. Before exploring your options, you should first figure what exactly your business needs from a checking account, both right now and into the future as it continues to grow.

Here’s what you should consider as you make your choice:


Business checking accounts have varying transaction limits. These inform you how many transactions you can make per statement period before paying a set fee per additional transaction. Typically, accounts that have lower monthly fees have lower transaction limits. But if you think your business will make a number of transactions beyond that limit, you could lose that cost savings in transaction fees. Thus, it’s important to consider your business’s projected volume of transactions per month to ensure you choose a suitable account.

Both BMO Essential Business Checking and BMO Non-Profit Small Business Checking have transaction limits of 200. Although BMO Advantage Business Checking has a slightly higher monthly fee, it has a much higher transaction limit of 500.

Balance Minimums

Balance minimum is another consideration as you choose your business bank account. Many business checking accounts require either a minimum initial deposit or a minimum account balance. At BMO Harris Bank, all business checking accounts require a minimum opening deposit of $100.

Thereafter, you must maintain a certain account value in order for the bank to waive the monthly fee. This required balance varies by account type, so you should consider how much money you plan to have in your account on average before selecting your account.  

BMO Essential Business Checking waives the monthly fee for accounts that have an average collected balance of at least $1,500 for the statement period. BMO Advantage Business Checking, on the other hand, waives the monthly fee for if you either have an average total balance of at least $5,000 or, if you link your account under the Relationship Waiver, a total combined balance of $15,000.


The final consideration is fees. Among the BMO online business banking options, BMO Non-Profit Small Business Checking is an outlier in that it does not carry a monthly fee. However, this account option is geared specifically toward non-profits. The other account options, which are more generally geared towards small business owners, all have monthly fees. BMO Essential Business Checking and BMO Advantage Business Checking have monthly fees of $15 and $20, respectively. However, if you maintain a certain total account balance, the bank will waive that fee.

BMO Business Checking Analyzed, an option for businesses that bank a lot, carries both a $20 monthly maintenance fee and a balance admin fee. As you select an account, you’ll want to keep these fees—and the minimum account balances required to waive these fees—in mind.

You should also take note of any other fees involved, including ATM fees. BMO Harris Bank does charge a fee for transactions at non-BMO Harris ATMs, and those costs could add up if you’re traveling often and not near one of the bank’s ATMs.

bmo online banking for business

The 4 BMO Business Checking Accounts Reviewed

BMO Harris offers four checking account options for businesses: BMO Essential Business Checking, BMO Advantage Business Checking, BMO Business Checking Analyzed, and BMO Non-Profit Small Business Checking. The first three options cater to businesses with varying monthly transaction and account balance levels. As the fourth account’s name suggests, BMO Non-Profit Small Business Checking is specifically for non-profit organizations and has no monthly fees.

While there are certainly numerous features to note that set each of these accounts apart, there are also some commonalities among the accounts:

  • Required minimum opening deposit of $100
  • BMO Harris Bank Debit MasterCard® BusinessCard available
  • $3 fee per statement period for check images (unless you choose to only receive online statements)
  • No transaction fees at BMO Harris ATMs

BMO Essential Business Checking

The first BMO online business banking account option that we’ll cover is BMO Essential Business Checking. This account is designed for small businesses that typically have a low account balance and don’t make many transactions per month. The account has a fairly low transaction limit of 200 transactions per statement period, and you’ll pay $0.40 for every subsequent transaction. A $3 fee applies to each non-BMO Harris ATM transaction.

As an added perk for businesses looking to cut costs, BMO Essential Business Checking waives the monthly maintenance fee, coin and currency fees, wire transfer fees, and check image fees for the first three months. After that period is up, you’ll pay a $15 monthly maintenance fee, though this fee is waived for accounts that have an average collected balance of at least $1,500 for the statement period.

Monthly fees and limits:

  • $100 opening deposit required.
  • $15 monthly maintenance fee (waived for accounts that have an average collected balance of at least $1,500 for the statement period).
  • 200 free transactions per month (includes non-ATM deposits, checks deposited, checks paid, and ACH credits and debits). Then, $0.40 fee per additional transaction.
  • $3 fee per non-BMO Harris ATM transaction.
  • $3 fee per statement period for check images (unless you select to only receive online statements).

Best for:

  • Business owners making infrequent transactions
  • Business owners with a low average account balance

BMO Advantage Business Checking

This BMO online business banking option is for businesses that make a moderate to high number of transactions each month. You’ll get 500 transactions per statement period, which is more than twice the transaction limit of BMO Essential Business Checking. Subsequent transactions beyond that cap carry a $0.40 fee.

Additionally, BMO Advantage Business Checking offers the opportunity to earn interest. This account does carry a slightly higher $20 monthly fee, which will be waived if you have an average total balance of at least $5,000. Or, the bank will waive this fee if you link this account under the Relationship Waiver and have a total combined balance of $15,000. Because of this option, this account may be an attractive to business owners who have other accounts with BMO Harris.

Like for the BMO Essential Business Checking, BMO Harris Bank will waive the monthly maintenance fee as well as coin and currency and transaction fees for the first three months after you open a BMO Advantage Business Checking account. Although non-BMO Harris ATM transactions will typically carry a $3 fee, this account does offer two such transactions for no fee per statement period.

Monthly fees and limits:

  • $100 opening deposit.
  • $20 monthly maintenance fee (waived for accounts that have an average collected balance of at least $5,000 for the statement period OR if you link this account and have a total combined balance of $15,00).
  • 500 transactions per month (includes non-ATM deposits, checks deposited, checks paid and ACH credits and debits.) A $0.40 fee applies to additional transactions.
  • $3 fee per non-BMO Harris ATM transaction in excess of two transactions per statement period.
  • $3 fee per statement period for check images (unless you select to only receive online statements).

Best for:

  • Business owners making a moderate to high number of transactions
  • Business owners with a moderate average account balance or other BMO Harris Bank accounts

bmo online banking for business

BMO Business Checking Analyzed

BMO Business Checking Analyzed is for businesses that are heavy bank users, making a high number of transactions each month and maintaining a higher account balance. Unlike the previous two account options, which offer a set number of fee-free transactions per statement period, BMO Business Checking Analyzed automatically offsets certain fees with an earnings credit that’s based on your deposit balances.

Rather than charging a flat $0.40 fee for all transactions, this account has different fee rates for different types of transactions:

  • Per deposit: $0.65
  • Per check paid: $0.20
  • Per check deposited: $0.18
  • Per ACH transaction (credit and debit): $0.25

This account carries both a $20 monthly maintenance fee and a balance admin fee, which is assessed per $1,000 in average balances multiplied by a BMO-determined factor that’s variable and subject to change. Unlike BMO Essential Business Checking and BMO Advantage Business Checking, the account does not waive this fee nor other fees for the first three months after opening account. However, the account does allow two non-BMO Harris ATM transactions per statement period at no fee.

Monthly fees and limits:

  • $100 opening deposit.
  • $20 monthly maintenance fee.
  • Balance admin fee (assessed per $1,000 in average balances multiplied by a BMO-determined factor that’s variable and subject to change).
  • Fees varied by transaction type ($0.65 per deposit, $0.20 per check paid, $0.18 per check deposited, and $0.25 per ACH transaction).
  • $3 fee per non-BMO Harris ATM transaction in excess of two transactions per statement period.
  • $3 fee per statement period for check images (unless you select to only receive online statements).

Best for:

  • Business owners making a high number of transactions
  • Business owners with a high account balance to get earnings credits to offset fees

BMO Non-Profit Small Business Checking

The BMO Non-Profit Small Business Checking account is more targeted than the other BMO online business banking options. This account is specifically tailored to small non-profit organizations that have low balances and low monthly transaction volume. Notably, this is the only BMO business account that has no monthly maintenance fee. However, you can’t earn interest with this account.

Like BMO Essential Business Checking, this account allows 200 transactions per month, with each additional transaction carrying a $0.40 fee. You’ll be a charged a $3 fee for all non-BMO Harris ATM transactions per statement period.

Monthly fees and limits:

  • $100 opening deposit.
  • No monthly maintenance fee.
  • 200 transactions per month (includes non-ATM deposits, checks deposited, checks paid and ACH credits and debits). A $0.40 fee per additional transaction.
  • $3 fee per non-BMO Harris ATM transaction.
  • $3 fee per statement period for check images (unless you select to only receive online statements).

Best for:

  • Owners of a non-profit organization

Who Are BMO Business Checking Accounts Right For?

BMO Harris Bank has a number of online banking for business options that can meet a range of business owners’ needs. The outlier in the group of four account options to choose from is undoubtedly BMO Non-Profit Small Business Checking, as it is specifically for non-profit organizations that have low account balances and monthly transaction volume. Uniquely, there is no monthly maintenance fee associated with this account option, though it’s also a non-interest-bearing account.

BMO Harris Bank’s other three business checking account options meet varying levels of banking needs for small business owners. BMO Essential Business Checking is for business owners with a low monthly transaction volume and a low average account balance. This might be a good option if you’re just starting out and have basic banking needs. For a slightly higher monthly fee (though this fee can be waived), there’s BMO Advantage Business Checking. This is for business owners with a moderate-to-high transaction volume and total account balance.

The BMO Business Checking Analyzed account has a slightly different fee set-up from the previous two accounts and is geared toward business owners with high balances that are heavy bank users. This account has a non-waivable monthly maintenance fee in addition to a balance admin fee. However, the bank automatically offsets certain fees with an earnings credit that’s based on your deposit balances.

If you don’t own a non-profit organization, the right choice for you might not be immediately apparent. It’s important to think carefully about your business’ needs and financial habits before selecting a business checking account. Ideally, you’ll select an account that can serve as a business partner for you now and grow with you into your business’ future.


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How to Accept Payments Online

If you’ve gotten a customer to the point where they are ready to purchase a product on your website, you’ve done a lot of things right as an ecommerce small business owner. But don’t celebrate prematurely! The checkout stage is actually the most precarious part of an online transaction. When it comes time to pay, customers abandon their shopping cart at a whopping average rate of 69.89%.

This is due to an array of factors, including hidden costs (shipping, taxes), extra steps (needing to create an account), untrustworthiness, lack of payment methods, and a cumbersome checkout process. How can you, as an ecommerce small business owner, buck this trend? By having an excellent online payment experience.

To do this, you need to learn about the world of online payments. We’re sure you received a primer when you first set up your ecommerce business, but the world of online payments is quite complex, and all ecommerce operators can benefit (and save some money) with a bit more background.

In this guide, we are going to talk about how to accept payments online. This includes how online payments work and the different types of online payments. But before we do that, it’s important to understand why online payments are so important in the modern retail landscape.

Benefits of Accepting Payments Online

Let’s set aside the obvious first. The main benefit of accepting online payments is expanding your revenue base by being able to collect payments from customers who purchase your products via the internet. This is probably why you decided to get into ecommerce in the first place.

But online payments can offer your business much more than just a way to collect money. A good online payment system has a variety of benefits, including:

Reaching an International Audience

No matter how small your business is, if you have an online payment system that can accept multiple currencies, you have the potential to reach customers around the world.

Customers Can Pay via Mobile

Retail payments by mobile apps, like Google Wallet, PayPal, and Apple Pay, are expected to amount to $318.8 billion by 2020. If you have an online payment system that accepts these forms of payment, you increase your opportunity to reach your target audience and close a sale.

Set up Recurring Payments

If you operate a subscription-style service or charge your customers monthly fees, an online payment system can save you some time by automating the collection process.

Build Brand Credibility

Instances of fraud are higher when customers pay online. One in three shoppers hesitate to buy online because of security concerns. It’s one of the biggest issues holding back the ecommerce industry. But if you have an online payment system with first-class security measures, this could be an opportunity for you.

Coupling robust security and varied payment methods establishes your business as more trustworthy and reliable in the eyes of the customer. More than 80% of customers feel safer submitting their credit card information if they see familiar card logos (think Visa or MasterCard) displayed prominently in an online store, according to

Be Part of the Trend

Americans increasingly want to buy things from the comfort of their computers. The ecommerce industry grew by 16% in 2017, amounting to $453.46 billion in sales, according to SaleCycle. Ecommerce now accounts for 13% of all U.S. retail sales. Accepting online payments allows you to be part of this growing trend and reap the benefits.

Disadvantages of Accepting Online Payments

There are two dreaded Fs associated with the world of online payments: Fees and fraud.


The type of fees associated with your online payment system vary depending on your provider and the features you want. Most providers either charge a per-transaction fee or an interchange fee. A per-transaction fee is usually a small percentage of the total cost of a transaction. An interchange fee is a fee paid between banks for the acceptance of card-based transactions.

Per-transaction and interchange fees are usually similar, but you should shop around for the best rate. Additionally, some providers also charge setup fees, monthly service fees, and usage fees for going over or under certain transaction limits.

Fraudulent Charges

While robust security measures can be marketable, the fact remains that ecommerce businesses lose 0.8%-0.9% of all sales to fraud each year. And each instance of fraud costs a business $114,000 on average. Fraud is more common online because the sale is taking place virtually where the merchant cannot verify the customer’s identity.

There are two major types of online fraud that you should be aware of: Account takeover and identity theft. Account takeover fraud is when a customer account on your ecommerce site is hacked into. The perpetrator then uses the payment information saved on the customer account to make unauthorized purchases. Identity theft fraud is when unauthorized purchases are made on your ecommerce platform using stolen customer data.

To help businesses protect themselves from fraud online, the Payment Card Industry Security Standards Council (PCI SSC) created a set of best practices that all online retailers must enforce called PCI compliance. There are additional measures you can take as well, such as monitoring transactions, setting purchase limits, and requiring tougher passwords.

If you sell online, fees are part of the cost of doing business, and fraud is always a looming threat. For those considering setting up an ecommerce shop, plan accordingly.

accept payments online

How Online Payments Are Processed

Processing online payments is complicated, which you might not have guessed considering how fast it happens. Within moments of a customer clicking the “Order now” icon on your website, multiple stakeholders open and close a line of communication to determine if a transaction is legitimate and whether or not it can be processed. This series of events is not possible unless you possess two very important items: a payment gateway and a merchant account.

Let’s look at how each of these things fits into the online payment process.

Payment Gateway

A payment gateway is an application that plugs into your ecommerce platform to authorize online payments. It’s useful to think of a payment gateway as the middleman between your bank and the customer’s credit card provider.

When a customer purchases something on your website, the payment gateway transfers their credit card information to your bank and communicates back to the customer if the transaction is approved or denied. Payment gateways exist because it is prohibited to send information directly from a website to a payment processor, per PCI compliance.

To get a payment gateway, you will have to fill out an application and provide financial information. There are a variety of payment gateway providers, most of whom will charge a per-transaction fee and a monthly fee. Once you get one, you will have to integrate it into your ecommerce platform, which can be a complex process.

If you’re in the market, here are a few good payment gateways for small business owners:

  • PayPal Payflow
  • Authorize.Net
  • Amazon Pay

Merchant Account

When we say the payment gateway connects to your bank, what we really mean is it connects to your merchant account. A merchant account is a special type of bank account that allows you to receive different types of payments, including credit and debit card payments. Once the merchant account receives the funds, it transfers them to your business bank account based on the payout schedule you’ve worked out with your account provider.

All business owners who want to accept credit card payments—online or otherwise—need a merchant account. Only ecommerce businesses need a payment gateway.

The process for acquiring a merchant account is similar to acquiring a payment gateway. You will need to submit an application and pay some fees—specifically an application and monthly service fee. Depending on the merchant services provider you use, you will also be charged per-transaction fees, interchanges fees, or a charge based on your business’s transaction volume (tiered pricing).

Also note that you can select a dedicated or aggregate merchant account. A dedicated account is an account only you have access to that gives you more control over your payments. An aggregated account means your account is grouped with various other merchant accounts to form a single account. This option is usually cheaper, but gives the merchant less autonomy.

Some good merchant account providers include:

  • Veem
  • Quickbooks Point of Sale

Some services will bundle a merchant account and payment gateway together. These are called payment services providers (PSP). PSPs don’t charge monthly fees, but may charge higher per-transaction fees. Some of the most popular PSPs include:

How Payment Gateways and Merchant Accounts Work Together

Let’s go step by step through how an online credit card transaction is processed:

  • The customer submits their credit card information: Once this happens, the ecommerce platform passes it along to the payment gateway via an encrypted connection.
  • The payment gateway passes this information along to the merchant account: More specifically, the payment gateway passes the credit card information to the merchant account bank’s payment processor. A payment processor is a company authorized to process credit and debit card transactions between buyers and sellers.
  • The payment processor contacts the customer’s credit card network (Visa, MasterCard): The card network routes the transaction to the bank that issued the credit card
  • The issuing bank approves or denies the request: The bank checks to ensure the funds are available and the transaction isn’t fraudulent. Based on the bank’s findings, it will either approve or decline the transaction. Either way, it will relay it’s decision back to the credit card network.
  • The sale is processed (or denied): If the transaction is approved, the credit card network will inform the payment processor of the merchant account, at which point the funds will be released into the merchant account. The information is also relayed back through the payment gateway to the ecommerce platform to inform the customer the sale has been processed (or, if there was an issue, denied).

Once again, all this happens within a matter of seconds.

Different Types of Online Payments

Offering multiple payment methods improves customer experience and can reduce the time it takes for you to get paid. Most of these will require a payment gateway that accepts the payment method. The internet supports a variety of payment methods, some of which we have already alluded to. Let’s take a look at each one:

Credit & Debit

Credit and debit cards are the most widely used method of online payment, and the preferred method of payment by millennials. This is partly because credit cards offer rewards for usage in the form of cash back and airline miles. All ecommerce business owners should accept major credit card providers, including Visa and MasterCard. To pay via credit or debit, a customer will have to key their card information into your website’s payment platform.

ACH Processing

An ACH transfer (Automated Clearing House transfer) is the transfer of money electronically from the customer’s bank account through the ACH network to the merchant’s bank account. ACH is a U.S. financial network for electronic payments and money transfer. ACH transfers don’t require a payment gateway to be processed (although you do need a merchant account).

Common uses of ACH transfers include:

  • Payment of service providers (cable, gas)
  • Payroll deposit
  • Tax refund

ACH processing fees are typically lower than credit card processing fees, and are charged either per-transaction or as a flat rate.

Mobile Payment

Mobile payments are transactions that take place digitally via a mobile device. To pay via mobile, you must have a mobile wallet application on your phone that stores your credit card details. Popular mobile wallets include Google Wallet, Apple Pay, and Venmo. To accept these payments online, you will need a payment gateway that supports mobile wallets. Note that some mobile payments, like Venmo, can be processed as ACH transfers.

Email Invoice

With email invoicing, you can send customers bills with a link to your payment platform, allowing them to complete payment in a matter of clicks. Email invoicing can also be automated on your ecommerce platform for hassle free payment collection. This type of collection is particularly useful for recurring billing.

accept payments online

Which Online Payment System Is Right for Your Small Business?

If you’re ready to start collecting online payments, or if you are interested in upgrading how you collect payments online, consider the following when making your selection: How many transactions do I have each month? What are my customers’ preferred payment method? How do I want to integrate my payment gateway (API, hosted)? Do I want to accept overseas payments? Are many of my payments recurring?

Once you know the answers to these questions you should have a good idea of which online payment system is right for you. Ultimately, you want to do what is best for your customers, because a great user experience keeps them coming back to your site again and again.

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Tuesday, November 20, 2018

How to Price a Product or Service

Every entrepreneur faces the complex question of how to price their product or service, and it’s a decision that can make or break your business. Unfortunately, there’s no set formula for this calculation, and experts hold vastly different opinions on the matter. You might have heard the popular maxim that pricing is more art than science, and our research bears out this principle. Not to worry—we’ll walk you through each factor to consider as you determine price so you can settle on the model that’s right for your enterprise.

Compute Your Costs

The first step in deciding how to price your product is to establish how much it costs to make your goods or provide your service. After all, your goal is to turn a profit—which is impossible if your expenditures aren’t covered. Expenses fall into three categories: materials, labor, and overhead. Add these together, and you’ll arrive at an accurate figure for your total cost of output.


Materials constitute the raw components of production. For example, if you make clothing, your materials might include cloth, buttons, and thread. If you provide a service, you might still have material costs, depending on the industry. A janitorial business, for instance, requires items like mops, buckets, and other cleaning supplies. If you resell commodities produced by another entity, your materials are the items you acquire from the initial seller, plus anything required for repackaging.

The fiscal outlay in the above illustrations may seem obvious, but calculating the cost of materials is not always straightforward. If you run a tech company, consider the value of your computers and servers. Such devices might fall under materials if they comprise part of your actual product—i.e. your business sells technical components. On the other hand, if your computers are merely tools to enhance a service, they are overhead, which we’ll discuss below.


Labor measures all physical and mental manpower necessary to create your product or service. Whether it’s a worker on the factory floor or the receptionist in your office, if you hire someone who adds value to your business, that person becomes part of your labor calculation.

Don’t forget that salary isn’t the only cost associated with labor. You may need to pay for benefits like insurance and retirement plans, as well as payroll taxes for social security and Medicare. Be sure to include all these expenses in your computations.

Remember also to account for the time that you invest into your business as an entrepreneur. Many business owners underestimate the value of their time and undercharge for their services. One way to avoid this error is to document each step in the processes you complete daily for your enterprise. Then step back and examine the amount of knowledge required and energy expended on each task. You may be surprised by the extent of your contributions and your expertise, and you can be less partial as you price your own work.

Finally, if you’d like some objective data, consult the U.S. Bureau of Labor Statistics to compare the average price of labor by industry and by geographical area. This tool might provide some perspective as to whether your costs are in line with similar businesses.

how to price a product


Overhead is a catchall term for all expenses that aren’t covered under materials or labor. These expenditures can either be fixed or variable.

Fixed Overhead

These are the costs that one must pay every month—no matter whether your company is in the red or in the black—and the amount remains relatively constant each month. Fixed overhead includes rent, insurance, salaries, depreciation on equipment previously purchased, payroll costs, some taxes (others are variable based on revenue, etc.), and utilities.

Variable Overhead

These expenses vary month to month, and depend on factors like seasonal change and fluctuations in profit. Such costs include marketing, shipping, office supplies, and travel. This category also encompasses what are typically one-time expenditures necessary for starting up, such as security deposits, equipment purchases, and fees for state and local licenses. To calculate variable expenses for the purpose of pricing, use an average monthly figure based on an estimate of the annual total.

If you’d like some guidance to compute your total costs, use this worksheet from the Small Business Administration.

Determine Your Desired Profit

You can calculate your desired profit as the dollar amount above costs that you wish to make per unit or per customer, or perhaps as the percentage of revenue that’s actually profit once you deduct all your expenses—a figure also known as the profit margin. Your profit goal might be somewhat arbitrary, although you can look to professional associations in your industry for guidance. Many of these organizations publish free or low-cost anonymized financial information.

If you’re unable to find such information, you can purchase an annual statement study from Risk Management Associates. RMA is a nonprofit organization comprised of the major lenders around the world that uses data collected by these institutions from small and medium-sized businesses to create annual reports on the financial health of many industries. If RMA covers your industry (and with 2,330 choices, the likelihood is high), you can measure how your current or desired profit margin compares with others in your field.

how to price a product

Know Your Customer

To determine how to price a product, it’s important to know your target market and to understand what motivates them. You can pay a research firm to gather such data, or you can collect a lot of it yourself—through your personal and social media networks.

An informal survey conducted in person among contacts and colleagues or given online can unearth a goldmine of information, if you ask the right questions. Should you have access to a relevant email list or have an existing customer base to consult about a new product—or if you simply want to sample all your friends—SurveyMonkey and Google Surveys are simple and inexpensive ways to compile and aggregate statistics via the web.

Here are some topics to cover and questions to ask that should help you to better understand your customer and to determine what they might pay for your goods or service:

  1. Demographics: What is their gender, age, general location, and income level?
  2. Competitive intelligence: What are their favorite products or services that are similar to yours? List some options for them to select.
  3. Budget consciousness: How important is the price of an item when they make a purchase? Allow them to rank this preference from 1-10.
  4. Motivation: When they make a purchase, which do they prioritize—price or convenience? How about some of the other unique features of your merchandise or service? Pit various options against each other to see what matters most to your consumer.
  5. Status: When selecting among products, how important is the brand name of the item? Again, provide the ability to rank this priority from 1-10.
  6. Psychological susceptibility: Are they more likely to buy a product that is priced at $9.89 than one priced at an even $10?

These answers should help you decide whether your client base focuses primarily on cost, comfort, feature set, or luxury. If their priority is cost, bundling products or services or tiered pricing may appeal to their frugality. If comfort is of utmost concern, you can charge more and emphasize the amenities that set you apart from the competition.

Should your customer prefer a robust set of features, subscription-based pricing might work well—as it allows for a constantly evolving and ever-changing product. And if your customer is all about prestige, avoid pricing your product too low; such individuals associate the cost of an item with its quality.

Research Your Competition

Now that you understand the priorities of your customer, it should be easier to differentiate your direct competition from other potential competitors. Who offers a product or service similar enough to yours that your customer likely faces a choice between you and them? What do they charge?

You can unearth a wealth of competitive data online, and not just on a company’s website. Use Google Alerts to stay abreast of the latest news on any business, product, or industry. Google Trends reveals the popularity of all search terms—like the name of a possible competitor—and the locations from which that query is most often entered. This tool also displays related search terms and the respective popularity of each one. With this knowledge, you can further hone your list of direct competitors.

Follow the social media accounts of your future rivals. You’ll learn about their target demographic, their marketing strategies, and whether they’ve found a niche. Do they have a large online audience? If so, pay close attention to their tactics—especially when they involve price. Watch what type of promotions they offer and when, and consider whether you can match or exceed such discounts.

If your internet efforts don’t yield the results you need, play detective the old-fashioned way. Call or visit possible competitors. You can also ask your current or potential future customers about the competition, as we discussed above.

how to price a product

Common Pricing Models

We’ll now explore some of the prevailing and most successful models that businesses use to set price. Remember, though, that a model is just that: a framework to help guide the decision-making process, not a definitive blueprint. Given the numerous variables involved, it’s unwise to adhere exclusively to one methodology to determine price.

Cost-Plus Pricing

This is the textbook model of how to price a product that we referred to above: calculate your costs, add your desired level of profit, and voila—you have your price. Some sellers determine how to price a product simply by doubling their costs, which is a simplified version of cost-plus pricing. Although this methodology is common, as we’ve seen, it fails to account for factors like customer preference, brand image, and competition. It also ignores the laws of supply and demand.

Even if you adopt this model, cost-plus pricing might not be a realistic option out of the gate, it might be impossible to cover all your costs right away, especially if you’ve just started out and have accrued significant one-time expenses.

Finally, if you use this approach, be certain to include all your costs in these calculations. If you overlook hidden costs like inventory markdowns or holiday pay, you may undercharge your customers and neglect to produce the profit you require to stay afloat.

Market Share Pricing

The goal of many pricing models is to maximize profit. However, it might be just as (if not more) important to maximize market share—which measures the percentage of an industry that your business controls—particularly if you’re new to that market. To gain market share means that you gain customers, which should eventually produce a net increase in revenue, even if you must first lower prices to grow that market share. (Think volume over price.)

A boost in market share may also result in what is called a network effect, where the value of your product rises as more people use it, which might allow for a price hike down the road. The Windows operating system created by Microsoft is an excellent example of the network effect. As Windows became an industry standard, more developers created applications that ran on Windows, which increased its inherent value to the consumer and thus customers tolerated a surge in price.

If you have a low market share in a fast-growing industry, the goal should be to increase market share or to penetrate the market, as they say. Consider a lower price than your competitors to encourage customers to try your product or service, and perhaps to switch for good. You can raise your price slowly once you establish brand loyalty with your new client base, although that might not always occur. A consumer who changed companies once because of price is more likely to do so again, so this strategy might only take you so far.

Dynamic Pricing

Dynamic pricing is also called demand pricing, which means that the cost of a product or service varies based on when and where it’s offered or sold, and to what extend the demand for the item is on the rise.

For instance, you might find your favorite fashion at various prices, depending on where it’s sold. The apparel industry consists of retailers, discount chains, wholesalers, ecommerce sites, and more. Each of these vendors will pay a different price for the same item, and will likely pass that cost on to the customer.

If the style you seek is not in vogue, i.e. demand is low, the production house may hawk the clothing to a wholesaler, who buys inventory in larger quantities and for less than a retailer. The wholesaler may then unload that inventory to a discount chain or an ecommerce site, where the customer can acquire the piece at a reduced price. Conversely, if the item is on trend and sells quickly, you’ll need to pay full-price at a primary retailer to obtain the same style.

Surge pricing is a type of dynamic pricing most commonly observed with rideshare services like Uber and Lyft. When demand rises during inclement weather or during rush hour, for example, the price of a ride increases significantly.

A dynamic pricing model requires you to keep tabs on the demands for your time and the popularity of your product, and to raise prices commensurately. If you operate a service, try scheduling or project management software to determine how many clients you’re juggling and how much work each one expects. If the sum total is more than one individual can handle effectively, you might hike your prices to weed out customers or to cover the costs of outsourcing some responsibilities.

Competitive Pricing

In some markets where it’s difficult to distinguish between products, like in the airline industry, businesses use a competitive pricing model. There’s often a market leader who sets the standard, and competitors follow suit. If one company raises or lowers prices, other companies feel compelled to follow.

In a competitive pricing model, if you wish to charge more than your rivals, you must convince the consumer that you provide a superior product or service. This brings us to the principle behind the final model we’ll explore.

Value-Added Pricing

As discussed above, if your target market is not budget conscious, they might accept a higher price when they perceive added value in your product or service. Here are some potential ways to boost customer benefit and to justify a price hike:

  1. Facilitate convenience: Some consumers would rather pay more than go out of their way to find what they need or wait a long time to receive it. Thus, a neighborhood corner store can charge more for the same item than a supermarket can, or an ecommerce retailer can add a surcharge on top of the actual cost incurred for expedited shipping.
  2. Brand your product: It’s worth going the extra mile to ensure that your brand becomes well-known in its industry, as many individuals will shell out more money for a name that they know and feel like they can trust.
  3. Set a trend: Certain customers are early adopters, and are the first to own the latest gizmo or the hottest fashion. If your product might fall into this category, market accordingly and consider partnerships with influencers that speak to your target demographic.
  4. Create scarcity: Ticket resellers use this technique when they purchase a large number of seats to a highly anticipated event and drive up the prices for that show. This approach can backfire, however, if consumers grow frustrated with the steep markups that ensue.
  5. Find a niche: If you’re one of the only suppliers of a product or service, you have carte blanche to set high prices.
  6. Provide unparalleled customer service: Many clients will spring for a smooth and efficient online shopping experience, for instance, or for the assurance that they can return a product any time, no questions asked.

how to price a product

Monitor Your Prices

It’s unlikely that you’ll set prices only once. Watch for changes in the market, and keep an eye on your competition. Track your costs to ensure they don’t rise astronomically without your knowledge, and mind your revenue as well. Note whether the public perception of your product changes for any reason, either positive or negative. Any of these issues might signal a need to reevaluate price.

The Final Word on How to Price a Product

A final note on pricing from Norm Brodsky, senior contributing editor for

“The truth is, most people tend to charge too little when they first go into business. It’s not always clear, after all, what customers are willing to pay or how much they value what they’re getting. So there’s uncertainty, and there’s also fear. First-time entrepreneurs usually feel as though they need every customer that they can get just to survive. They’re afraid that if they ask too much, they might lose a customer’s business. Or they worry about setting their rates so high that they’ll price themselves out of the market, even if a particular customer does go along with the price they’re asking for. As a result, new business owners tend to undervalue whatever they’re providing. By that I mean they charge less than their customers would willingly pay.

Carefully weigh all the factors we’ve laid out here, but when all is said and done, err on the side of higher prices. It’s easier to lower prices than to raise them, and the market will provide a quick correction if you overshoot the mark. Whether you’re brand-new to business or a seasoned veteran, your effort and your ingenuity are probably worth more than you realize. Set your prices accordingly.

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Best Native American Business Loans in 2019

Capital City Bank Business Credit Cards Reviewed, Plus Top Alternatives

Wondering if a Capital City Bank business credit card is right for you? Let us walk you through the bank’s four business credit cards, plus the top alternatives to each card. Capital City Bank may not be a household name, but their business credit cards offer competitive features and perks. Even if you have a business bank account elsewhere, you might want to take a look at the Capital City Bank business credit cards.

The bank’s four business credit cards include three rewards credit cards and one credit card with more basic features but with a longer introductory interest rate that could be appealing if you think you’ll need a little more flexibility in your first several months as a cardholder.

To help you evaluate each of the four Capital City Bank business credit cards, we’ll walk you through alternative cards with comparable features. That way, you’ll know what else is on the market when it comes time to make your decision.

Capital City Visa® Business Real Rewards Card

First up on our review of the Capital City Bank business credit cards is the Visa® Business Real Rewards Card. With this card, you’ll earn 1.5 points for every dollar you spend on qualified purchases. There are no caps or limits on the points you can earn, and the bank compares this rewards rate to getting 1.5% cash back.

After you make your first purchase as a cardholder, you’ll get a signup bonus of 2,500 points. The card lets you separate business expenses, manage cash flow, and track spending, all of which should help you keep your business running smoothly.

The Visa® Business Real Rewards Card doesn’t come with an annual fee. And the good news doesn’t stop there. As a cardholder, you’ll also have an introductory 0% APR on purchases and balance transfers for the first six billing cycles. After the introductory APR period ends, you’ll pay a variable APR that will depend on your creditworthiness and the market prime rate. Check the issuer’s terms and conditions for the latest APR information.

Top Alternative to Visa® Business Real Rewards Card: Chase Ink Business Unlimited

An alternative to the Visa® Business Real Rewards Card from Capital City Bank is the Chase Ink Business Unlimited. The Chase Ink Business Unlimited card will give you 1.5% cash back on every purchase, with no monthly or annual limit. Both cards come with a rewards rate of 1.5%, though the Capital City Bank card handles rewards in points rather than cash back. There’s also no annual fee with the Chase Ink Business Unlimited.

Like the Visa® Business Real Rewards Card, the Chase Ink Business Unlimited comes with a signup bonus. In the case of the Chase card, it’s a bonus of $500 if you spend $3,000 in your first three months as a cardholder.

Also like the Visa® Business Real Rewards Card, the Chase Ink Business Unlimited comes with a 0% introductory APR offer, but the offer on the Chase card lasts 12 months, compared to the six-month offer on the Visa® Business Real Rewards Card from Capital City Bank. Of course, with both offers, once the introductory period ends you’ll pay a variable interest rate that will depend on your creditworthiness and the market prime rate. If you need a longer introductory APR, you might be better off with the Chase Ink Business Unlimited card than with the Visa® Business Real Rewards Card.

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Capital City Visa® Business Cash Card

The second Capital City Bank business credit card in our roundup is the Visa® Business Cash Card. This card gives you 3% cash back on eligible purchases from business-friendly categories including office supply stores, and phone, internet, and cable TV services. Plus, you’ll earn 2% cash back on eligible restaurant and gas purchases, as well as 1% cash back on all other eligible net purchases.

The signup bonus on the Visa® Business Cash Card won’t knock your socks off, however. With the Visa® Business Cash Card, you’ll earn a signup bonus of $25 after your first purchase. If you’re looking for a bigger signup bonus, you’re better off opting for an alternative card.

Like the Visa® Business Real Rewards Card, the Visa® Business Cash Card has no annual fee and gives you an introductory 0% APR on purchases and balance transfers for your first six billing cycles. After that, your interest rate will be a variable rate that will depend on your creditworthiness and the market prime rate.

Top Alternative to Visa® Business Cash Card: Chase Ink Business Cash

We know these credit card names can get confusing—bear with us. If you’re intrigued by the Capital City Visa® Business Cash Card but you want to evaluate an alternative, we suggest you take a look at the Chase Ink Business Cash. The Chase Ink Business Cash will give you a higher signup bonus—$500 if you spend $3,000 in your first three months as a cardholder.

Plus, the introductory 0% APR period on the Chase Ink Business Cash card lasts twice as long—12 months compared to the six months you’ll get with the Visa® Business Cash Card. Of course, once that introductory period ends you’ll pay a variable interest rate that will depend on your creditworthiness and the market prime rate. Remember to check the issuer’s terms and conditions for the latest APR info.

The rewards categories on the Chase Ink Business Cash card work a little differently. You’ll earn 5% cash back on the first $25,000 you spend annually at office supply stores or on phone, internet, or cable TV services. You’ll earn 2% cash back on the first $25,000 you spend annually at gas stations and restaurants. Finally, you’ll earn 1% cash back on all other purchases. As you can see, the rewards rate and signup bonus are higher with the Chase Ink Business Cash card.

Lastly, this Chase business credit card has no annual fee.

Capital City Visa® Business Card

The third Capital City Bank business credit card we’ll discuss in this review is the Visa® Business Card. This is the most bare-bones of the business credit card offerings from Capital City Bank in terms of rewards (there are none), but it offers a whopping 15 billing cycles interest-free on purchases and balance transfers.

That 15-month 0% APR period could be great if you’re transferring balances from other cards and you need some time to pay them down, or if you have a lot of purchases to make but you’re unsure what your cash flow situation will be for the next year or so. At the end of the 15-month introductory period, your interest rate will jump to a variable rate that will depend on your creditworthiness and the market prime rate, though, so be sure to get your balances all paid down before that happens.

There’s no annual fee for the Capital City Visa® Business Card.

Top Alternative to Visa® Business Card: Blue Business Plus Card From American Express

The AMEX Blue Business Plus card is another card that offers a generous 15 months at 0% APR on purchases and balance transfers. All you have to do for those 15 months is make at least the minimum payment on time. Once you do that, any balances you carry from month to month won’t accrue interest. Still, it’s best to put yourself on a schedule so that your balance will be paid down by the time the 15 months are up. Once that happens, your interest rate will be a variable rate determined by a combination of your creditworthiness and the market prime rate.

Just like the Capital City Visa® Business Card, the AMEX Blue Business Plus card doesn’t have an annual fee. Unlike the Visa® Business Card, the AMEX Blue Business Plus card offers rewards on your spending.

With the AMEX Blue Business Plus card you’ll earn 2x points for every dollar you spend annually up to $50,000. After that, you’ll earn one point per dollar spent. If you want a card that combines a generous introductory APR period with some rewards, the AMEX Blue Business Plus is a solid option. If you’re looking for a generous signup bonus, however, you’re better off looking elsewhere—the AMEX Blue Business Plus doesn’t offer one.

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Capital City Visa® Business Rewards PLUS Card

The fourth and final business credit card from Capital City Bank is the Visa® Business Rewards PLUS card. With this card, you’ll earn 3x points for every dollar you spend in the category you spend most on: cellular phone services, hotels, or airline purchases. You’ll also earn 1.5x points for every dollar you spend on all other purchases.

Looking for a signup bonus? You’re in luck. The Visa® Business Rewards PLUS card comes with 20,000 bonus rewards points when you spend $2,000 in your first three months as a cardholder. Those 20,000 points are redeemable for $200 in cash back, merchandise, gift cards, or travel savings.

With the Visa® Business Rewards PLUS card, the first year you have the card is free. After that, an annual fee of $99 kicks in. There is no introductory 0% APR offer.

Top Alternative to Visa® Business Rewards PLUS Card: Chase Ink Business Preferred

A comparable card to the Visa® Business Rewards PLUS card is the Chase Ink Business Preferred. With the Chase Ink Business Preferred card, you’ll pay an annual fee of $95, with no free deal your first year.

However, the rewards on the Chase card are generous. The card comes with a welcome offer of 80,000 points if you spend $5,000 in your first three months with the card. With a 25% redemption bonus on that welcome offer, your signup bonus will be worth up to $1,000 of free travel when you redeem through Chase Ultimate Rewards.

How do the rewards on the Chase Ink Business Preferred compare to the rewards on the Visa® Business Rewards PLUS card? With the Chase card, you’ll earn 3x points for every dollar you spend on travel, shipping, advertising purchases made through search and social sites, as well as phone, internet, and cable TV services. That 3x rewards rate applies to your first $150,000 of eligible spending in a year. For all other purchases, you’ll earn one point per dollar spent.

Again, like the Visa® Business Rewards PLUS card, there’s no 0% intro APR with the Chase Ink Business Preferred card.

Which Capital City Bank Business Credit Card Is Right for You?

Ready to make a decision about a business credit card? The card you choose will depend on the weight you give to various card features, including the rewards rate, the length of the 0% APR period, the signup bonus, and the annual fee. If you want the longest possible 0% APR offer, the Capital City Visa® Business Card is the winner. If you’re looking for the highest signup bonus, the Visa® Business Rewards PLUS card has you covered.

As always, it’s important to consider your budget and spending habits when you’re choosing a credit card, and to consider alternative cards that offer comparable perks.

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