Welcome back to another WWYD Wednesday! Grab your coffee and settle in. Today, we’re heading to the local neighborhood favorite, “El Corazón,” a high-volume Mexican restaurant that is currently feeling the squeeze of a “locked-in” ecosystem.
The Scenario: The $8,500 Exit Fee
You’ve been talking to Miguel, the owner of El Corazón, for months. He loves his staff and his food, but he hates his current setup with Skytab. He’s tired of the lack of support, and he just realized that between the processing and software fees, he’s overpaying by nearly $1,500 a month.
Miguel is ready to switch to your system today. He wants your local support and your transparent pricing and is interested in dual pricing.
The Twist: Miguel calls Shift4 to cancel, and the news is brutal. Because he signed a long-term agreement to get the “free” hardware, his liquidated damages for early termination are calculated based on his remaining months of expected profit. The total buyout to leave: $8,500.
Miguel looks at you and says: “I want to move, but I don’t have $8,500 sitting around to pay these guys just to leave. I’m stuck, aren’t I?”
The Audit: The Math of the Escape
You run the numbers. By switching Miguel to your Dual Pricing model, you can eliminate his processing fees entirely.
- Current Cost: $1,500/month (Processing + Fees)
- New Cost: $0 (Processing passed to the consumer)
- Monthly Savings: $1,500 +
The Dilemma
Miguel is terrified of the $8,500 bill, but he’s losing $1,500 every single month he stays. In less than 6 months, the savings from your system would pay off the entire cancellation fee. But Miguel is “contract-scarred” and doesn’t want to take the risk.
So, What Would You Do?
Option A: The “ROI” Reality Check
You lay it out straight for Miguel. “Miguel, you aren’t saving $8,500 by staying; you’re losing $1,500 every 30 days. In six months, you’ll have paid Shift4 $9,000 in fees anyway. I’ll help you pay the $8,500 fine over a few months using the savings we generate. It’s a short-term sting for a long-term fortune.”
Option B: The “Skin in the Game” Partnership
You believe in this deal so much that you offer to split the fee. You pay $4,250 of the $8,500 buyout out of your your own pocket, and Miguel covers the other half. You tell him, “If I’m willing to bet $4,000 on your business, you know this math is real.”
- Note: Not a fan of this plan but with a restaurant this size, your residuals will likely recover that $4k in 8-10 months.
Option C: The “Parallel Run” Strategy
You tell Miguel to keep the Skytab gear plugged in but only for the handhelds or a secondary station to avoid the “non-use” penalty. Meanwhile, you install your POS as the primary system. You move 90% of the volume to your Dual Pricing model, generating the cash Miguel needs to save up the $8,500 over the next few months so he can cancel “clean” later without a hit to his cash flow.
The Big Question
When a merchant is staring down a nearly $9,000 “exit fee,” do you push them to take the hit for the sake of the long-term ROI, or do you find a way to soften the blow—even if it costs you your own pockets?
How would you rescue Miguel from the Skytab Standoff? Cast your vote (A, B, or C) Let me know.
Happy Selling,
David
