Based on the above, which seems quite plausible:
I'm going to put my lender hat on now....
The salespeople at BIG are more or less selling FCC Lines Of Credit to enable the customer an interest fee loan schedule for the video payments.
However, BIG are having to pay 24% "commission" or $2400 on every $12,000, not the actual package amount.
Dont be silly you say, but please hear me out!
If the customer agrees to the $12,000 LOC, this is in BIGS benefit as it pays themselves upfront to do work and pay expenses, before the LOC is even approved.
If the clients says I don't want the LOC option to the BIG salesperson, then they either have to pay upfront say $4000 for the platinum pack, or monthly (but non financed).
If they (customer) accept the BIG'S proposal to not only get a video with "no cost" upfront, but also propose to apply for the LOC for $12,000 that will cost customer $1000 month (if and when fully drawn I presume) meaning FC wont charge interest for the first 12 months which is the 12 x $1000 payments.
If that is the case, then it could well be that BIG are paying out $2400 in interest/fees no matter the value of the package?
There is no way FCC will do this for 24% of the package amount only, and they won't offer "interest free" for the entire $12,000 LOC?
Ok .....rebuttal, so BIG could say the video portion is interest free, not the extra LOC, hence its a LOC, which carries interest which is between FCC and customer.
I would agree with this, however, it's certainly not worded that way when it states the $1000 month x 12 months.
This makes assumption to me that BIG is paying the interest on the full $12,000 on behalf of the client for getting access to the funds upfront to do the work (it's part of the agreement).
So this means in turn, there is minimal to no profit on these smaller packages if financed via FCC, in fact I'd argue a lot are done at a loss.
That may well be the case, their end goal is to make money on pillar 2 and 3.
Thoughts?
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