One of the Rosenberg children needed braces. The Rosenbergs got recommendations for a good local orthodontist. “The regular price for comprehensive treatment is $6,000 for braces, $500 a month for a year,” explained the orthodontist. “There is a $600 discount (10 percent) if paid up front entirely at the first session.”
“I’ll let you know,” said Mrs. Rosenberg.
Another child needed therapy for a few months.
“The regular price is $150 per session,” said the therapist. “However, if you pay up front, I offer a 13-session package, which is three months of weekly sessions, for $1,800. Financially, this represents a $150 (7.5 percent) discount, or a free session.”
“Let me consider this,” Mrs. Rosenberg said.
That evening, Mrs. Rosenberg discussed the issue with her husband. “Both the orthodontist and the therapist offered a discount rate for upfront payment,” Mrs. Rosenberg said. “What do you think?”
“I’m always in favor of receiving discounts,” replied Mr. Rosenberg. “We have money available to cover the upfront payment. I have to check something, though.”
“What’s the issue?” asked Mrs. Rosenberg.
“I recently heard a shiur about the laws of ribbis,” replied Mr. Rosenberg. “I remember that there was an issue with prepayment discounts or ‘early bird’ specials, but I don’t remember the details.”
“You told me that for purchases with two-tier pricing, the upfront price is preferable, and the installment method can be problematic,” said Mrs. Rosenberg. “That’s I why I usually pay up front and not in installments.”
“I think, though, that there may be a distinction between purchases, like you said, and prepayment for services,” said Mr. Rosenberg. “I remember that sometimes prepayment or an early bird discount can be problematic, but am not sure in what cases.”
“I never realized there was an issue with this,” replied Mrs. Rosenberg. “Many professionals offer a discount for payment up front. Could you find out? I have to let the orthodontist and therapist know.”
Mr. Rosenberg consulted with Rabbi Dayan. “Some professionals offered us a discount if we pay up front,” he said.
“Is there any issue of ribbis involved?”
“The Gemara (B.B. 86b-87a) teaches that it is prohibited to advance payment to a worker before he even begins working, to receive a discount or secure a low rate,” replied Rabbi Dayan. “This is because the advance payment seems like a loan to the worker, who later provides services worth more than the money received, which looks like ribbis.
“However, if the worker begins working now and continues at the lower price, it is permitted. In this case, the prepayment does not seem like a loan with ribbis, but rather payment of lower wages for the work he is now beginning and will continue” (Y.D. 176:8; Bris Yehuda 26:4).
“Many authorities, though, require that the worker work consistently, as defined by the common custom. They maintain that an atypical interruption would render the work performed after the break as a new employment with a discounted prepayment. Other disagree. Even so, it seems that weekly sessions could be considered as continuous if common in that field, such as therapy” (The Laws of Ribbis, 10:23; Chelkas Yaakov, Y.D. 79-80; Bris Yehuda 26:3-4:).
“Furthermore, some authorities allow the prepayment discount even before beginning treatment, if there is a binding commitment, as through a signed contract, kinyan sudar, etc. This is certainly true regarding a contractor, who is paid a flat fee for the job, and does not work by the day or hour, who cannot retract from his commitment” (The Laws of Ribbis 10:21-28; Toras Ribbis 14:16; Shach, C.M. 333:14).
“Regarding an orthodontist, the issue is simpler,” concluded Rabbi Dayan, “He generally charges a certain amount for the entire course of treatment. Since the payment is not for each visit but for comprehensive service, it is considered as continuous employment” (The Laws of Ribbis, 10:23).
Verdict: In many situations a worker can provide a two-tier system, in which he provides a discount for upfront payment, provided that he has begun working, or at least has a binding contract.