When I got custody of my thirteen year old son, his stepmother and I came up with an elaborate way of getting him back on track, and this included withholding and granting of privileges for grades. It worked, we got this kid from having to have gone to summer school to pass from the 7th to the 8th grade at his mother's home, to being accepted to both state universities by the time we were done with him.
But I believe that such payment-deprivation plans should be carried out only by the parents of the kids. Any money that somebody thinks they want to spend on this should be diverted towards making parents more engaged with their kids' school work.