When you’re first starting out in business, you are so focused on getting clients you often don’t stop to think about secondary sales processes like refunds and payment plans. Today I want to talk about them a little more.
Should you offer a refund?
First up, refunds. This is something you must check with a lawyer in your jurisdiction, because the law varies on this. As far as I understand, there is no requirement for refunds in the US, but there is in Canada and in the UK, where my business is based.
Refunding depends a lot on the service that you’re offering. I don’t think it’s fair to have to refund money for live services when your time has already been used. You don’t get a refund from a doctor if you only see him once! However, you may want to offer a get out clause, e.g. with 30 days notice.
The Risks of Refunds
It’s common for digital products to come with money back guarantees for a specific number of days. I offer a 30 day full refund with Become Your Own Boss if you don’t like it. I know it’s an amazing programme and will be really helpful to the people who take it, so the number of refund requests is really low.
It puts quite a risk on my own cashflow to offer a refund because if everyone asked for a refund, I’d not be able to pay my bills for the month. Yes, people could abuse the system but in reality, the overwhelming majority of people are honest and they aren’t going to mess you around, especially my community!
After refunds come payment plans. Now obviously offering payment plans allows people to access your services who maybe don’t have thousands on a card or stashed in savings. About half of my clients pay monthly. Most of the time this works really well, but there’s always the odd card that expires or person that goes AWOL, so you need some extra admin time to handle that. That’s why payment plans are usually 20% more expensive than paying in full.
Whether you offer a payment plan is really up to you and how you need your cashflow to work. If you want to do a huge brand overhaul, or if you want to get married, you might need more cash in the bank. But if you prefer the stability of having 10 payments coming through every month for 6 months, that’s also nice because it allows you to plan your cashflow a little more.
Structuring a payment plan
One thing I do recommend though to all my clients is to always insist on payment upfront - even on payment plans. So if you offer 3 months of services, get month 1’s payment before month 1 begins, the second payment before month 2 begins, etc. That way you aren’t chasing people to pay for services you have already given.
Having this all written out in your contracts gets it all out in the open and keeps disagreements to a minimum if anything does go wrong down the line.
What are your thoughts on refunds and payment plans? Leave a comment and let me know!
Want more info? Join my free training webinar: How to Start Your Online Business and Escape Your Job in 6 Months WITHOUT Having to Quit Your Job First - Even if You Don’t Have Time, Tech Skills or a Business Idea.
Reserve your seat by clicking the image below. See you there! :)