A great refund policy helps protect you and your customers. A simple one-liner can work for some folks, but depending on your business type, you may need something more thorough.
This guide will help walk you through how to create a strong refund/cancellation policy, inclusive of most business types.
Step 1 - Think Of What Your Business Stands For
It’s important to build a policy that works for your business. Maybe that means you want to include a 100% satisfaction guarantee; or maybe you take a 50% deposit up front and the remainder paid upon completion of the project because you incur expenses regardless of completion.
What is realistic for you and your business? How would you feel as a customer purchasing something with the policy you’re thinking of?
Step 2 - Build Your Policy
Expand each section that applies to you. You’ll find questions that you’ll want to answer for yourself so that you can build them into your refund policy, and examples of how to do this.
If you sell a product
- How long does your customer have to return the product?
- Can they only return it if it’s damaged or not as described, or can they return it if it didn't meet their expectations?
- Does the product have to be returned in the original packaging? What if the packaging is slightly damaged?
- Who pays for returns? The more shipping fees you (the seller) absorb and pay for, the happier your customer will be. Whatever you decide, make it clear who pays for what.
- If you send the customer the wrong order, will you re-send the right one express? Will you pay for the extra shipping costs?
- Can a buyer exchange a purchase for the same thing in a different colour or size? If there’s a price difference between variants, how will you handle that?
- Does your customer receive store credit for a future purchase, or do they get their money back?
Example: Simple Product Return Policy
We’re sorry you’re not in love with your purchase. Please send an email to firstname.lastname@example.org with your order number within 30 days of receiving your product, we’ll take care of the rest.
Example: Refund Policy With Expiry
Thanks for purchasing our products. We offer a full money-back guarantee for all purchases. If you are not satisfied with the product that you have purchased from us, you can get your money back no questions asked. You are eligible for a full reimbursement within 14 calendar days of your purchase.
After the 14-day period, you will no longer be eligible and won't be able to receive a refund. We encourage our customers to try the product in the first two weeks after their purchase to ensure it fits your needs. If you have any additional questions or would like to request a refund, feel free to contact us at email@example.com.
If you run an events/travel business
- Is there a deposit? Is that refundable?
- Up until when are refunds accepted?
- Should the expected refund change as time passes? For example, 50% prior to 30 days, then 20% prior to 60 days.
- Is there a specific communication method that customers must use for cancellations? (e.g. online, via phone, email only).
- How will you handle reservations when you only have limited spots?
Example: Credit for Cancellation
We request that you cancel with a minimum of 48 hours before a scheduled class. This gives us the opportunity to fill the class. You may cancel by phone or online here. If you have to cancel your class, we offer you a credit to your account if you cancel before the 48 hours, but do not offer refunds. You may use these credits towards any future class. However, if you do not cancel prior to the 48 hours, you will lose the payment for the class.
Example: Tiered Refunds for Cancellation
Cancellations made 7 days or more in advance of the event date, will receive a 100% refund. Cancellations made within 3 - 6 days will incur a 20% fee. Cancellations made within 48 hours to the event will incur a 30% fee.
If you run a consultation/labor business
- Consider any non-refundable expenses incurred. For example, it costs money for an accountant to file your taxes, even if you aren’t satisfied with how they did it.
- Are there any warranties involved? A plumber installing a water tank is a good example of this, since there are often warranties on products involved.
- Do you offer guarantees on your labor? For example: If this pipe leaks within 30 days, you will come back and fix it.
Example: Labor and Materials
Design: Deposits are non-refundable and will serve as equal to the minimum amount to be billed for required design time.
Installation: Installation deposits are non-refundable within sixty days (60) prior to start of installation.
Maintenance: Maintenance contracts must be canceled within thirty days (30) prior to cancellation of billing as contracts are monthly and renew with each monthly payment.
Some goods are exempt from being returned, including materials and items purchased prior to written cancellation, items delivered prior to written cancellation, as well as special or custom orders.
Example: Professional Services
Tax returns and other projects are billed based on the amount of work required. For example, if it requires our firm to complete more tax research or to accumulate or compile your records, there may be an additional charge to our standard tax preparation rates. Our liability for any errors or omissions will be limited to a full refund of the fees paid and will not include liability for any consequential damages. Any claim for damages will expire within two years of when the invoice is mailed. Our liability is also limited to you; any recommendations provided to you may not be used or relied upon by any other parties.
Example: Deposits on Labor
A full refund will be issued if a payment is made by the customer toward any job for which we do not actually perform any work or incur any costs.
Job deposits are non-refundable and are considered fully earned, as they are intended to cover the administrative costs for receiving the job call, reviewing the job, doing any research, procurement of materials, and providing any estimate.
If partial work is performed or we incur any costs related to a specific job we will evaluate our costs as it relates to that same specific job and we will seek to reach an agreement with the customer for a refund, whether it is a partial refund or a full refund.
In cases where the work on a specific job is performed to completion, there will be no refunds issued. If there are any problems with the work we performed we will take necessary action to correct the problems in a timely manner.
If your products or services are non-refundable
- After what period of time are refunds disallowed? Is it tiered?
- Are there copyrights involved? Music, custom art, anything software-based, perishables, subscription services usually have copyrights or are non-refundable.
- Would you do an exchange, store credit instead? Does non-refundable mean nothing, or something else instead?
Example: No Refunds Permitted
I do not offer refunds on coaching services. I am here to coach you to your highest level of success, and part of that is requiring a commitment from you that you are fully invested in your coaching package. When refunds are an option, you can have “one foot in” the work, and “one foot out” the door. It is to YOUR benefit to decide BEFORE purchasing your package and committing to work with me that I am the right coach for you. If you’re in, you need to be 100% in, just as I will be for you.
Should you need to reschedule a coaching session, you may do so by providing 48 hours notice in advance of your session and making up the session within a week of the originally scheduled date. Sessions not cancelled 48 hours in advance will not be eligible for make-ups. It is important that you prioritize this work to receive the full benefit of your coaching package.
Step 3 - Make it visible
Wave lets you include your refund or return policy on any invoice you send. You can choose to require acknowledgement of your policy before receiving a credit card payment, which can help protect you in payment disputes.
You can also put your policy on your website, include it in an FAQ, or attach it to emails.
Step 4 - Enforce it
Make sure your team understands the policy and the philosophies behind it. Once understood, you’ll be able to adapt your approach based on real-life learning as you go. It may be necessary to have a 100% no-refund policy when you have limited cash flow, but perhaps you can reconsider this as your business grows.
If you have a website, consider making an infographic or adding visuals to enhance the clarity of your policy.
We've put this together as a starting point, but this is not a substitute for legal advice. If you require further help with your refund policy, we recommend contacting a lawyer.
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