Editor’s Note: This is an updated version of an article originally published on my personal blog in 2013. It’s something that can’t be said enough so it finds a new home here after I shut my blog down. After almost two years of having a money back guarantee and providing refunds at churchthemes.com, I can say that it is still worth it.
I prefer stores with refund policies that give me peace of mind before buying. Amazon, Target, Home Depot — they’ll take back pretty much anything without a hassle. This not only benefits the customer but it benefits the store as well. Any loss from refunds is built into the cost of doing business so their is no real loss. They don’t just break even either. They make more money by maintaining happy customers. Happy customers come back to buy different things and often share with others how much they like a store.
I believe every commercial WordPress plugin and theme seller should have a money back guarantee and offer easy refunds because it benefits both the buyer and seller.
Some say no refunds on digital products because they cannot be "returned". I say digital products are the easiest to refund! #happycustomers
— Steven Gliebe (@stevengliebe) March 11, 2013
But Digital Products Can’t Be Returned
It’s true, files can’t be returned. Many shops have a refund policy that goes something like this.
Plugins and themes are non-tangible and therefore cannot be returned. All sales are final and no refunds are made. Please make sure you choose the right one.
This might be reasonable since a customer could continue using a plugin or theme they got a refund for, but is it worth it? One of the biggest theme shops doesn’t think so.
We offer refunds to any unsatisfied customer up to 30 days after the purchase was made. If you would like your money back, simply send us an email. Elegant Themes
My view is that since plugins and themes are non-tangible, they are actually easier to refund. There is no dealing with damage, missing parts, repackaging, etc. All the seller needs to do is give the customer their money back and cease to provide support/updates. We offer a 45 day refund period at churchthemes.com because it really is useful to try a theme to see if it is the right solution.
But We’ll Lose Tons of Money
One reason a WordPress plugin or theme seller might not offer refunds is because they are afraid if they do, they’ll be flooded with refund requests (even from fraudsters) and lose a scary amount of business. Concern is healthy but this just hasn’t been my experience and if it were a real problem then the big theme shops like Elegant Themes who offer refunds would not still be offering them today.
churchthemes.com has been online for almost two years now. Customers have 45 days to try a theme or plugin and if they’re not happy, they can simply ask for their money back. After several thousand sales, we’ve had a refund rate of 2.7% (of all types). A better way to look at this is that we hold onto 97% of the dough. There isn’t any major loss here. Further, we set our price knowing that there would need to be some resources expended on refunds.
A Strong Refund Policy Increases Sales
Stores with strong refund policies make me feel safer than stores with rigid refund policies. I know I can get my money back if something’s not right.
A customer knows you care about meeting their needs when they see that they can get their money back for any reason. A strong anti-refund policy says the opposite. A customer may take that as meaning you won’t care if they’re happy or not because you get to keep your money no matter what. Having an Money Back Guarantee increases customer confidence and therefore increases sales.
If you don’t have a strong refund policy and your competitor does, you’re at a disadvantage.
Your Reputation is Important Too
You don’t want unhappy customers. Have you seen online users ranting and raving about how a company completely ripped them off and kicked their dog? Some people make it their mission in life to destroy a company. They will tell everybody how terrible the company is. Most unhappy customers aren’t that extreme but the point is if there are enough moderately unhappy customers out there, your reputation will suffer. You’re in a bad position when your competitor’s reputation exceeds yours.
Your product will not be perfect no matter how hard you try. Do try hard but also give the customer a way out if you’re not meeting their needs. Simply give them their money back. There’s a real possibility that you can make that unhappy customer into a happy non-customer. My experience is that most customers are quite appreciative of a quick and courteous refund. They might consider one of your other products in the future or tell others about how you guarantee your work.
Do you want to be known as a company that milks their customers for all their worth or one that makes things right?
The Proper Way to Refund
Customers remember how you treat them and will keep that in mind when considering you again or speaking to acquaintances. Simply returning their money is not enough.
- Be as courteous as if it was a pre-sales inquiry
- Don’t try to change their mind and don’t ask pesky questions
- Initiate their refund immediately and tell them when to expect the funds
- Thank them for giving you a try and apologize if there was any inconvenience
- Ask them if they have any questions
In short, treat them how you would want to be treated. If you make the refund experience rough then you’re only making a less than ideal situation worse. If you make it easy then there is a good chance they will leave with a good impression. They will have gotten what they requested and will have been served with courtesy and respect.
The Future of Refunds
Some commercial WordPress theme and plugin providers have money back guarantees and some don’t. A few of the big shops like Elegant Themes, StudioPress and WooThemes do but still others big ones don’t. The landscape is similar among smaller sellers. I hope to see every provider offer refunds in the near future. There is very little to lose and much to gain for both the buyers and sellers.
Do you sell WordPress themes or plugins? How do you handle unhappy customers and refunds? If you don’t offer refunds now, will you consider it? Customers, what are your thoughts on refunds? Please share your perspective in the comments below.
Related: WordPress Businesses Should No Longer Fear Refunds at WP Tavern
Thanks Steven, I’ll consider this for our wireless Internet service provider company. Last I checked the refund policy hasn’t hurt Elegant. They state to have over 200,000 customers.
I think a strong refund policy is worth considering for any non-tangible product. My company has another division selling personality reports and the refund rate there has been under 1% for years. That’s a very different product than WordPress themes yet the same strategy works. Maybe you’ll have similar result.
I agree 100%.
As a customer I expect to be treated exactly as described in this post when it comes to refund. If I were ever to sell digital products I’d implement something like it for the customers.
I believe the common “no refunds” policy came into being because so many people were already robbing theme and plugin companies through chargebacks in the early days of commercial WordPress products. Since people were already willing to lie and issue a chargeback which left the user with the theme and the company with an extra fee for their work, many shops felt that making this process easier would be a bad decision. That had a lot to do with this being a standard that was frequently adopted.
As the WordPress market as matured, you don’t find anywhere near as many people issuing chargebacks–which is a great thing. Because of that, it’s reasonable to offer a refund policy like this now. I noticed WooThemes even uses a pop-up to let users know about their 30 day guarantee. Four years ago, that probably wouldn’t have been possible.
I’m glad to see things changing and a more sensible policy become standard.
Thanks for the interesting history on this. I’m glad things changed before I showed up. ;)
I had a website that sold HTML templates more than 10 years ago and a ridiculously large portion of sales were fraudulent. I was expecting to see some of this with churchthemes.com but so far nothing which has been fantastic.
Do you ever see fraudulent purchases with your non-church themes? I wonder if church themes are less likely to be abused.
I can’t think of any church or non-profit that has ever issued me a chargeback. Most of the time, even if they were using a church theme, it was a rather shady individual up to know good. I can remember at least a few of them being done by overseas hacker groups.
I’m just glad that seems to have died down over the last few years. You lived through it. There’s nothing like having your credit card processor assess you a fee on top of losing the money of the sale all while having your product taken. Now we can focus on making good tools instead of dealing with fraud.
Yep, chargebacks hurt. Every now and then I get one with my other business which also sells a digital product. I’ve never been able to figure out why they happen since we do have a money back guarantee. Chargeback customers have never replied. I just wish they’d use the refund policy instead of a chargeback. Easier for all parties. ;)
+1 for focusing on making good tools instead of dealing with fraud.
I believe it really depends on certain factors…the truth is, there’s many out there who will take advantage of it, whether to simply use the theme freely after getting a refund, or they turn around and sell the theme(s) if they know they are fully WP GPL licensed (commercial themes). Some will also take your themes, get a refund, then put them up for free on file sharing.
Refunds by a theme company is fine if you got the cash and big sales like Elegant Themes, but for the little guy, it’s a potential business killer and opens the door for abuse if you get a regular flow of refunds and chargebacks. For me, I make the judgement call each time I get a request (sometimes demand) for one. It’s best to offer solutions first, then if no success, then they get a refund.
Thank you for sharing your thoughts. Do you run a theme shop and have you offered a money back guarantee recently? I’m interested to know how you drew your conclusions.
My experience with churchthemes.com is that you don’t have to be a large shop like Elegant Themes to offer a money back guarantee. My conclusion in this article is that it benefits us to have such a policy.
Actually I do…but after posting my comment, I did a little more research and decided that a money back guarantee has a bit more advantage than disadvantage. Ultimately it’s not fun when you have to do a refund, even when you know it’s not a legitimate refund request, but getting into a battle with someone who is not happy could have dire consequences on your business should they decide to retaliate out of spite if you refuse a refund…you would end up losing more than just the cost of the theme or theme membership. I decided to update my refund policy, so we will see how this goes.
Cool, I hope it goes well for you. According to Bill up there (http://stevengliebe.com/2013/12/31/offer-refunds-wordpress-themes-plugins/#comment-5093), illegitimate refunds are not as common as they used to be.
I’d prefer 0% refunds but since having a policy means they’re going to happen, I try not to consider what a customer pays as “mine” until the refund period has ended. There’s some loss (time processing refund or even bigger any support provided) but I consider it a marketing expense and marketing expense is for the purpose of profit in the end.
Great post. The increase in conversions and customer satisfaction from offering a a no-questions-asked refund policy really does outweigh the few people who abuse the refund.
We’ve had a full refund policy for Paid Memberships Pro since inception. And we process those refunds quickly, without hassle. It’s important that we spend our time working with the customers who want to pay us instead of battling the customers who don’t want to pay us.
Another piece of advice I’ve heard before, mostly in the grimier internet marketing forums, is that if your refund rate is lower than 5-10%, it’s probably TOO LOW. A low refund rate means that people aren’t motivated to ask for a refund when a product doesn’t work out for them, etc. In other words, you might be charging too low a price for your product.
It really is the way to go.,…offering a refund policy where all parties will be happy is good business and it doesn’t waste their time in chasing you down for one either. For me, I like to offer additional options to whatever issues they experienced before issuing a refund because sometimes there might be an easy fix. For example, I had a customer totally new to WordPress and they had trouble installing the theme and they were frustrated after trying many times. So I offered to install WP, the theme, and even the plugins for them…long story short, they were very happy and stunned at that level of support. But the moral of the story is that offering a refund policy that is EASY and QUICK for the customer is important because it makes them feel more secure when they pay money to someone that may live on the other side of the planet, cannot see you in person, or know who you are.
That’s interesting. I don’t think we’ve yet had a customer ask for a refund without seeking help first. I’m not sure how I’d handled that. I’d like to give them their money back right away if it’s what they are asking for but it does make sense to offer a simple fix if it’s true they would prefer to use the theme. Hmmmm.
Excellent point. Focus on the customers who pay.
That’s interesting about the idea that if your refund rate is too low, your product price may be too low. I was hoping it had to do with the quality of our product. But it’s true if you buy something at the store for $1 and there’s a problem you might just toss it in the trash. If it was $100 then you’ll probably want your money back.
I noticed in the WP Tavern article WooThemes rate was higher than StudioPress. I wonder if that could be any way related to their prices being higher.
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Since we noticed less and less refunds requests for our products in the last 24 months, we decided last week to change our refund policy to 30-days money back guarantee. 1 week is not enough to tell for sure, but we did notice an increase in subscriptions. So far so good…
A worthy experiment! I’d be interested in knowing what you find after enough time.
You motivated me to add a 30 day money back guarantee policy for CalderaWP. We will see how it goes. I pretty much always give refunds when requested anyway.
BTW The one thing you left out here is that refusing to give a refund can lead to disputes and chargebacks, which are annoying and could lead to being cancelled by your payment processor, which is real bad.
Cool, Josh. I’d like to know how that goes (ie. if you notice an increased conversion rate). Thanks for sharing about the chargeback risk with no refunds.