Should You Offer Refunds (Policy) on Digital Products or Services?


I speak from my experience. I started with the most relaxed no-questions-asked polices. And it was so much hassle. Tons of deadbeats taking advantage and doing chargebacks because I didn’t respond in time. (Yes, sometimes they’ll do a chargeback only 30 mins after sending you an email.) When you make thousands of sales, even 1% of difficult customers is going to cost you a lot of hassle. Oh and don’t get me started on what happens when you get too many chargebacks in a short period.

Getting rid of the refund policy literally got rid of ALL the serial-refunders, saved me hours every month of customer service, and WITHOUT costing me any sales.

Now would I recommend my model for everyone? No. Only those with strong branding and loyalty in the industry can do it like me. Everyone else out there is usually trying to skim off impulse buyers. And impulse buyers love refund policies.

If anything, I now believe refund policies make your business appear more gimmicky if you don’t promote it correctly. Tons of shady companies offer it (as well as legit ones, of course). But what about the ones that don’t? It can make your company look more serious…like a “no refund, no bullshit” approach. I’ve learned from some amazing guys in the online marketing space making a killing out there. Their wording is along the lines of…”due to the nature of online business, we cannot offer refunds once you’ve accessed your content. We are however invested in your satisfaction and will jump through flaming hoops to solve your problems. If you’re not 100% sure about our product, please see our FAQ/Q&A/etc.”

But hey, don’t take my word for it. Just do what I did…try every refund policy ever known over a period of 10 years and see for yourself.

  • 364 day no questions asked policy
  • prorated policy
  • 30 day policy
  • 30 day discretionary policy
  • 30 day exchange-only policy
  • 50% moneyback AND they keep the product
  • DOUBLE moneyback policy
  • FREE upgrade policy (implemented only internally, it’s not publicly stated)
  • 14 day
  • 7 day
  • 48 hours
  • 24 hours
  • 5 logins
  • 3 logins
  • 1 login

Also placed the policy in different places:

  • right under the purchase button
  • in the footer
  • at the top of the page
  • super visible (large, red font)
  • clear but not obvious (medium-sized, black font)
  • kinda hidden, invisible (small, soft grey font)
  • big sticker image vs text only

“But what about making more money by offering refunds?”

This is the biggest load of crock. Your real customers are buying your product, not your refund policy. That probably won’t even notice that you don’t have one and also won’t care to get their money back. You know who goes for refund policies…the serial refunders or people wanting to take advantage of you.

So let’s do some math. We’ll pretend adding a refund policy increases sales by 5%:

  • WITH refund policy – 1000 sales and 10 refunds/chargebacks per month
  • WITHOUT refund policy – 1050 sales and 35 refunds/chargebacks per month

Yeaup! I’m dead serious. The increase in sales feels like it goes completely to the serial refunders. Now you might think it’s still worth the extra profit but here’s why I tell you it isn’t (at least not for me):

  • You want your business to be as hassle-free and passive as possible. Having 35 refunds/chargebacks a month is so time-consuming and frustrating. Some of them send an email asking kindly and then when you reply, they initiate a chargeback anyway. Others do a chargeback right off the bat. Either way, they still steal from your time AND your money.
  • Believe me, you do NOT want to be engaging with serial refunders. Many of them are quite negative and will spout off about your subpar product on online forums and/or even tell their friends other people to take advantage of you the same way. You can also bet if they’re willing to take advantage of you like that, they’re probably also willing to share your product for free (or even sell) to others.
  • The serial refunders are much more likely to buy and refund ALL products as well. You will feel so incredibly used and angry. And again, they’ll even waste your time writing you fake-angry emails to justify their demand for a refund. All this is stealing time from legit customers.

“But the big stores offer refund policy, and still make money off of it…so why can’t I?”

Those big stores sell tons of products and make lots of money from you buying more items than you were initially looking for. You go in for a coupon for a chair, but then buy a soda and some batteries. They make money off those impulse buys. Later on you return the chair, but then buy a sleeping bag. Either way, they still make money eventually.

A small shop like yours with only a few products, I can assure you those refunders will never return to buy anything else after they get their money.

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