How to decide upon a refund policy
Career Management Series
By Laura Lee Rose
Hello, this is Laura Lee Rose – author of TimePeace: Making peace with time – and I am a business and efficiency coach that specializes in time management, project management and work-life balance strategies. I help busy professionals and entrepreneurs create effective systems so that they can comfortably delegate to others, be more profitable and have time to enjoy life even if they don’t have time to learn new technology or train their staff. I have a knack for taking big ideas and converting them into smart, sound, and actionable ideas.
At the end of the day, I transform the way you run your business into a business you love to run.
This question came from a busy professional and entrepreneur:
What is your refund policy?
I offer photography services. Recently, I’ve run into a couple scheduling conflicts where the client cancels on me last minute. Since I plan my availability far in advance, this really messes with my schedule because it is hard to fill a Saturday or Sunday day last minute. How do you handle client cancellations? I understand the answer might be different depending on your product or service offerings. Do you give a full refund?
Regardless of your product or service, I recommend that you publish your refund policy on your invoices or receipt. Even with the best of intentions, you can’t please all of the people all of the time. Therefore, it’s important to understand how you are going to handle unhappy clients.
Standing behind your product
The first consideration is whether or not you want to stand behind your product or service. For instance, are you standing behind your product and services with some type of a service or satisfaction guarantee? Depending upon the type of product or service, there may be several types of guarantees that you may want to implement.
· Money Back Guarantee
· 100% Satisfaction
· Forever Guarantee
· Low-Price Guarantee
If you would like more information on which guarantee is best for your product or service, please setup an introductory complimentary business consult.
Handling Client Cancellation
Now that you have illustrated your commitment to your product, how do you assure your client’s commitment to their part in the equation? For example – how do you assure that your client will show up to the above photo-shoot? As this busy entrepreneur mentioned, you may book jobs weeks in advance. You may have even passed on some profitable jobs because you were already booked on those dates. When clients cancel at the last minute, you don’t have time to schedule another job in that time slot, losing out on that revenue. If you need to rent a studio or space for that job, you may also have some out-of-pocket costs.
To increase client commitment and reduce out-of-pocket expense, consider a "save the date" non-refundable deposit. Make the deposit amount enough to cover any out-of-pocket expenses that you may lose because of a late cancellation.
Also require full-payment X number of days before the event. This helps guarantee that the client is serious about these services.
At the contract signing, make sure they understand your cancelation policy. For instance, how far in advance can they cancel to get 75% refund, 50% refund and 0% refund? Just make your cancelation policy known upfront.
· If you feel that a 5 business day advance notice allows you to fill in that date with someone else (with no loss of income) – give them a full refund less the "save the date" deposit. Or you can elect to give them 100% Credit for the next scheduled shoot.
· With 2 days advance notice, perhaps give them 1/2 refund CREDIT for the next photo-shoot.
· 1 day notice, they don’t get any refund because you don’t have time to schedule anything else.
· Consider giving them "% Credit" for the reschedule date – if the cancelation is their fault.
· Give them $$ back and additional product/service if the reschedule is your fault
· If they continue to “cancel” on you – even if they give you the proper notice, consider reducing the % of credit each time they cancel.
I know your situation is different. If you would like additional information on this topic, please contact LauraRose@RoseCoaching.info
I am a business coach and this is what I do professionally. It’s easy to sign up for a complementary one-on-one coaching call, just use this link https://www.timetrade.com/book/WFSFQ
With enough notice, it would be my honor to guest-speak at no cost to your group organization.