Recently a vendor who sells software asked members of the Business of Software forum “Do you wait a while before issuing a requested refund?”.  Ken White, one of FastSpring’s Dedicated Account Managers, had an interesting response based on his experiences with a software firm he’s been involved with over the years:

“Not everyone will like this idea, but with my product line, which actually cost me something because of some 3rd party royalties, I sell the software products with a 30 day money back guarantee.  BUT, when I get a refund request, I first ask if there was any particular problem or something we can help with.  Then I tell them if they would like to proceed with a refund, visit our refund page.

That page describes that while we are happy to offer a 30 day guarantee and offer refunds, because of some licensing issues and the fact that some buyers in the past have purchased, downloaded, then asked for refund just to get the products free, we require that they print, sign, and mail the attached form to receive the refund.

What I’ve found in about 5 years of doing this is:

1) The ones who were just trying to steal get really upset about the whole process, yell, scream, etc.  I’ve pretty much decided the ones in this group were never going to be profitable for me, and even if somehow they were to eventually become customers, they would be the high-maintenance types that would cost us more than we’d make.  About 50% of these will actually send the form and eventually get a refund.

2) About 50% of the normal people who wanted a refund will end up engaging me more about their problems before jumping to the refund form, and with many of those I can help them work through the issue that made them want the refund to start with.

3) About 5% of the refund requesters will get angry and impatient and initiate a chargeback.  This is an acceptable level of that given that I’ve cut out about half the returns with the form.”

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