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Is stalling refunds and trying to make things right a good strategy?
janderbilla
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in General
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Thanked by 1Nepal
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EDIT: This is not an entire view of things, I am a mere human sharing my thoughts. Accept or reject it freely.
There's a couple of things missing from the question but I thought it was a good question nevertheless.
As a software provider (mostly), I sell my software relatively inexpensive (subjective / opinion). If someone purchases the software and it has perhaps a bug (hopefully minor) I would hope that the customer would be patient enough to wait a couple of days while I scramble to fix the bug (this is an incredibly stressful process that I very much doubt a lot of customers are aware of - but it's a part of life). You might wonder why I would do this - why is it not easier to just refund the money - the answer is 3 fold (within my mind scope)
a. Payment gateways like Payal from my understanding actually charge a fee to refund to customers. If my software costs 3 dollars a year per license, I think it's like 30 cents or something to refund - which seems small, but if someone abuses the process and by 10 licenses and then want a refund, that's me refunding them and paying paypal $3 just to do that. Net loss: $3 dollars. Have a 100 disgruntled customers, boom $300 out of pocket. BUT WHAT IF YOUR PRODUCT COSTS MORE THAN THAT? BIGGER REFUND FEES.
b. Sometimes customers actually do not read for example the install instructions and then do a refund - I have literally made software free to use for one year and customers did not read the page, purchased a license, then found out they could get it for free and asked for a refund leading me back to point a.
There's sort of a c. which is my third point - in the low end market, I don't think customers think about what they are getting for the massive discounts they get it at - sometimes the discount is so bad yes you get the worst ever service - this is a really truly balancing act and yes some providers do deserve a chargeback because their TOS in my opinion are morally wrong even if it's covered by some sort of legal advice. But then their are honest providers who make a very slim margin focusing on making the profits to stay alive by having lower prices and hopefully more customers. These customers who want back their money instantly if they didn't do something right or can't wait let's say 5 days to get a resolution or bypass seems a little unreasonable - like for $3 a year or even $10 a year, those kind of prices, you really cannot expect gold YET you can expect customer support to be supportive.
With that being all said, that's software. Hosting is even more challenging because of the hosting costs involved (is my guess). There's an incredible amount of bills that providers MUST pay (usually monthly) whether they get customers or not - I do not envy them at all and has been a reason I've still not been able to penetrate the hosting market when I look at the deals offered here. Providers can make money but those who take the most risk (and can afford with large sums of money to input into their business to I guess can do that) - and some of them win big I assume without calling any provider names in particular.
But finally, and sorry for being long, there are times when it's just better for providers to give out the refunds quickly. I've given out refunds when I detect a difficult customer and it's within a reasonable time (and usually whatever the Paypal rules are) - for example for me, as much as I want my software to be used by people, $3 to deal with a difficult customer for an entire year is something I could do without - that stuff messes with your sleep, your health, your mood with the people you care about etc. Thankfully refunds have been so low - probably not because things were perfect but because most people have a basic understanding of what the money is vs what they get out of it. I don't know what the experience may have been for you and why you're asking but hopefully I didn't ruffle or offend you by what I said.
I really hope this doesn't cause drama but I wouldn't put my life on someone stirring up drama even for such a post.
If you accepted crypto from clients, they couldn’t just hit ‘refund’ like they do on PayPal.
You’d get to decide yourself: who gets their crypto back and loses service, and who gets a chance to fix their buggy code.
At least, that’s how it works with the crypto payment gateway Cryptomus.
Oh, and you wouldn’t be bleeding from those massive payment processing fees either — plus, your customers would automatically earn cashback. Win-win.
As Customer view, I dont mind if they actually fix the problem
The fact that if they are stalling refund for fix stuff, that mean they willing to help your ticket in future.
If they repeat stalling for over week or month, then no
Stalling refund? Chargeback and get to wine here. Easy.
I guess this was a response to what I said, fair advice. I still kind of don't feel right keeping a customer's money if they're unsatisfied to be transparent with you on my thoughts (maybe it's a moral thing + also being able to afford the one off based on the low number that does this and maybe I would think differently if it were much more and the losses were insurmountable (hopefully that never happens)). Thanks for the comment.
I also think this is a very fair customer point of view. Without other providers chiming in to say what they think, just based on my knowledge - the majority of customers that ever had issues were like this for me. Thank you for this comment, gives some of us service providers hope I think.
customers choose paypal, they assume the refund fees.
Refund is just an option to solve an issue, they can also waiting more.
The real price is when the customer prefer to keep your product active
@janderbilla what's your thoughts about this?
If this is repeated pattern I will stay away. But I am willing to forgive as long as I see they are trying their best in good faith. Also depends on how much time this is going to take. This is for personal things. But if people depend on me I might pass sooner than later.
This seems to be answering a different problem - selling software with a known defect.
In this case, the solution is simple. Tell the customer you found a serious bug, and offer them the chance to continue the purchase or not. By offering that courtesy, you're already treating them more specially than an existing customer who just has to wait until the bug is fixed.
But, it might be the case that the user doesn't care about the bug. Maybe it won't affect them, maybe they just want to experiment on temporary data to learn how the software works, maybe they're rolling it out to their staff and need the software (even if buggy) straight away to create their internal documentation. It's not your place to unilaterally decide to delay sending them the software if they've already paid for it.
It's arguably a different situation if it's embedded firmware in a device, or you are sending physical media (who even does that any more), but for a software update delivered over the internet? Just ship the software already.
If refunds are such a large problem, then they should look at getting a merchant account themselves. There's advantages to using a payment processor, as they deal with the tax requirements and issues in different locations and provide a single API regardless of payment type, and it's that that you're paying the fee for. If you just want to take cards in your company's home currency, you can do that, but it's more upfront work for you, and you'll have to deal with the tax obligations yourself.
It sucks that refunds aren't free in this case, but you've caused the payment provider work and costs to provide you the service and not refunding those fees is their way of incentivising you to not have unhappy customers who want refunds.
Then, maybe structure your pricing differently. Perhaps the free licence should be limited to a month instead of a year, maybe you should publicise the free trial on the purchase page. Maybe you should roll it into the first year as a one-off discount, so it's still cheaper for the customer to continue with their one year purchase than to cancel, use the free licence for a month and then re-buy.
I get what you're saying, but that's a business decision by the provider of the service. If they can't make any money on it, then they're either doing it as a loss leader to get publicity or customers, knowing they'll make it back on renewals, or they don't know how to run a business.
There's also a fine line here. I'm happy with hosthatch's deals (as an example) saying the support will be absolutely minimal, because they are such massive discounts. But I still expect a working service from that, because that is inherently the contract we're entering into. If the provider can't respond timely to an entire node going down (for instance), then they are at fault. But if it's just people getting annoyed at e.g. slow delivery, when expectations were set on the order page for a delivery at least a month out, then there's no reason to expect support on that.
Again, you need to rethink your pricing structures. If lots of customers are buying 10 licences of the same thing separately, then you should consider bundling them in a pack of 10 licences. That's easier for both you and the customer administratively, and you'd be paying less in fees.
And if you regularly have 100 disgruntled customers who all buy 10 licences each, then you've got a bad product. Maybe fix that first.
If it paypal case, almost rarely the seller/developer approves the refund/chargeback from dispute request since it's gonna affect their good standing in paypal eye, and paypal is not your friend, despite how many transactions you made or profit for them, there's always a chance they will ban you anyway when they see your account is risky enough and not worth it to continue unless you know someone important in PayPal who can help you.
Just to be clear since I am not sure if you were taking my examples literally based on the services I run but the 100 customer example was an example and not from experience. I would be a massive tool to purposely send out software with so much bugs, the point was to parallel (only a bit) for other services offered here.
The LET market (and actually in general) is a hard for most cases especially when software isnt a big niche here and everyone goes for open source and free which is also the norm here. Keep that in mind. With that being said, thank you for clean input in the discussion, I can appreciate that.
Just to be clear, I have no idea what services you run, I just saw that you were answering from a software developer angle rather than a hosting provider angle.
But regarding sending out software with bugs, that's just life. There's almost always bugs in any non-trivial software, it's usually just a case of whether you've found them yet or not!
Having worked in software development almost 3 decades, it's clear to me that delaying a release only makes sense for a tiny percentage of absolutely critical bugs where a large subset of customers will be impacted, but in that case you could still ship the previous release until the bug is fixed. Generally, customers are mostly concerned about disclosure - if they are told what the bugs are, they can work around them if they will be affected, or choose to wait. When you get angry customers is when they hit a catastrophic bug that you already know about.
Ah, I get where you're coming from, I am in agreement with your points made here
Just my personal view: delaying a refund usually isn’t a great sign in terms of integrity, but being willing to resolve the issue is definitely a positive gesture. In many cases, it also depends on the type of issue the user raises — some problems aren’t really meaningful (often it’s just that they think the IP isn’t “good enough”). In those cases, a straightforward refund might be the better approach.