[jdlshore]

Hmm, as someone who also sells a digital product, I have to disagree. I'm very generous with refunds. I figure a reputation for great customer service more than makes up for the small amount it costs me.

Sure, there's nothing, literally nothing, stopping someone from downloading my entire 40-hour+ back catalog, unsubscribing, and asking for a refund. They could also sign up for the free trial, download everything, and unsubscribe.

Or they could just pirate everything. And there's nothing I can do to stop it.

So who would I hurt by refusing to offer refunds: The freeloaders? Or the legitimate customers who gave my product a try and found that it didn't fit? Maybe I'm naïve, but I think that positive word-of-mouth a friendly and prompt refund will benefit me more in the long term.

I know that if I got a non-functional product and couldn't get a refund, I'd be livid. I'd execute a chargeback so fast their head would spin, and I would badmouth the company involved for months.

[jnbiche]

How's your business going with this approach? I actually suspect your reasoning here is correct, but I'm always curious to find out how a business is faring using this customer-friendly approach.

[jdlshore]

Almost all the refunds I process are due to people getting busy, no longer using my service [1], and forgetting to cancel their subscription. When somebody sends me a cancellation request right after they've been billed, I volunteer to refund the payment. Perhaps half of them take me up on it.

Even with this proactive approach, my refund rate is only about 1%. It's not affecting my profitability in any significant way.

The benefit is harder to measure. I typically get a warm thank you from offering and, as I said, about half decide to stay subscribed for the remaining month. I've also had people tell me how much they appreciate my "no DRM" policy. So I'd say that my general attitude of trusting and respecting my customers pays off, but it's impossible to say how much.

[1] I sell a subscription-based programming screencast called Let's Code: Test-Driven JavaScript, http://www.letscodejavascript.com

[thenomad]

I also sell a digital product with a 30-day "refund for any reason whatsoever" guarantee.

I think I have had one refund requested ever. It's not a huge seller, but that still puts the refund rate considerably less than 1%.