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Refunds on yearly accounts?
| Posted by Xcel, 09-08-2003, 05:30 PM |
| I am curious to know what peoples policy is on someone who pays for quarterly or yearly account.
If someone buys a years worth of hosting and then decides to leave after 3 months through no fault of the host are they obligated to refund the unused portion?
In my opinion they paid for it and that is the end of it. The host is giving out discounts for multiple month sign ups. If the hostee decides to leave whenever they want and get a refund there is no point in the host offering discounts for longer sign ups.
If I were signing up I would try a month or two and then if I liked it I would pay for 3 or 12 months. I wouldn't buy a years hosting and then say I don't want it anymore.
Opinions please........
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| Posted by UH-Matt, 09-08-2003, 05:31 PM |
| It all depends on your terms of service and if you have any kind of moneyback guarantee.
We will issue a pro rata refund for annual payments, so if someone leaves after 5.5 months they will receive 6 months worth of refund.
No refunds are given on monthly accounts, the customer simply isnt rebilled.
This is just our way of working and seems to be acceptable to both sides.
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| Posted by CrazyTech, 09-08-2003, 05:33 PM |
| We approach it the same way UH-Matt does. This way seems to work quite well and has presented no problems to date.
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| Posted by eddy2099, 09-08-2003, 05:36 PM |
| Depends on your stated Policies which you present in your contract prior to your client sign up.
Some hosts uses a 3rd party payment processor and are unable to refund part payments.
Wouldn't disagree with you. An annual payment is usually heavily discounted.
Perhaps you could include how refunds can be calculated.. for instance, if they terminate before the year, the months consumed would be computated based on the monthly rate.
So for instance, your annual account is $100/pa and your monthly is $10/mth.
So if your client leaves after the 3rd month, you compute the consumption as $10 x 3 and refund the remaining $70.
Just an idea.
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| Posted by Deb, 09-08-2003, 05:38 PM |
| We provide discounts for annual payments. Meaning, because you agreed to a year term we are giving you a discount, and if you do not complete that term then the discount does not apply.
So what we do seems to land in the middle of to, or not to, give refunds.
We simply charge the monthly fee for the time they did use our services and deduct that from their annual payment. The remaining amount is refunded back to the Site Owner.
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| Posted by Deb, 09-08-2003, 05:39 PM |
| Uhhh yeah... what Edwin said
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| Posted by Xcel, 09-08-2003, 06:47 PM |
| Thanks for your replies. I like the idea of just not applying the discount and charging the monthly fee if the client runs out on thier contract. And to me that is exactly what it is.... breaking a contract.
I like the idea of a 30 day money back gaurantee but other than that I don't think it is necessary to offer money back simply because someone changed thier mind.
But I suppose in order to please customers and potentially gain new ones I can offer a more extensive refund policy.
One problem is though using a 3rd party processer who charges a percentage to process the money. You end up paying the fee to process the one large payment and never recieve the full benefit of the payment.
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| Posted by Deb, 09-08-2003, 06:50 PM |
| Yes, you'll pay a fee for receiving the money, and just to keep things interesting, you'll pay a fee to refund it too!
Processing fees are the pits....
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| Posted by idologicJeff, 09-09-2003, 12:07 AM |
| I agree with Xcel. If 3rd party processing is costing you anyway, less transactions save money.
Why not pass that savings on to your clients?
Cheers
Jeff
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| Posted by sprintserve, 09-09-2003, 05:48 AM |
| My personal thought is what Edwin suggest. But to date, no annual customers has backed out on us yet.
as for the transaction fees, of course if you want to you can count those and deduct it too from the refund. But I tend to just write it off as business cost.
Makes a good incentive to make sure we keep the customers
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| Posted by Aussie Bob, 09-09-2003, 05:56 AM |
| Long long ago, in a time not like this we used to offer 90, 180 and 360 day payment plans. If anyone decided to leave, and they were X% way through their 360 days of pre-paid hosting, then I would calculate the balance that was left, for the time unused, and take that away from the full cost of the 360 day plan. I would then ask them to make a 1 time payment for the time used, and I would then refund them their full original payment.
It was a pain in the neck and one reason why we stopped offerring 90, 180 and 360 day payment plans. It was also a pain when someone wanted to upgrade their account. By only having 30 day payment plans, it's a snap when folks want to cancel or upgrade.
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| Posted by centrahost, 09-09-2003, 09:24 AM |
| I agree with AussieBob.
Anything more than annual in a pain in the ... neck.
Uneeded admin woes.
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| Posted by mwalters, 09-09-2003, 09:27 AM |
| I personally only offer yearly payment to my face to face clients if that makes any sense. On a one-off basis I may offer one to someone that emails me and asks for it specifically, etc. If one of them ever asked me for a refund however it would be the solution that Eddy has already stated stated. It's the honest/fair way to handle it IMO.
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| Posted by centrahost, 09-09-2003, 09:41 AM |
| Good point.
It's all about Visa/MC bogus regulations that refuse to catch up with the times. I mean, why should they? They make money in both directions.
I will gladly take an annual payment by check. Who wouldnt? At least then YOU can make the call instead of VISA/MC.
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| Posted by AmishHost, 09-09-2003, 01:30 PM |
| If an annual customer wants to leave, we pro-rate a refund for however months are left on his contract, and then we take out 30% for processing fees...
so say they payed $149.50 for a year. After 7 months they wish to stop service. We will issue them a refund for 5 months ($62) and then we take out 30% of that (roughly $20) for processing fees.
This is stated in our terms of serverice and I think it is a fair way to end an annual contract. We gave them a 2 month free discount for signing for a year, plus the fees we have to pay to our processor...
Try and back out of your cell phone contract, you will be staring at a 150 dollar bill
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| Posted by sprintserve, 09-09-2003, 01:34 PM |
| Well we are nice people
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| Posted by cdgcommerce, 09-11-2003, 12:43 PM |
| Regarding the issue of annual payment refunds, we have never really run into this since we only offer annual payment plans to very select customers on a one-to-one-basis... and we usually do a direct EFT debit on such transactions. (hardly ever do them on credit card)
All of our regular hosting - and e-commerce - plans are monthly subscriptions billed on the 1st of each month.
The end result is that this has made our revenue extremely stable, reliable and easily forecasted month to month. And if a customer cancels, usually because they are out of business and no longer need the site, we simply remove them from future billings.
This has kept our transactional prices very low and avoided these refund issues entirely.
In addition, it is important to keep in mind that the way VISA/MC rules and regs are structured, there is very little protection for these types of "future deliverable" transactions. So - we also limit our exposure by doing monthly billings.
If I WERE to do a lot of annual payments, then I think the aforementioned suggestion in this thread about issuing a refund after re-calculating based upon a month-to-month price... would be an equitable way to handle it with most customers.
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| Posted by centrahost, 09-11-2003, 01:02 PM |
| According to VISA/MC regs... Any internet transaction without a written signature is subject to reversal for up to 6 months at the cardholders request without question.
We have adopted a policy of:
1.Never billing for more than a month at a time.
2.Always give the customer back money when they ask for it.
This might sound a bit to easy going for some of you but, it keeps down expenses and stress over the long haul. For us anyways.
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| Posted by centrahost, 09-11-2003, 01:06 PM |
| Also wanted to add. The Moneta system is awesome. If you bill over 10K a month it's a must have!
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