Forums: Discussions for entrepreneurs and small business.

I did a search in the forums to find everyone`s thoughts on refunds but only found threads about product related refunds.  I operate a tutoring service and students pay for packages of tutoring in advance.  This comes up very rarely, only 3 times in 4 years, but when it does I`m always surprised and am torn.  Split between the business side of me that sees the cost incurred and the side that sees an unhappy customer. 

Business side: We commit resources and time to preparing for a particular student which are up front costs.

Customer side: Unhappy or there was a scheduling issue and the customer would like a refund for unused package funds.

Please share your thoughts they are greatly appreciated.

This time the schedule / communication was our fault.  We apologized and offered to give the student an additional lesson for free and they were still unsatisfied and just wanted a refund for the amount unused. 

Another typical option is to state in your contract that there is a non-refundable setup charge. Call it whatever you want, but it means you`re charging for your preparation work. A sub-clause to that section would indicate that if the customer for ANY reason cancels or is unable to fulfill their contractual obligations, they don`t get that payment back.

It splits the payment into parts, assigning each part to whatever part of the services you want to assign them to. So you could take the remainder, after the setup fee, and provide the typical 50% at the start of actual work, and 50% upon completion.

Or you could formulate specific milestones. Some portion of payment would be paid per milestone.

I`m thinking you could do some Google research on basic fee agreements for consulting contracts, services contracts, and independent contractor agreements.

I`m reminded of the old analogy that an angry customer will tell 10 ppl about you and a happy customer will tell 1.

In this situation, I`d definitely give a refund.

I`d also put together written policies on what is refundable and what is not -- something that your customers can sign upon ordering your services. Perhaps a non-refundable retainer fee for your prep work, and require customers give X days notice if cancellation is needed, otherwise no refund.

Also, keep in mind for the future, if a client is still willing to work with you, you may offer credits to their account or the opportunity to reschedule for no additional charge.


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