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.

If you have a signed contract saying that their payment is non-refundable, you can point that out. But you`d have an unhappy customer (who might spread the word around.)

But to make the customer happy, offer a partial refund for the unused portion.  They won`t get 100% return of the unused package, maybe 50%. 

Or return 100% of the cost of the unused package, less charges for early termination fee.  How much that fee should be is up to you.

If the customer had a schedule conflict or not feeling well, just offer to reschedule the session at another time, so you don`t have to give refunds.

I think the best solution is when you and your customer leaves away from the negotiating table both a little unhappy. The customer didn`t get his money back and you have to juggle your schedule to accomodate the rescheduled session.

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. 

No question. I would give 100% of the unused amount.  

Based on your original post, I thought it was the customer that had the scheduling issue... but now I find out it`s your fault.  

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.

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Craig Landes
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Defining the undefinable. "There are 10 kinds of people in the world---those who understand binary numbers and those who don`t." - Unknown

International Society of Curmudgeons

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

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Mark Fackrell

Strategic Business Services
CFO For Hire
http://www.contract-cfo.com

mfackrell@contract-cfo.com

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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