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What to consider when creating your online course refund policy

Category: Build Your Business

What to consider when creating your online course refund policy
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Read time: 5min

“Can I have a refund?” Five words that you don’t want to hear from customers in any business. And as a knowledge entrepreneur, it might even hurt your feelings a little bit - we get it.

Luckily, having a refund policy in place for your courses and coaching programs will not only allow you to deal with such instances but also be a key marketing strategy for your brand. Think of it as a trust exercise between you and your customers - it alleviates stress for potential buyers and establishes an open line of communication for you both. In fact, over 60% of consumers review a return policy before buying - that’s why establishing the right refund policy is key to seeing your sales increase.

Watch our video covering five key steps to setting up your online course refund policy:

Keep reading as we walk you through you all things refund policies - from how they can benefit creators to how to set up your own:

  • How a Refund Policy Can Benefit Creators
  • What are typical course refund policies?
  • 5 Steps to Setting Up Your Course Refund Policy
  • FAQ

How a Refund Policy Can Benefit Creators

A refund policy might sound like a necessary evil to most business owners. For creators, it can be confusing on what you should give back seeing as you’re providing knowledge as a service. However, instead of building it in as a loss to your profits, think of how you can use your refund policy as a marketing technique. Here are a few ways that creators can benefit from refund policies:

  • You can establish more trust up-front: the majority of consumers feel better spending their money on something when they know there is a safety net to fall back on. In the world of online shopping, an inconvenient return policy deters 80% of people - this is why it’s crucial to offer a refund policy in the first place.
  • You can increase your conversion rate: for similar reasons mentioned above, the more people trust your brand and feel comfortable purchasing your product, the more sales you’ll make. They won’t be as hesitant to put their credit card information in when they know there is a flexible refund policy.
  • Refunds can provide useful feedback: You can’t please every purchaser of your product and for those who end up wanting to refund their purchase, it’s a great place for you as a course creator or coach to receive feedback. 
  • Creators can prove the value of their product more: If a new pair of jeans don’t fit, they don’t fit. But, when you’re selling coaching and coursework, the value is in the knowledge your audience is gaining which is hard to “refund.”  A refund policy helps convince customers to purchase your offering in the first place so they can experience the value firsthand.

Overall, the benefits of offering a course refund policy far outweigh the cons - the main reason being that refund policies help increase conversions and increase revenue. Plus, even if you do end up having to give a true refund, the customer will be grateful and remember the easy experience they had with your brand which could lead them to come back in the future.

What are typical course refund policies?

Now the juicy stuff - what kind of refund policy should you offer? As you’re creating your courses, it’s up to you to decide what works best for your online business. We’ll walk you through the three types that course creators and coaches typically offer:

1. A money-back guarantee policy:

A money-back guarantee policy is one of the most common refund policies you’ll find with digital products. These usually come with a time component as well such as a “30-day money-back guarantee.” This type of offer is very attractive to online buyers who may be hesitant about purchasing your course - knowing they can get all of their money back means they are more likely to convert and hopefully stay once they’ve experienced your offering.

2. Try before you buy:

This concept is becoming more popular among e-commerce brands, but it can work to a creator’s advantage as well. A try before you buy model would mean that whether it’s an online course or a week of coaching, your customer gets a taste of what the full course or experience would be like. Plus, your customer might not know which course they want to take, so giving a chance for them to try a few out could be helpful. With this model, you should still collect credit card information upfront and be careful you’re not giving too much free content away.

3. A refund with credits:

If you don’t offer a money-back guarantee or a try before you buy policy, an alternative is to offer a refund with credits. A refund with credits will allow the user to purchase something else on your course site if they wanted a different class or wished to come back at a later date. While this could be good for those who might want to change what they originally wanted, it offers less flexibility to your buyer and may make them more hesitant to purchase.

We know it’s always helpful to hear what other creators are doing - here are a few Kajabi heroes discussing their refund policies:

“We offer a 30-day no-hassle money-back guarantee for our membership that comes with access to our flagship course. If they want to leave, we let them leave. Easily. We want their experience with us to be the best they’ve ever had, no matter what they choose. They may return someday or they may tell someone in their network about us. Better to have more happy clients and ex-clients than unhappy ones out in the world.” - Caryn Yuen, Quality Investor Packs

“I offer a 30-day money back guarantee for my membership program. It's very specific and they DO have to show me the work. I also offer month to month options so they can choose to cancel at anytime. My yearly members however have to show me their work that they tried within the 30-day guarantee. I understand this may not work for a course, but it's perfect for a membership program.” - Patti DiFondi

5 Steps to Setting Up Your Course Refund Policy

You’ve read the benefits, know your options, and you’ve heard from other creators - now it’s time to set up your own refund policy! Before you dive into setting your refund policy, there are a few things to remember:

  • It’s better to be lenient.
  • Your refund policy is part of your marketing and brand strategy.
  • You should know your audience no matter how small or large it might be.

You want to do what’s best for you and your business and that usually means doing what’s best for your customer - if you don’t know your audience well, then you’re not going to have a full picture of what their needs and wants are. For our full guide on how to grow your brand and audience, read here.

Here is the step-by-step process to creating your refund policy:

  1. Ensure there is a time limit - whether it’s 14 or 30 days, set a number of days the refund will be valid until. Even with more flexible refund policies, it’s still smart to have a cut-off for the refund policy so you can protect your sales and business.
  2. Consider completion requirements - if you choose to do so, consider setting completion requirements where the customer has to finish a certain amount of the course before they can ask for a refund. Or, maybe you offer a refund if you see they have only consumed a certain amount of the course. 
  3. Don’t overcomplicate it - if your refund policy is long, exhaustive, and forces customers to jump through hoops to get their money back, it’s going to cost you more than any refunds would by stopping people from purchasing in the first place.
  4. Make sure to check local and state laws regarding refund policies - be sure to make sure you’re always following the law when it comes to your policies so you aren’t discriminating or breaking a rule you were unaware of.
  5. Write the refund policy clearly in your contract - make sure your policy is in writing! This is essential for any business, but before a customer makes their purchase, clearly outline the refund policy in the agreement or contract.

No matter what type of refund policy you decide to go with, make it obvious, simple, and clear to help yield better results for your course.

Setting up a refund policy the right way can be advantageous for knowledge entrepreneurs. By doing so, you create trust and transparency with your audience which is key in growing your brand, creating a community, and, of course, increasing your overall revenue.

FAQ About Course Refund Policies

Should I consider offering a free trial?

While a free trial seems like an obvious choice for creators, it can also cause your product to lose its value if you offer a free version of a premium course. If you choose to offer a free trial, you should collect credit card information upfront and make the content different and more unique than the paid version of your coaching or course program.

An alternative way to give customers confidence in your course material is to offer a free mini-course as a lead magnet. That way, your potential customers know that your teaching style is a good fit and that they are a good fit for the course material. 

Should I collect payment information from customers upfront?

As a best business practice, we recommend collecting payment information upfront - in the long run, it will make things easier and increase your sales. Plus, it makes your product offering seem more legitimate and valuable to the purchaser.

Should I keep my refund policy the same across all courses and for all clients?

Unless you have a great variety in the types of courses and coaching programs you offer, it’s better to keep your refund policy the same across the board. This limits confusion for your customers and even yourself as your refund policy becomes associated with your brand. 

Use Kajabi to Turn Your Knowledge Into Digital Products You Can Sell

Ready to be your own boss? Ready to monetize your knowledge? You need Kajabi - It’s a full-featured platform that allows professionals like you to create their own businesses from home.

Create online courses, establish membership sites, offer coaching programs, host a podcast, and sell other digital products. Plus, you'll get marketing tools like a website, CRM, email marketing, landing page templates, and helpful analytics to help you spread the word about your products and earn more revenue.

Fully explore what Kajabi has to offer and start building your business during a free trial. Start your free 14-day trial of Kajabi today!

Still researching? Check out Kajabi’s free downloadable ebook guides on launching and growing a knowledge commerce online business!

Read the 2022 State of the Creator Economy Report to get the latest data on industry trends and growth for knowledge content creators.

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