Refund policies for WordPress businesses

I started writing this post because I’ve been thinking a lot about what kind of refund policy to have for my own products. Logically, I’ve always felt that offering a refund makes sound business sense but I can’t help the nagging feeling that refunds on digital products are just an invitation for people to steal your work.

Initially I thought I would just write up some thoughts on the subject and maybe include some best practice examples of refund policies. In fact, I ended up contacting nearly 100 theme and plugin shops and as I found out more about how other people approached the subject, I started to change my mind about my own approach.

So, if you’d like to find out more about refund policies and refund rates, read on.

What kind of refund policy do theme and plugin shops offer?

Out of the 94 premium WordPress theme and plugin providers that I surveyed, I found the following:

We can see that over two thirds of stores offer refunds to their customers.

Types of refund policies

I broke down the different approaches into four categories:

• No policy
• No refunds under any circumstance
• Refunds but conditions apply
• Unconditional refunds

It’s also worth pointing out that a substantial number of theme shops that I surveyed sold their themes exclusively via Theme Forest, which has its own refund policy and which I didn’t consider for this article.

No policy

There were 10 sites that didn’t have any reference to a refund policy anywhere.

Michael Hebenstreit, from MH Themes, describes the rationale for not having a policy like this:

From my experience I can say that customers who are looking for refund policies before purchasing are often the same type of customers that are asking for discounts. We rather prefer that people do their homework before making a purchase (check features, demos, information, etc), the same way we ensure that everything will work exactly as advertised.

Michael Hebenstreit, MH Themes

This is an interesting idea: by not having a refund policy, you deter the type of customer who is likely to make potential refund requests, thereby keeping your refund rate low. In order to achieve this, you need to put the work in to ensure that you present everything the customer could want to know up front.

No refunds under any circumstance

I found 14 sites that had a definitive policy ruling out refunds under any circumstance.

This was the only category where I didn’t receive a response from a theme shop. Maybe it was coincidence, but no shop owner seemed to want to defend a policy that didn’t permit refunds.

Typically, clauses ruling out any refunds are brief and most refer to the impossibility of returning digital goods. One or two explicitly refer to the risk of being defrauded.

Refunds but conditions apply

There were 23 sites that had an explicit policy that allowed for refunds under certain circumstances. These circumstances varied, though generally there was a requirement to attempt to first resolve any issues via support.

This type of refund policy was always hidden away on a T&C page and not that easily discoverable by a customer.

Bhanu Ahluwhalia, from My Theme Shop, explains that they changed their policy in 2014 from no refunds to allowing refunds under certain conditions. He puts it like this:

We offer refunds only if our product is not working on their website even after contacting our support staff… Due to the nature of our products, we only provide refunds if the theme or plugin doesn’t work as advertised or if our support team isn’t able to solve any issues they had with the theme/plugin within 48 hours of reporting.

Bhanu Ahluwhalia, My Theme Shop

Unconditional refunds

I found 29 sites that had a “no questions asked” refund policy. Almost always, this policy is advertised on the site’s homepage or on product or pricing pages.

Frequently, the policy is framed as a Money Back Guarantee and features a badge or commitment statement from the company, like the example from Proteus Themes below. This very much forms part of the company’s marketing. An unconditional refund policy is there to create trust.

Scott Rollo from the Theme Foundry describes their process when a customer requests a refund:

We make an effort not even to ask ‘why?’ We want to keep it hassle-free and super-simple for our customers. And, in online transactions, I think a simple, honest refund policy is a really great way to show we back our own product and we trust people will love it.

Scott Rollo, The Theme Foundry

Justin Tadlock from Theme Hybrid:

I get a request for a refund about once a year. Twice in a year at the most. Most of the time, it was an honest mixup about what the customer was purchasing. No big deal. I just send over a refund in that case.

Justin Tadlock, Theme Hybrid

Theme Forest

There were 18 sites that sold their themes exclusively through Theme Forest.

As an absolute giant in the world of WordPress themes, you’d expect Theme Forest to have an extensive refund policy… And they do. (Hint: it’s not that easy to get a refund.)

Ben Ritner from Kadence Themes describes it from the point of view of a customer:

I for one, have been burned by purchasing something where I misunderstood the features thinking it would do what I wanted but didn’t. I feel like this is a common experience for many developers because of how popular Themeforest / Codecanyon are and how hard it is to get a refund if you misunderstood the intent or features of the product.

Ben Ritner, Kadence Themes

Mike Stott from Epic Plugins also raised the Envato issue.

WordPress is tricky though, the general CodeCanyon pricing for themes and plugins really gives unrealistic expectations for a lot of buyers on what actually goes into the products, supporting them and making sure they keep working with new versions of WordPress etc.

Mike Stott, Epic Plugins

What are the benefits of having a refund policy?

While not everyone is convinced of the value of a refund policy, there are some consistent benefits listed by those that do:

• Increase sales

Rich Tabor from ThemeBeans puts it succintly:

The refund policy definitely has an impact on sales. People buy when they are confident in their purchase. Refunds build their confidence in a very big way. Realistically, if someone bought a theme past the 14 day period – and wanted a refund – I would surely refund it anyway. My general philosophy is “If you’re not happy, I’m not happy”… Sure, I get it’s a digital product and the policy can obviously be abused, though the confidence it instills in my shop’s visitors far outweighs those losses.

Rich Tabor, ThemeBeans

Shri from SKT Themes changed their refund policy:

Sales became lower but genuine sales were more and refund requests reduced.

Shri, SKT Themes

• Customer peace of mind

Katie Keith from Barn2 Media describes how customer peace of mind contributes to sales:

We send a feedback request email to all customers two days after they purchase. This asks what convinced them to buy, and what might have put them off. They regularly mention that the 30-day money back guarantee was vital in convincing them to buy one of our WordPress plugins.

Katie Keith, Barn2 Media

Scott Rollo also refers to peace of mind.

Our customers love the pre-purchase peace of mind our 14-day refund policy offers. We hear that all the time. It gives customers the flexibility to try out our products to see if they’re a good fit for their project. If it’s not a good fit, we refund their money 100%.

Scott Rollo, The Theme Foundry

• Trust

Leland Fiegel from Themetry:

It’s probably hurting sales to not have a refund policy published. People like to feel assured that their payment will not be flushed down the toilet if they run into an insurmountable problem, and would rather not need to go through an arduous payment dispute procedure with PayPal or their credit card company.

Leland Fiegel, Themetry

• Repeat business

I’d rather someone try a theme out, hate it, get a refund, then move on – instead of trying a theme, hating it, then hating my shop for not refunding their money, then moving on. SO many customers who I’ve refunded even come back to try other themes (and land on one).

Rich Tabor, ThemeBeans

• Prevent negative reviews

We offer the policy to not only ease customers’ anxiety over the purchase but also to prevent negative rage reviews that simply come down to a misunderstanding of the intent of the product or design.

Ben Ritner, Kadence Themes

What are the legal requirements?

I am most definitely not a lawyer. If you’re concerned about legal requirements in this area then you should consult with an expert.

Interestingly, however, I noticed a couple of theme shops referring to an EU directive in their T&Cs indicating that consumers have no legal right to apply for refunds for digital products: https://europa.eu/youreurope/citizens/consumers/shopping/guarantees-returns/index_en.htm.

I think the point here is that you can put your foot down and refuse to issue a refund if you want. You just have to consider whether this is the best approach from a customer service point of view.

What are the risks associated with refund policies?

Probably the biggest fear around refund policies is the notion that unscrupulous customers will buy your theme or plugin, request a refund, then continue using the product.

However, in all the responses I had, I don’t think anyone actually flagged fake claims as an issue. Ben Sibley from Complete Themes describes how he changed policy:

There was a brief period where I did not have a refund policy because I was worried about people downloading the product and then requesting a refund. Unlike a physical product like shoes, there’s no way to guarantee anyone actually stops using it even after getting a refund. It’s a reasonable fear to have, but it’s very rare that someone actually takes advantage like that, at least for a smaller theme shop. I followed suit with some popular theme shops I saw offering refund policies and haven’t had issues with false refund requests since.

Ben Sibley, Compete Themes

As we saw from Ben Ritner’s quote above, if a customer finds it difficult to get a refund from you, they’re going to remember it. And they’re unlikely to come back to buy anything in the future. And of course, they’re going to tell others about their experience.

We’ve always offered refunds, we used to not have it as front and center on our site. This was because of a fear of people purchasing taking the product asking for a refund but then actually using the product anyway. In other words a roundabout way of stealing the product. That was stupid thinking and frankly, if someone wants to steal our products there are a lot of easier ways to do it.

Ben Ritner, Kadence Themes

You can mitigate against fake claims, however, by ensuring that your products are continually updated with new features and bug fixes. Any users who are trying to scam the system by continuing with your product will not have access to updates or support and will quickly find that their version of your product is out of date.

What are the typical refund rates?

Refund rates are not just a reflection of your refund policy. The complexity, maturity and quality of your product also clearly play a part.

Understandably, not everyone was willing to share their refund rates. However, I did receive figures from 16 shops and we can see that people are typically operating at a refund rate of 1% or under.

I broke the figures down according to the type of refund policy:

Bear in mind that there wasn’t a consistent reporting method here – some shops were able to give quite a precise figure, others less so.

I’m not sure that the data set is large enough to draw too many deeply meaningful conclusions. However, from the table we can see that refund rates are higher for shops that have refund policies. It sounds obvious but certainly bears out Michael Hebenstreit’s comments above.

We don’t know from these figures what effect refund policies have on sales. Many of the respondents to my survey clearly believe that the benefits of a refund policy outweigh the costs of making refunds.

What would be really interesting here is if providers were to run some A/B tests… I don’t know if anyone has ever done this?

[Update, 3 February 2018: WP Geo Directory published an article on their website just after I published this article. They actually discuss how they transitioned from a no-refunds policy, through to a policy with conditions, and ended with a money back guarantee policy. It’s the nearest to an A/B test I’ve seen.]

How long should you allow for a refund claim?

While doing the research, I was surprised to find a couple of providers offering 60 day money back guarantees.

I think this partly depends on the complexity of your product. Delicious Brains, for example, offer 60 days. The potential downside to this is that people who only want your product short term can use it then get a refund.

Steven Gliebe from Church Themes is a proponent of a longer refund period (Steven also wrote this article in 2014 about refunds):

I originally wanted to offer a 60 day refund period, but that was too close to the payment processor’s limit, so I chose 45 days instead. My idea was to give customers total confidence to buy and try. 14 days wouldn’t be long enough for many of our customers to give our product a fair shot. I would be comfortable offering 30 days.

Steven Gliebe, Church Themes

If anyone is on the fence about purchasing, this can be the tipping point since they can complete the purchase knowing they haven’t fully committed yet. Most refund requests are 1-7 days after a purchase, so customers know pretty fast, but 30 days gives them plenty of time.

Ben Sibley, Compete Themes

How to reduce refund requests

Even if you offer refunds, you want to avoid them as much as possible. There are some steps you can take:

• Make sure your documentation and support are solid
• Test your product thoroughly

I think the reason why we don’t get many refund requests is that we’ve extensive documentation available, we provide quick support (answers often after a few minutes during our business hours) and we also ensure that the product is solid. We heavily invest in product testing, often several times, before release.

Michael Hebenstreit, MH Themes

• Consider live chat

We are also on chat during our working hours to help clients with any queries.

Shri, SKT Themes

• Freemium model

Elliot Condon from Advanced Custom Fields describes how their freemium model is behind an extremely low refund rate:

I would like to think our low refund rate is all related to the quality of the product, but is more likely related to our freemium model. ACF is available as a free WordPress plugin which offers a lot of functionality out of the box, more than enough for a professional web developer to build with. 

Elliot Condon, ACF

Refund best practices

If you do get a refund request, I believe there are a few steps to take to ensure the best possible experience for your customer.

• Offer to help or fix any issues first. Obviously this is helpful to the customer, but it’s also helpful to you as it gives you an insight into your products from customer point of view
• Find out why the customer is asking for a refund. Depending on your policy, the reason for the request might not affect whether a refund is due – but it’s useful for you to know why the customer changed their mind.

Ben Gillbanks from Pro Theme Design describes their process:

Pro Theme Design offers a 30 day Guarantee – with a one question asked policy. The one question being “why?”. I use it as an information gathering exercise. I don’t want people to be unhappy with something they bought from me so I refund them as soon as I can. However I do ask that they explain what the problem was in the hopes that I can learn about the problem(s) they had so that I can try to address them for future customers.

Ben Gillbanks, Pro Theme Design

• If you’re going to do it, do it quick. Don’t let customers hang around on tenterhooks, wondering when they’ll see their money again
• Customer satisfaction is crucial to the success of any business. That applies even when the customer has decided they don’t want to be a customer any longer. Leave them feeling that they’ve been well-treated by you – they might come back later or tell others about their good experience.

We have adopted a very relaxed approach to refunds mainly because we don’t receive many requests, but also because we believe this is a fair part of business. When selling software (or any other product/service), accepting failure is an empowering lesson to learn. For instance, keeping 100% of customers satisfied is hard, but keeping 99% is easy!

Elliot Condon, ACF

Should you have a refund policy?

Yes, says Rich Tabor:

When I first started off I decided to not have refunds, though I still refunded people who were not happy. I didn’t know any better – but now I do.

Rich Tabor, ThemeBeans

No, says Michael Hebenstreit:

The type of customer who cares about refunds, maybe just doesn’t make a purchase if he can’t find a refund policy.

Michael Hebenstreit, MH Themes

What did I learn?

• In my opinion, with a refund policy, it’s probably better to go to one of the extremes – either don’t have a policy at all, or make your MBG central to the buying experience
• Personally, I’m no longer worried that a refund policy is an open-door invitation to people to steal my products. As a direct result of researching this article, I’ve changed the policy on this site to allow unconditional refunds and I’ve highlighted this on every page
• And of course, I’ve learned how incredibly open people are in the WordPress community. I’d like to thank everyone who took the time to contribute to this article.