* The Business of Software

A former community discussing the business of software, from the smallest shareware operation to Microsoft. A part of Joel on Software.

We're closed, folks!

Links:

» Business of Software FAQ
» The Business of Software Conference (held every fall, usually in Boston)
» Forum guidelines (Please read before posting!)

Moderators:

Andy Brice
Successful Software

Doug Nebeker ("Doug")

Jonathan Matthews
Creator of DeepTrawl, CloudTrawl, and LeapDoc

Nicholas Hebb
BreezeTree Software

Bob Walsh
host, Startup Success Podcast author of The Web Startup Success Guide and Micro-ISV: From Vision To Reality

Patrick McKenzie
Bingo Card Creator

Refunds/chargebacks for non-physical sales?

Let's say I sell an app and charge for support only (the app itself is 100% free).  What happens if the user doesn't like my level of support, for example, he can't grasp what I'm telling him).  If he asked for a refund from PayPal or FastSpring, would they do it?  And would a bank allow a chargeback to his credit card?  There's no physical goods involved so how would he prove he didn't get what he paid for?
PSB136 Send private email
Thursday, October 31, 2013
 
 
Further: to me, it's a bit like donations: do people actually get refunds for donations, considering that when they pay, they are NOT getting or expecting anything physical/tangible product in return?
PSB136 Send private email
Thursday, October 31, 2013
 
 
> There's no physical goods involved so how would he prove he didn't get what he paid for?

IIRC this is is exactly why so many illegitimate chargebacks get through for actual software, there's no physical delivery so no way to prove (in the card companies eyes) that the product was ever delivered. I don't think there's any difference here, if the customer has a shady credit card company and wants to pursue a chargeback they'll get it.

Personally I wouldn't sweat this if you're talking about charging lot's of people for support, most people are honest. If on the other hand you only have a handful of clients this should involve contracts.

But, I don't think the free software / charge for support model is a great one for most businesses.
Jonathan Matthews Send private email
Thursday, October 31, 2013
 
 
"...so how would he prove he didn't get what he paid for? "

How would you prove they did get it?

Really, the customer only has to query the item on their bill to have it taken off, at least for consumers (B2B is different), so you just have to accept this as cost of doing business.
Scorpio Send private email
Thursday, October 31, 2013
 
 
> How would you prove they did get it?

Phone logs and agreed recorded calls, email trails, etc.
PSB136 Send private email
Thursday, October 31, 2013
 
 
You can dispute the chargeback and create an investigation. You really only want to do this for stuff like the client received the new $1500 laptop via UPS and signed for it and is now claiming it never arrived, in which case police reports for theft of property should be filed and there is an intent to prosecute.

Credit card companies don't like getting involved in he-said she-said tit for tat where the customer is genuinely unhappy and the merchant wants to do line by line in some service agreement to "prove" they held up their side. The presumption is the customer has a legitimate case. It's generally not worth it to fight these unless it's really clear there was fraud involved in the chargeback request.
Scott Send private email
Thursday, October 31, 2013
 
 
+1 to Scott for saying it better than me.
Scorpio Send private email
Friday, November 01, 2013
 
 
This is why I tend to encourage clients to offer outrageous guarantees, because they boost sales and you can't say no anyway.



AC
Reluctantlyregistered Send private email
Friday, November 01, 2013
 
 
Okay, so what about flat-out actual donations?  Do companies refund those (aside from wrong amounts)?  I don't see why they should, since they're given totally free by the payer with no expectation of anything back.
PSB136 Send private email
Friday, November 01, 2013
 
 
We refunded a donation to charity last year!

We offered the entry-level edition of our product at a nominal price ($10 instead of $1,000+) for a limited time and donated all proceedings ($5K+) to charity. One old customer, who stopped upgrading years ago, emailed us that he thought the new version has a certain feature, which it does not, and he had better uses for his $10. I simply issued a refund.
Dmitry Leskov Send private email
Friday, November 01, 2013
 
 
No, I meant merchant companies; not the software vendors.  Like, would a bank do a chargeback for a donation, or PayPal or FastSpring?  A donation is a one-way transaction, with the concept being no refund is expected by the donor.  To ethical people, anyway.
PSB136 Send private email
Friday, November 01, 2013
 
 
>> "Like, would a bank do a chargeback for a donation, or PayPal or FastSpring?"

Yes, absolutely.
Wyatt O'Day Send private email
Friday, November 01, 2013
 
 
For Paypal if you specify the payment as a "gift" then it cannot be refunded.

I know this as that's how I purchased some bitcoins last year :o)

(and for you haters;

http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgCzm1g10zm2g25  )

I'm not sure if their API can automate that, or present it elegantly?



AC
Reluctantlyregistered Send private email
Friday, November 01, 2013
 
 
Off-topic @AC
>> "and for you haters; [... nice inclined graph ...]"

That's the type of graph you want for your stocks, not for your currency. Unless of course you just want to cash out of your fake currency into a real stable currency, in which case ... congrats?

For a real currency (a currency adopted by a group outside of libertarian-nerds) you want to see a flat line. Or actually, you want to see a little bit of inflation (so a line sloping downward mildly over time).
Wyatt O'Day Send private email
Friday, November 01, 2013
 
 
Yes, because losing spending power is just so great...

But OT anyway.



AC
Reluctantlyregistered Send private email
Friday, November 01, 2013
 
 
I had a dream last night about a great way to sell software without worrying about piracy, but I fell back asleep after I woke and now I can't remember it.  :(  I feel it's still on the tip of my mind though, so hopefully I'll recall it today sometime.  Damn.
PSB136 Send private email
Friday, November 01, 2013
 
 
I just sell the software and don't worry about piracy.
Nick Moore Send private email
Friday, November 08, 2013
 
 
Yes Nick, that's kind of the approach I want to take.

Anyway, back to the topic title again: do people give refunds for services then? How does a customer prove to their bank that a service wasn't provided, and thus get a chargeback? Because to me, paying only for support is the same as paying for a service. I see no difference?
PSB136 Send private email
Friday, November 08, 2013
 
 

This topic is archived. No further replies will be accepted.

Other recent topics Other recent topics
 
Powered by FogBugz