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How bad is 2% refund rate?

by aritrim
8 replies
Hello Folks,

I was finalizing my accounts today and decided to do a refund calculation for the previous financial years. It comes to around 1.95%, or 2% in round figures for 2010. Question is how bad it is?

Is it normal? Here are the figures for the previous years.

2004 Refund Rate - 0.4%
2005 Refund Rate - 0.63%
2006 Refund Rate - 2.2%
2007 Refund Rate - 1.1%
2008 Refund Rate - 3.4%
2009 Refund Rate - 0.4%
2010 Refund Rate - 1.95%

Note that I do not use Clickbank, where a refund is issued even without asking the seller.

What's your refund rate and what do you think is a good and acceptable refund rate?
#bad #rate #refund
  • Profile picture of the author DavidG
    Honestly I wouldn't be suprise if the refund rate is higher in some years simply because of the economy. I'd say any type of refund is acceptable since you get to knock down what sells and what doesn't sell. Also what you shouldn't spend effort for the time being, as some things could be demanded in a later time.

    regZ
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    • Profile picture of the author vblacke
      Originally Posted by regZ View Post

      Honestly I wouldn't be suprise if the refund rate is higher in some years simply because of the economy. I'd say any type of refund is acceptable since you get to knock down what sells and what doesn't sell. Also what you shouldn't spend effort for the time being, as some things could be demanded in a later time.

      regZ
      I agree, I think it's just a matter of different buyer circumstance for the market that the product is in.
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  • Profile picture of the author Ti
    I sell software for gamers (see my sig) and my refund right hovers around 0.5% and 1.1%. Those refund rate numbers, for software sold on the internet, are extremely awesome.

    So a 1% rate is extremely awesome

    Also note that the 1% refund rate is really an industry minimum, not because of product quality, but because of credit card fraud, insufficient funds, and chargebacks. Things out of your hand.
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  • Profile picture of the author WillR
    I wouldn't be worried about a 2% refund rate - that's quite acceptable. Obviously the best refund rate is 0% but these days no matter how great your product is you are always going to get a few people who just don't want to play by the books.

    In comparison most physical businesses usually have an allowance of around 5% which means 5% of stock can go missing before questions are asked.
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    • Profile picture of the author aritrim
      Originally Posted by WillR View Post

      I wouldn't be worried about a 2% refund rate - that's quite acceptable. Obviously the best refund rate is 0% but these days no matter how great your product is you are always going to get a few people who just don't want to play by the books.

      In comparison most physical businesses usually have an allowance of around 5% which means 5% of stock can go missing before questions are asked.
      Did not know that! Thanks for sharing.
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  • Profile picture of the author Michael Cole
    A 2% refund rate is pretty darn good in my book, but I'm going to be the devil's advocate here.

    Some of the trainers I've worked with say a ten to fifteen percent refund rate is healthy for your business, otherwise you aren't marketing agrressively enough.

    The idea being would you rather have 98% of $1,000.00 or 85% of $1,500.00?
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    • Profile picture of the author aritrim
      Originally Posted by mccole61 View Post

      A 2% refund rate is pretty darn good in my book, but I'm going to be the devil's advocate here.

      Some of the trainers I've worked with say a ten to fifteen percent refund rate is healthy for your business, otherwise you aren't marketing agrressively enough.

      The idea being would you rather have 98% of $1,000.00 or 85% of $1,500.00?
      This was exactly I was thinking too. But the marketing overheads are accountable too when you are opting for 85% of $1500.00.

      Having said that I will vouch that if a 2x marketing increases your sales by 1.5x and have your refunds go up by 3x, then also you are in profit!
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  • Profile picture of the author UMS
    A 2% refund rate is pretty good. Some "gurus" would have you believe that if you don't have a 35%-45% refund rate, then you're doing something wrong.
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