You've poured your heart and soul into building your small business, carefully selecting products or crafting services that speak to your passion and expertise (and pricing to match).
But what happens when a customer isn't entirely satisfied with their purchase or service experience?
That’s where a well-crafted refund and return policy comes into play. Implementing these can safeguard your business and drive up customer loyalty, keeping them coming back for more.
In this article, we’ll give you a step-by-step guide to crafting your own policies and show you effective, real-world refund policy examples to inspire your own.
But first, let's start with the basics.
A refund and return policy is the playbook you turn to when your customer isn’t satisfied with their purchase.
Picture it as a friendly agreement between you and your customers, laying out the options and steps to take if they find themselves less than thrilled with your goods or services.
A refund policy is a crucial aspect of any business, and there are several types of refund policies that businesses can adopt. Here are some of the most common types of refund policies:
Partial refund: In cases where items are worn or damaged, a partial refund can be offered. This ensures transparency and helps customers understand the conditions under which they can expect some money back, fostering trust and clarity in the return process.
The short answer is YES. Whether you sell physical products, digital items, subscriptions, or services, a refund policy protects both your business and your customers. It’ll help you:
💡 Pro tip: As you start documenting all of the necessary policies for your business, like your refund and return policy, consider documenting other important small business workplace policies.
Let's walk through 8 key pieces of information that you should consider including in your refund policy.
The first piece of the refund policy puzzle is the simplest! Start by providing all of your business information, including company name, address, and contact details.
Abercrombie & Fitch Canada does so right at the top of their Sales Terms page.
Your policy should spell out which items can be returned, refunded, or exchanged and which are a firm "no-go." Many businesses choose to mix and match their policies.
📝 For example, you can exclude sale or discounted items from returns, categorize high-ticket items for exchanges, and reserve refunds for regular-priced items. If you’re in the service-based industry, you might just stick with a no-refunds altogether policy.
A great example of this is businesses that sell swimsuits online. Many declare that for sanitary reasons, tops can be returned or exchanged, but bottoms can't. See how Strawberry Milk Mob explains this clearly on their refund policy page:
Your policy should state the condition items must be in to be eligible for a return, such as being in original packaging and in good condition. This helps prevent disputes and ensures returned items can be resold.
Most businesses will only accept items in pristine, new condition, with all the tags and wrappings intact. This piece of information isn't relevant for service-based businesses.
Looking at the same example from Strawberry Milk Mob, we can see that they've included item conditions within their refund policy:
Give customers a clear and firm deadline by which they can ask for returns, refunds, or exchanges.
📝 For example, you may choose to implement a 30-day refund window for coaching sessions.
But if your business sells physical products, it's important to be clear about when the return window starts. Is it from time of purchase or from the day the delivery was made?
In the same Strawberry Milk Mob example, we see that they've decided to opt for a 15-day return period after delivery.
Don’t forget to require a receipt for every refund—whether it's a digital version or a traditional paper one. Otherwise, people may take advantage of you.
Requiring proof of purchase has also become something that's easier in a digital-first world. It's likely that your POS system or invoicing software will keep a record of customer purchases.
To speed up the return process, you may also require order number or order confirmation details, which is another way to verify proof of purchase.
Detail the steps customers need to follow to return an item, including whether they need to cover return shipping costs. Providing clear instructions makes the process smoother for both the customer and your customer service team.
This is especially important if you're running an online store because customers don't have the ability to just walk into your store and talk it through.
As you write out your return process, put yourself in your customers’ shoes and craft your policy to answer all their potential questions.
Specify whether customers will receive a cash refund, store credit, or an exchange. This transparency helps manage customer expectations and reduces potential dissatisfaction.
When looking at Strawberry Milk Mob again, we can see that in their policy they outline that they don't offer exchanges and that all returns will be processed for store credit.
Another element that you may include as part of your refund could be restocking fees. If applicable, mention any restocking fees that will be deducted from the refund. This can help cover the costs associated with processing returns and restocking items.
Specific overarching refund laws may already exist depending on which country you do business in. Be sure to double-check that your refund policies are in line with those to avoid possible legal issues.
Your policy needs to be clear and understandable. If you write it in legalese (or just in a confusing manner), you’ll risk needing to field an endless string of questions from befuddled customers.
Don’t forget to use clear headings so customers can easily find the information they want!
Our refund and return policy examples are here to help you out, but you’ll need to tailor them to fit your specific business model. Take the time to craft an effective policy now, and you’ll save time and hassle in the long run.
Once you have your ironclad return policy, the next step is informing your customers. Share your policy in:
Add a link to the policy in your website footer, so that no matter what page your customer is currently perusing, they’ll easily be able to access your return and refund rules.
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💡Pro-tip: Add a FAQ section to your website about your return policies to ensure customers can easily find the info they need. See Moleskin's example here. |
Do you send automated emails after a purchase or booking? Include a link to your refund policy in your booking or purchase confirmation email.
👉 If it’s a digital invoice, include a link to your return policy.
👉 If it’s a physical invoice, include a quick summary of your terms and direct your customers to where they can find more information.
👉 If you run an e-commerce store, include a link to your policy on the checkout page.
👉 If you run a service-based business, such as a hair salon, tutoring center, or coaching practice, don’t forget to include a link to your refund policy on your booking page.
Service-based businesses often have more complicated refund policies than e-commerce ones. While you can easily return a physical item, you cannot return someone’s time or efforts in the same way.
As a service-based business, you have three choices:
Browse through all three approaches in the sample refund policies below.
What they did well: Even though ReDiscover doesn’t offer refunds, the business still suggests what customers can do if they aren’t pleased with the services.
What they did well: Balayage House clearly explains what a customer needs to do if they aren’t satisfied with their service, including the time frame during which they have to report the issue and what will happen once they do.
What they did well: About Time Coaching lays out a step-by-step plan of what a customer must do to qualify for and receive a refund, and the consequences for asking for this refund too often. This policy ensures client satisfaction while protecting the business from repeat or unfair refund requests.
For service businesses, you can also opt to offer partial refunds and clearly explain scenarios where those are granted. For example, if someone's 50% of the way through a coaching package and decide they're not satisfied, you may offer a partial refund instead of a full one.
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🆘 Have trouble with last-minute appointment cancellations? Get tips for crafting your booking policy and cancellation policy to safeguard your bottom line. |
If you run an online store, you'll have a few more things that you'll need to include in your refund policy. These things can include:
What they did well: Cafe Blue lays out an easy-to-read, bulleted list detailing what steps a customer must take to return an item. The company outlines all the necessary details, including the time frame, item conditions, contact info, return address, and processing time.
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💡Pro-tip: Still intimidated by the prospect of writing your return and refund policy? Try using a policy generator to help you get started. |
Alright, we've used this example a few times but it's just so good! If you're running an online clothing business, you'll likely experience a higher rate of return requests. So, putting in the measure of offering store credit only for all refunds is a way to minimize the mountain of return requests you likely process.
What they did well: Across their entire refund policy, Strawberry Milk Mob makes their terms very clear across:
While it may seem like a small detail, your refund policy can significantly impact your business's long-term success and reputation.
Your policy will be the safety net for both you and your customers: it’ll safeguard your small business’ interests while showing your clients their satisfaction truly matters to you. So, don't wait—take the time to craft your refund policy now, and you'll definitely thank yourself later.