Money Back Guarantee for Hosting Business Owners

posted by Archie @ 21:04 PM
December 7, 2010

Money back guaranteeIf you have your hosting business you have to take care of every single detail concerning your team, your hardware, your clients… and their billing. Today however, we are not going to talk about invoicing, transaction tracking or fraud control – our article is dedicated to money back guarantee.

Frankly speaking being a web hosting provider you are not obliged to have this policy and you may not offer money back with any of your services. On the other hand, offering money back may help your customers build trust in your company and the service you provide, which is a very important factor for attracting new sales.

Attracting Customers

Though it may look not very clear at first sight, offering money back does help attracting customers. Namely it increases the trust of the potential clients to you and your business. This works especially good for those hosting packages that use some new technologies – VPS servers, cloud hosting, etc. – or special hosting plans designed for hosting of particular software, e.g. blog hosting or e-commerce hosting. Even if there’s nothing special about the packages you offer, the money back guarantee is going to make your business look more serious and reliable.

Handling Billing

Although guaranteeing unconditional money back puts you under the risk of losing some funds, it secures you from a greater risk of losing even more funds in less fair way. We can’t say there were a lot of such cases but almost every host might have faced troubles with unexpected chargebacks and transaction disputes. The problem with those is not only about the fact you have to give back the money you earned on fair service provision, the problem is that you pay an additional chargeback fee that may make about $30 – $100 and even more sometimes.

Offering a money back guarantee lessens those risks much. As far as you know, hosting services require subscription and usually imply some funds being transferred upfront. By default the customer can have his or her transaction disputed within 6 month. If your hosting package has a minimal billing cycle of a year, it’s going to be 1.5 years – hardly a nice prospect for your business. A money back guarantee is something that is going to define the legal period for cost recovery, which means that even if a chargeback is requested, you have more arguments to dispute it and have it denied.

Tips and Tricks

Now you know why you need a money back guarantee. Let us find out which exactly way you need it to be offered. Below you will find some tips that are going to help not only hosting providers but regular clients as well. The former will learn which conditions it is advisable to offer money back on, while the latter will understand, what their providers mean by money back policy and how those policies work. This in turn is going to let the prospective clients make their choice with more trust and conscious.

First things first you need to create a policy. The clearer the policy is, the less misunderstandings you are going to have. One of the important points to consider is the money back period. Not only the time period should be fixed, but the starting point should be as well. The most recommended term to use is “XX days after initial signup” those three words disable money back guarantee for renewals or upgrades/downgrades. Another thing to take care of is the product you guarantee cost recovery for. If your client bought a hosting package and then a domain and/or a dedicated IP address along, while you refund only hosting packages – you should clearly mention it in your policy. If some services of yours do not include money back – state this, listing all packages this term concerns. The last but not least is the amount of funds to return – if your merchant takes some commission for reverse transfers, don’t leave this unmentioned. Otherwise you risk confusing your clients who are waiting for full cost recovery.

If you didn’t offer money back before – you now have reasons to start thinking of implementing it. Do it and watch more clients signing up for your services with more trust and pleasure. Apart from it you will secure your business from unfair actions of some customers, who we wish you never have. In case you are only looking into starting your own hosting business, check out our VPS hosting packages or dedicated servers – those are going to be a good launch pad for your own hosting company. Money back included 🙂

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