6 December 2015 | 33 Comments
Recently I engaged in several discussions on the Facebook Kickstarter Best Practices group about refunding individual backers. I’m going to combine a few quick thoughts on this topic before I update our money-back guarantee stats as I’ve done for our previous projects.
How Refunds Work on Kickstarter
I contacted Kickstarter last week to figure out exactly how refunds work, and here’s the deal: For any project launched after Kickstarter switched from Amazon Payments to Stripe (February 2015), you can issue a refund to a backer at any time–even months or years after the campaign ends.
All you do is go to the Backer Report, search for the backer, and click “Issue a Refund.” There you can refund all or part of their pledge, and they’ll see the refund on their credit card statement a few days later. If you give the backer a full refund, they will no longer be able to comment on the project.
However, unless the refund is made within the 14-day grace period after the campaign ends (when the money is on hold), you will lose the roughly 8% fee charged by Kickstarter/Stripe. So if you send a backer a full $100 refund a few months after your project is over, the backer will receive $100, but you will incur a net loss on the original pledge of about $8.
If a Backer Asks for a Refund Before Receiving Their Reward, Should You Give It to Them?
The answer is completely up to you, the creator. But I would encourage you to ask yourself this question: Do you want to have backers who no longer feel good about receiving their reward?
I use the words “feel good” there because there are lots of different reasons a backer might not want to continue being a backer: Maybe it was an impulse pledge that they regret. Perhaps they learned something about the product, project, or you that they don’t want to continue supporting. Maybe something came up in their personal life that is putting them through financial strife. Whatever the reason, do you want to spend your time, energy, and funds on someone who no longer supports you and your project?
I think there is also a financial consideration for granting a refund to a backer. Going back to the $100 example, let’s say that you had a $100 KS reward that you plan to sell after the project for $125. Even if you incur the $8 loss in fees from refunding the backer, you’ll make more money selling that product later (if you’re confident you can sell it).
How Does the Stonemaier Games Money-Back Guarantee Work?
I won’t go into details about why we offer a money-back guarantee–you can read about that here. To summarize, it’s about trust. It’s one of the ways we say to backers, “Trust us with your hard-earned money many months in advance to make something awesome for you.”
Here’s how our money-back guarantee works: If you pledge to receive one of our games or products on Kickstarter, starting from the moment you make the pledge and extending until 1 month after you receive your reward, you can return it to us for a full pledge refund for any reason, including return shipping fees.
For all of our fulfilled projects to date, we’ve had a total of 20,484 backers who received physical rewards. A handful of them canceled before even receiving their rewards. As for the ones who received their rewards and chose to send them back, here are the totals:
- Viticulture: 0
- Euphoria: 2
- Tuscany: 3
- Treasure Chest: 2
- Between Two Cities: 6
- New Treasure Chests: 2
- TOTAL: 15
I share these numbers because I know it’s scary for creators to offer a money-back guarantee. I’m not saying it’s a good fit for you in the same way that it’s a good fit for us. But I want you to have some data for one company (Stonemaier Games) that has consistently offered this guarantee on our campaigns so you can make an informed decision.
Feel free to share your thoughts in the comments!
Also, a researcher (not me) is looking for some opinions of creators and backers. If you’d like to have an impact on their research, feel free to fill out this short survey.