Kickstarter Lesson #168: How Kickstarter Refunds Work and the Results of the Between Two Cities/Treasure Chest Money-Back Guarantee

6 December 2015 | 26 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
[Update: 7 people returned Scythe.]

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.

26 Comments on “Kickstarter Lesson #168: How Kickstarter Refunds Work and the Results of the Between Two Cities/Treasure Chest Money-Back Guarantee

  1. My actual job is with a fast-casual restaurant and I handle all customer complaints that come through our stores (in my region). I constantly struggle with those who are opposed to or even offended by the concept of giving refunds. You hit the nail on the head with your “feel good” about the product comment. There will always be customers who are dissatisfied with the product, but us as creators and retailers have complete control with whether or not a customer is dissatisfied with the company!

    While I doubt I’ll ever need to use that Stonemaier Games refund policy, it raises your stock in my eyes that you stand behind it!

    1. Thanks for sharing your experience at the restaurant. Do you ever feel like a customer takes advantage of a refund? With a board game, it’s not consumable–it’s not like the game is unplayable or unsellable if someone opens it and doesn’t like it. You can’t do the same with a hamburger. :)

      1. Yes, it definitely does happen – though so infrequently that I’d say it’s negligible. Maybe 1 out of 50. The big frustration is that the “1” is what sticks out in the operator’s mind and is the big hurdle to consistently providing great service.

  2. I am a perfect example of a new campaign creator who was hesitant to offer the money-back guarantee. Had lots of doubts before making this a feature of my campaign for Cauldron this May. Am very grateful to Jamey for his advice in this regard – it really helped me feel confident in offering this to backers.

    To me what it comes down to is showing confidence in your product. If you are worried that upon receiving your game people will want to refund in quantities that are a cause of concern – you need a better game.

    My campaign had 962 backers. There was 1 backer who took advantage of the money-back guarantee. I am in strong support of making this a regular part of game campaigns.

  3. The money back guarantee is just a good choice. The terms may vary. Some do “at any point”, some do “after receiving”. It’s a tough call to make.
    For our first campaign we budgeted zero profit, and we meant it. We issued about 2-3 refunds before we fulfilled, but then had to tell 1 or 2 people “not till after you get it”. We were too close to entering the red. It’s a good thing we stopped for the time, as we budgeted within 0.7% of our actual costs, just over. If we offered those 2 refunds (and 1 of them was sizable), we would have risked fulfilling (or had to pull from personal coffers).

    If I could add anything to the discussion, as a cautious “Gate Keeper”, is to make sure you have the budget wiggle-room to offer refunds before fulfillment before you offer refunds before fulfillment. : )

  4. This is probably in the top 10 lessons I learned from your book “A Crowdfunder’s Strategy Guide.” It’s a scary idea at first. My initial thought was, but what if everyone hates it and wants a refund. But that thought showed me the amount of faith I had in my product, which at the time was obviously little. This has pushed me to improve my product until I am confident that people will enjoy it. Because, after all, if I have no confidence or faith in my product then I do not deserve the confidence or faith of my backers. And that is a valuable lesson I’ve been happy to learn and remember.

  5. I let people back out right up until the day we ship, and will give refunds within reason even after they get the product. Life throws people curveballs, and sometimes that $50 or $100 they pledged 6 months ago could make a huge difference — like paying the rent. It more than pays for itself in goodwill (and more concretely, in lifetime customer value).

    The only possible exception might be if someone pledged extra to get something that was personalized *and* caused extra costs to be expended on their behalf, but even there I would bend over backwards to work something out.

    Another thing I do in the rare cases where this has happened is tell the backers that when they feel like things have settled down, they can get back in at the same price they pledged, even if the current price is higher (assuming we can fulfill the order).

    One thing a creator can do to reduce refund anxiety is communicate as much as possible with the backers during production, so they see how the product is developing and won’t be surprised by the final result.

  6. Just wanted to thanks for this, Jamey. Based on your brave example (must have been scary that first time!) we’ll be offering a similar money-back guarantee on our upcoming KS. Fingers crossed!

  7. Have you considered that maybe part of the reason is that your games are that good? I have no doubt that there would be more refunds if you provided a bad service.

    Then again, the number of refunds will always be much less than the number of dissatisfied customers, because on the consumer side there is reticence to take advantage of a money-back guarantee.

    The combination of these factors is how, for example, L.L. Bean’s “Lifetime Guarantee” doesn’t send them under.

  8. “Have you considered that maybe part of the reason is that your games are that good?” I’d like to think that our games are pretty good, yes, though it’s fairly subjective. I think there is a bit of a chicken-and-egg scenario here too: While I’m motivated by many things, it’s helpful to have a little pressure to try to make every game as great as possible BECAUSE of the presence of the money-back guarantee. I’m sure no one sets out to make a mediocre game, but perhaps the money-back guarantee could serve as a good motivator for other creators to put only their best work on Kickstarter.

    Objectively, it would be interesting to compare the return rates of all board games with money-back guarantees in comparison to their BGG ranking.

  9. Another factor that may account for those low numbers is that so many of us admire Jamey and we enjoy watching him work.

    I ordered a game, though I haven’t touched a board game in twenty years. It’s still in its original packaging and I’ll give it to someone eventually as a gift. I didn’t order it because I wanted the game. I ordered it because I like supporting Jamey. (When I have more money, I’ll just donate. For now I justified a larger pledge by considering it a future gift.)

    Once you like a creator a lot, you’re not likely to ask for a refund, no matter how you feel about a product, because you’re pledging to support him or her, as opposed to just shopping. So refunds are probably a safe option for creators who treat backers really well. They’re probably a more questionable option for creators who neglect backers.

  10. Wendy: Well, that’s very nice of you to say. It feels good to be supported by people like you, even if you’re not into games. That’s also a great point about how the connection between backers and creators they like may result in fewer money-back requests. “Refunds are probably a safe option for creators who treat backers really well.” If that’s an extra motivation for creators to treat backers well, I’m all for it! :)

  11. I and a few friends gave money to ZNAPS. We NEVER got a product or refund. However, it seems the producer did start selling them on Amazon after we funded their startup. I will never give Kickstarter money again.

    1. It sounds like that’s much more of a ZNAPS issue than a Kickstarter issue. ZNAPS is responsible, so why would you hold that incident against all other Kickstarter creators?

  12. NEED ADVICE on refunding backers after project was successfully funded.

    After the money was cleared and ready to use, and after spending some of it in preparation to even begin the project, it has had to be cancelled before it was even started. Some funds have already been spent. I am not the Kickstarter campaign project creator, but I am the main public face for the backers on the KS page for the project. I feel it is important to refund the backers 100% as we ran into insurmountable liability/legal issues that were not anticipated.
    As my relationship and my reputation with the backers is important to me, I am ready to pay the difference (including all KS fees from my own personal funds (which is not at all connected to the project account, but can be put into the account by the project creator).

    The refund policy according to Kickstarter seems somewhat nebulous to me. The project “creator” said she was told that we have until Sept. 15th to refund the money to backers using the project Kickstarter page, but after that she will be unable to do it using the backer refund link on the KS page, and will have to find another way to refund the backers and it will be much more difficult, and possibly more costly. I don’t know where she got this information. Communication with her has been very challenging, and she has not responded to my questions about it.

    So to be safe, would it be advisable to begin refunds now, and add additional funds as needed to make sure that there is enough money to pay everyone back 100%? Of course it is the “creator” who is in charge of the funds. She is as anxious as I am to start the refund process, but there have been some delays in getting a refund on money that is due back into the project account. It could be months due to a check payment made to a collaborator in Europe and needs to be returned to the project account and reissued another way.

    Any knowledgeable advice will be greatly appreciated.

    Than you,

  13. Maximilienne: Thanks for your question. I have never heard of Kickstarter placing a time limit on when refunds can be processed through their system. It’s been nearly 3 years since my Scythe project, and I can still send refunds to backers through Kickstarter. I would suggest that you make sure you have access to the Kickstarter account so you can handle that process, as it sounds like your co-creator isn’t up to the task.

  14. Something you mention but no one followed up on:

    I received a game, which unfortunately didn’t produce what they promised, I wont go into details, the game is complete and works, but they had to scale back sizes and quality to get to print, and didn’t tell anyone, so I voiced my concerns and suggested a refund.

    I was told: Ok, here have a free game, refund is on its way. and I was kicked out of the group.. Ouch!

    The Issue wasn’t the refund, it was that I was now locked out of the project, I was no-longer a ‘backer’ and it was that moment that I realised, I didn’t want a refund, I wanted to be listened to. While I was to get my money back, and a game.. It also felt like it was a strategic move to lock me out from bad comments in the forums..

    I’m unsure if it was, so I’m not going to comment on who, because it felt like a decent enough thing to do.. “sorry, Here’s your money back, keep the game”, but also a slap to the face. No more soup for you!

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