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How to Create a Refund Policy for Your Online Course

Learn how to create a refund policy for your online course that is fair, clear, and legally compliant. Get the tips you need to do it right!

Let the confetti fly… pop the cork on the champagne! You’ve successfully created and sold your online course. That is a huge accomplishment. Not to be a killjoy but errr, if you didn’t spend the time to figure out how to create a refund policy for your online course and communicate it to your students, that #winning can easily turn into #losing.

You’ll be like Oprah: “You get a refund! You get a refund! Everbody gets a refund!” Don’t believe me… take it from my friend Tarzan who had to give a $4,500 refund to someone who didn’t deserve it because she “gapped it” and didn’t create a refund policy:

Screenshot of Facebook comment by Tarzan Kay Kalryzian that says: "Doh! Just had to refund a client $4500 who TOTALLY didn't 'deserve' a refund... because my team and I gapped on the refund policy. I'm SOOO glad to have Bobby's template library to fill in the gaps I've been pretending didn't exist in my online business. Now if only my 8-month-old baby would sleep, I could sleep peacefully too knowing my legal stuff is dialed in!"

Dealing with the legal stuff may seem boring, but it’s important. And creating a refund policy for your online course should be at the top of your priority list. But what does “create a refund policy for your online course” actually mean? What should go into crafting one that will keep both you and your customers happy? We’ll explore those questions in this blog post so you’ll understand how to create a refund policy for your online course that is fair and enforceable!

Table of Contents

Do You Have To Offer Refunds?

Generally, you don’t have to offer refunds… Consumer protection laws generally allow “no refunds” policies as long as you communicate it to people at the time of purchase. Course creators tend to choose between three options: no refunds, no-questions-asked refunds within a set time period, or limited circumstances such as if students show that they’ve done the work.

The first option is self-explanatory… all sales are final and you don’t offer refunds. This policy is nice for you as the seller because you don’t have to worry about giving money back after you’ve made a sale. But, opting for a no refund policy could cost you sales in the first place. A solid refund policy is a great risk-reversal tool to make your potential students feel confident enough to buy.

The second option is also simple. As the course creator, you set a specific timeframe during which customers can request a full refund for any (or no) reason. A no-questions-asked refund policy gives people peace of mind, knowing they can get their money back without a hassle if they decide the course isn’t right for them. This type of policy shifts the risk to you.

The third option is a bit more complicated. You set a timeframe and define certain hoops people must jump through to get a refund even in that timeframe. Course creators often require students to prove that they’ve watched a certain amount of the content and completed some of the tasks assigned to them. This is a bit of a mid-way approach… Students get peace of mind knowing they can get a refund if the program doesn’t work for them, but they can’t get a refund just because they rethink the purchase.

Ultimately, you (as the course creator) get to decide what kind of refund policy works best for your business. But how do you make the decision?

Key Takeaway: Course creators have three options for refund policies: no refunds, limited time period refunds, or limited circumstances. Each option has its own pros and cons that should be carefully considered before making a decision.

How Do You Pick The Right Refund Policy For Your Online Course?

Your refund policy is part of your overall marketing strategy. That means you should pick the refund policy that will maximize your initial sales without leading to a glut of refund requests later.

When deciding what type of refund policy to use for your online course, you should think about a few considerations, including: (1) what will your students (and potential students) expect, (2) how likely are students to request a refund, (3) will a generous refund policy put your content at risk, and (4) how much of a commitment is each additional student.

What Type of Refund Policy Will Your Students Expect?

While some audiences may not have any set expectations about refund policies, some might. If your competitors have all adopted one type of refund policy, there’s a good chance your potential buyers have come to expect that you will adopt a refund policy that is at least as generous as that. If your students have become accustomed to “no-questions-aksed” refund policies, opting for either no refunds or a “show-your-work” policy could cost you sales.

As a general rule, you’ll want to meet or beat the competition when it comes to how generous your refund policy is. You can beat your competition either by moving to a more generous type of refund policy or by offering a longer timeframe (e.g., offering 90 days instead of 30 days).

How Likely Are Students To Request A Refund?

Next, you’ll want to consider how likely it is that students will request a refund because they simply rethought their purchase. It’s normal for some people to ask for a refund… but you generally don’t want your refund policy to encourage people who shouldn’t be buying your course to enroll. You don’t want a ton of “tire kickers” in your course.

This isn’t always an easy question to answer. But you should think about your overall marketing strategy (because that will affect how many fence-sitters end up buying) and how committed your potential students are. If the price of your course is a major expense for students, you should expect that more of them will rethink their purchase after the fact.

Will A Generous Refund Policy Put Your Content At Risk?

Allowing any refunds creates some risk to your content because people can get access to it and then get their money back. But this poses a greater risk for some types of courses versus others. The threat is greatest for courses that are released all at once and that are primarily about the content (not support).

If you choose to drip your course content out over time, allowing refunds is less of a risk. With this model, you can time the release of the content so that the bulk of the material (and often the most valuable material) isn’t released until after the refund period has expired.

Similarly, if the value proposition for your course is as much about the support they receive from you and/or the community they are a part of, allowing refunds doesn’t pose as great a risk. Sure, they might get the content… but that won’t reduce the value of your course.

How Much Of A Commitment Is Each Additional Student?

Finally, consider whether you’ll be investing additional time or money for each additional student. If increasing the number of students will require you to invest additional time or money at the outset of the program, you’ll want to be more cautious about offering refunds. The last thing you want is to reach into your pocket to give refunds after you’ve already invested some of that money.

This generally isn’t a major issue for course creators, but it would apply if students get any one-to-one or small group time with you or a team member. Those are hours you or your team members won’t get back.

Considering these factors should help you pick the right refund policy. Once that’s done, it’s time to clearly define it for your students!

Key Takeaway: In deciding what type of refund policy to offer, consider the expectations of your target audience, how likely students are to request refunds, how to protect your content, and what each additional student will cost you in terms of time and money.

Define Your Refund Policy In Your Course Terms & Conditions

Once you’ve chosen the right refund policy for your online course, it’s time to clearly set it out in writing in your online course terms and conditions. Your Course Terms & Conditions are the written agreement between you and your students. It is the written document that includes all the major elements of that agreement, from what’s included in the course to the refund policy to how disputes will be handled.

Curious about what all should go in your Course Terms & Conditions besides your refund policy? We created a free guide called Online Course Terms & Conditions Made Simple to demystify this crucial legal policy. Click here to grab your copy now.

If you opt not to offer refunds, that should be crystal clear in your course terms. In fact, most states have laws that will require you to honor “reasonable” refund requests if buyers were not told clearly at the time of purchase that there are no refunds. In other words, if you don’t have a written no-refunds policy, you will have to offer refunds. You don’t have to overthink how to craft a no-refunds policy. You can state simply that all sales are final and that you will not offer refunds in any circumstances.

But what if you decide to offer refunds? How should you spell that out in your course terms?

The answer is to be specific. When it comes to setting clear terms and conditions for your refund policy, be as detailed as possible. The goal of your refund policy should be to make it simple for you to decide whether to honor any refund requests from students. There should be no question of whether someone is entitled to a refund.

Your written refund policy should clearly state the timeframe for refunds (e.g., 30 days from the date of purchase), eligibility criteria (e.g., the specific work they need to have completed), and how they’ll request the refund (e.g., who to email and how to submit any work they were required to complete). With each element, the goal is to be crystal clear so there’s no confusion about when and how customers can request their money back.

A good refund policy will also spell out what will happen when students are entitled to a refund (e.g., that you’ll instruct your payment processor to issue a refund within X days)

Want to skip the headache of trying to draft your Course Refund Policy and Course Terms & Conditions yourself? Click here to buy my Course Agreement legal template, and you’ll have those policies created in a matter of minutes without having to write any legalese yourself.

Once you’ve created your course terms with a solid refund policy, how to you clearly communicate those terms to your potential students?

Key Takeaway: Your Online Course Terms & Conditions should include a clear refund policy that includes all the relevant details. Students should clearly know when they will be entitled to a refund, and the policy should make it simple for you to decide whether to honor a refund request.

Communicate Your Refund Policy & Get Explicit Agreement

Once you’ve created your refund policy, it shouldn’t be a secret. Clearly communicate your refund policy to customers before they buy your course… and get their express agreement to the policy. You should do this in two steps.

First, you should clearly communicate your refund policy (or no-refunds policy) on your sales page. While my legal templates aren’t a course, here’s how we convey our policy. We have it on our sales pages twice. It is part of the above-the-fold section:

Screenshot of webpage section for Online Course Agreement sales page. Among other things, the image includes an image of the agreement template, text describing the product, a "Buy Now" button, and dropdown menus for "Product Details", "What's Included", Refund Policy", and "Testimonials." The "Refund Policy" section is open and read: "Our individual templates come with a 30-day money-back guarantee. If you change your mind for any reason (or no reason) during the first 30 days, you can get a full refund."

We also include a more extensive description of the refund policy in our “Commonly Asked Questions” Section to make sure that purchases clearly understand our policy:

Screenshot of "Commonly Asked Questions" section of a sales page. The relevant question is "What's your refund policy?" The answer reads: "All of our legal templates come with an ironclad 30-day money back guarantee. If for any reason you're not happy with one of our templates, you can get that templated refunded within 30 days of purchase... no questions asked. The only exception to this refund policy is purchases of the Template Library all-access pass. Due to the nature of the product (you'll be getting access to every single one of our templates), we do not accept refund requests for that purchase. If you'd like to 'try before you buy,' try our FREE Website Privacy Policy template to see how they work. You can grab your FREE privacy policy here."

If you offer refunds, saying so on your sales page isn’t just a good idea legally… it’s a great way to increase your conversion rate by making potential customers more confident in their purchases.

From a legal perspective, you want to go one step further. You should require students to “click to accept” your Course Terms & Conditions as part of the purchase process. You should include a link to your Course Terms along with a statement that the student is agreeing to those terms next to a check box. And students should not be allowed to complete a purchase until they check that box. Here’s an example from our website:

Screenshot of a section of a checkout page that provides an Order Summary and a checkbox next to the sentence: "I agree to the terms and conditions." The phrase "terms and conditions" is hyperlinked. There is also a button to Complete Your Purchase.

Getting that “check” is how you’ll prove that your students agreed to the terms.

Key Takeaway: Clearly set out your refund policy on your course sales page and include a “click to accept” box during the checkout process that requires students to explicitly agree to your Course Terms & Conditions.

Conclusion

Creating a refund policy for your online course is an important step in protecting yourself and your customers. By defining clear terms and conditions and setting expectations with your audience, you can ensure that everyone involved has a positive experience. Doing so will also help to build trust between you and your customers, which is essential for any successful business. Taking the time to create a comprehensive refund policy may seem like an extra effort at first but it’s worth it in the long run!

Now that you’ve read this post, you know how to create a refund policy for your online course. But, here’s guessing you might rather avoid having to actually write the thing yoursel! If so… good news, our Online Course Agreement legal template makes it simple to create your refund policy and all the other essential elements of protecting your online course. Click here to grab the Online Course Agreement, and you can have your refund policy dialed in in a matter of minutes.