As a marketing consultant, I advise my clients to always provide a money-back guarantee. It’s a proven way to increase sales without a lot of cost or risk.
Would I give the same advice to my fellow freelancers?
The Case for Money-Back Guarantees
Having a money-back guarantee is good marketing. It takes the risk away from prospective customers. It shows how much confidence you have in your product or service.
For example, these past few months I’ve spent hundreds of dollars on various creams and other treatments for my son’s worsening eczema. So when I saw yet another “magic” cream at the natural health store, I was understandably skeptical.
However, the store owner said it came with a money-back guarantee. As long as I kept my receipt, if the cream didn’t improve my son’s skin after a couple of weeks, then I could have my money back. Of course, I bought it (and, yes, it worked along with other things).
Guarantees increase sales, and the additional sales far outweigh the refunds.
One of the most successful copywriters on Elance is a guy who promises a money back guarantee. Based on Elance’s statistics, he gets plenty of clients on the site. I’m pretty sure his guarantee is one of the reasons.
I’ve also talked to a business coach who offers guarantees on her coaching programs. So far, none of her clients has asked for a guarantee.
Does this mean freelancers should offer guarantees on our work?
The Case Against Guaranteeing Your Work
My own conclusion is that freelancers should not give money-back guarantees. Here’s why.
The risk and cost of money-back guarantees are much higher for freelancers than other entrepreneurs.
Those who sell physical products get the actual product returned to them before they issue the refund. More often than not, the customer even has to pay to ship the product back.
That means, even if the business owner may have lost some money in the transaction, they haven’t lost everything. They may still be able to resell the item, either at full price (if it hasn’t been opened) or at a discount. Either way, they can still cut their losses.
Those who sell digital products lose even less. After the digital product is created, it costs very little to reproduce them and deliver them to customers. This is why you can refund a digital product and not have to return it.
On the other hand, we freelancers put in our time, energy, and expertise in every project. Time, unlike money, is irretrievable once it’s spent. You can always make money, lose it, and make it again. However, time, once it has passed, is gone forever. You cannot “make up for lost time.”
Besides this, every work we create is customized to our clients’ needs and demands. We can’t turn around and sell a completed project to somebody else.
It wouldn’t be so terrible if the client were really dissatisfied. The problem is, sometimes people ask for refunds even if they ARE satisfied. For instance, in my two years of selling infoproducts, I’ve only had to make two refunds. One was because “It wasn’t what I expected.” The other was because “Your product was great, but I need the money.”
If you’re a freelancer, you simply cannot afford to return a client’s money for flimsy reasons like this. This is why I don’t believe freelancers should provide money-back guarantees.
I’ve even asked a couple of experienced and highly successful copywriters about this. None of them give guarantees on their work. The main reason for this is that the success of a marketing piece is a result of many factors:
- How targeted the audience is
- The design and lay-out of the piece
- The actual offer
- The timing
It would be foolish for a copywriter to guarantee a certain conversion rate, while being unable to control all of these factors.
At best, these copywriters promise a specific number of revisions–within the original scope of the project–to produce copy to their clients’ satisfaction. I use this approach myself.
What Do You Think?
What are your thoughts on guaranteeing your work? Do you do it, or not? If you don’t have a money-back guarantee, how do you reduce the risk for your clients?
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Image by christianhaugen