Refunds

• By
• Chris Burgner

  Chris Burgner

  12+ years of experience, most recently as a Director of Finance at Intercom.

  

Mistakes happen. That’s what refunds are for.

As an analyst, the problem is that refunds are often used as a catch-all for many things like:

• Incorrect subscription set-up
• A misunderstanding on pricing (e.g., “I didn’t know my bill was going to 10x!”)
• Poor customer experiences

They also restate historicals, which can drive you crazy when trying to reconcile performance data. Rather than walking through each permutation, we’ll share our guiding principles on refunds.

Always work to fix the underlying issue in the correct upstream source (usually the subscription) and make the best effort to record the refund on the date it was processed instead of applying it retroactively (i.e., avoid historical restatement). The one exception to the latter point is if the refund amount is so high that it materially impacts performance or creates misleading results. For example, when a customer expands by $1M and your total ARR pre-expansion is only $200K. In those cases, applying it retroactively makes more sense.