WordPress product sales vs refunds
How many of your monthly sales turn into refunds afterward? 💰
The question about refund rates was raised in the WordPress community a while ago. No answers were given.
Businesses are not really comfortable talking about refunds and how much money they lose. It can uncover quality issues, impact reputation, and reveal financial results.
Nevertheless, the question remained and I wanted to get some answers. An anonymous survey was created for WordPress businesses to share their refund rates.
Out of all the WordPress businesses out there, 89 decided to share data about their themes, plugins, and services.
WordPress and beyond 🌎
The average refund rate in eCommerce rests around 20% with numbers going up to 30% when we talk about holidays and sales. These are disturbing numbers for businesses but we need to understand that physical goods receive a lot more refund requests.
The main reasons for refunds are damaged goods, late delivery, wrong size, and faulty description.
Not all reasons are applicable to digital goods and there is usually no way to “return” digital goods. For digital goods, the average refund rate is around 5% with experts suggesting that everything below the 5% mark is considered to be good.
How does it go together with WordPress?
The average refund rate in WordPress (based on the survey) is 4.1%
The average refund rate in WordPress (based on the survey) is 4.1% which is below average and fits into the suggested numbers. At the same time, 21% of all responders said that their refund rates are above the 5% mark.
Are you good if your refund rate is higher than 5%? Depends on your sales volume. You can still make a fortune by selling thousands of licenses monthly. On the other hand, working on reducing your refund rate can help you get more and improve your reputation along the way.
Themes, plugins, and services 📦
It was also interesting to compare WordPress themes, plugins, and services to see how do their refund rates look like.
I'll start with the bad news, theme authors were the least active ones. Out of 89 respondents, only 6% were theme authors. Since the number is low, there is no real reason to build any assumptions around the WordPress themes and their refund rates.
Instead, I focused on the WordPress plugins, representing a solid 60%, and services with 34%.
The average refund rate for WordPress plugins is 5.77%
The average refund rate for WordPress plugins is 5.77% with 37% of all plugins having a refund rate above 5%.
The average refund rate for WordPress services is just 1%
As for the services, the picture is way better. The average refund rate for WordPress services is just 1% with no services exceeding the 5% mark.
Does it mean that WordPress services provide a higher quality compared to plugins? Not necessarily.
The nature of services compared to products are very different. So are the refund policies - or can we say the absence of the refund policies? Most of the services do not offer any refunds which is obvious.
For the plugins, the game is a lot different. Most of the plugins offer long refund periods to win customers. Just like with physical goods, customers use those refund periods to try products or receive updates.
Nevertheless, being on the product side is not a bad thing at all. As we all know, there are many successful WordPress plugins with solid market shares. For such WordPress businesses, refunds are part of the deal you must accept, while working on reducing it.
Your WordPress product refund rates
Do you know your refund rate? To my surprise, many businesses admit that they do not calculate their refund rates.
The refund rate is not just about the money. It is a health metric for your business to uncover issues with quality, reputation, customer flow, and more. Following that number can help you improve your products and services and get (or keep) your refund rate low.
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With in-depth research done on WordPress plugins, the infographic represents the most interesting findings collected from WPRacoon and other resources.