Should we allow refunds in a multi-year SaaS contract paid upfront?

echojason@gmail.com'

JASON LEMKIN

Let me add a controversial idea.

Everyone will say No.   Never allow refunds in a multi-year contract.  Sales will hate it if there is an explicit or implicit clawback if they do.  And — what the frack is the point of a discount for multi-year if you can cancel?

They are right.  So generally, don’t do it.

But ..

You are a start-up.  Until you are at $10m, $20m ARR … Close.  The.  Deal.   And — cash is king.

If they’ll pay you three years up front, and you have to take some risk you make them happy — I’ll take that risk.

Assume few of your large customers, the ones that will actually pre-pay for 2-3 years, will churn anyway if you do your job right.

So net, net the risk is low.

See Questions On Quora

View original question on quora

Published on January 21, 2016
Share This