Money-back guarantee: how to choose the terms, write the policy and honor it

A money-back guarantee promises buyers a full refund if they aren't satisfied within a stated period. It lowers the risk of buying from an unfamiliar brand, so it can lift conversion, and it costs you every refund you pay, often on product you can't resell. Under the FTC's guides, the phrase should mean a full refund on request, with any conditions disclosed and the promise kept promptly.

What does a money-back guarantee do, and what does it cost?

Part of a cold visitor's hesitation is the fear of paying for something that won't work for them, from a brand they've never heard of, with no way back. A guarantee moves that risk from the buyer to you. That's why it matters most where trust is lowest: cold traffic, a new brand, a product the buyer can't try in a store.

What it costs is every refund you pay. If the bottle has been opened, or never comes back at all, the product and the shipping are already spent. Check whether your payment processor returns its fee on a refund, too. Here is one illustrative three-bottle order, with refunds averaged across all orders:

From a $129 order to what is left, with 6% refunds

Illustrative numbers, per order on average

Price (3 bottles)$129.00

Product−$24.00

Shipping−$7.00

Payment fees−$5.16

Refunds (6% of revenue)−$7.74

Ad cost per order−$50.00

Profit per order$35.10

Say 6 of every 100 orders are refunded in full. Spread across all orders, that's $7.74 per $129 order. Double the refund rate to 12% and the same order leaves $27.36 instead of $35.10, about 22% less profit. Refunds come straight out of profit, which is why the refund rate belongs in your break-even math.

Type your own refund rate into the calculator to see how far it moves your break-even ROAS. It starts with the example: at 6% refunds the order breaks even at 1.52x, and at 12% it needs 1.67x.

Calculator

Break-even ROAS and CPA calculator

Your numbers per order. Below the break-even ROAS, every order loses money before fixed costs.

Average order value$Product cost per order$Shipping and fulfillment per order$Payment fees (% of the order)%Refunds and chargebacks (% of revenue)%Other costs per order$

Break-even ROAS

1.52x

Profit per order before ads

$85.10

Contribution margin

66.0%

Break-even cost per order (CPA)

$85.10

ROAS = revenue ÷ ad spend. Refunds are counted as revenue you give back; the product cost and shipping of a refunded order are already spent.

Reset to the example

What does the law say about money-back guarantees?

In the US, the FTC's Guides for the Advertising of Warranties and Guarantees set three expectations for a satisfaction or money-back promise (16 CFR Part 239):

1. It means a full refund. Terms such as "Satisfaction Guarantee", "Money Back Guarantee" and "Free Trial Offer" should be used only if the seller refunds the full purchase price of the advertised product at the purchaser's request.
2. Conditions must be disclosed. Ads that mention such a guarantee should clearly disclose any material limitations or conditions that apply to it.
3. It must be honored. A seller should advertise a product as guaranteed only if it promptly and fully performs its obligations under the guarantee.

In practice, anything that makes the refund smaller or harder to get is a condition to state next to the guarantee: original shipping you don't refund, return postage the buyer pays, a requirement to send back unopened bottles, a clock that starts at the order date instead of delivery. A guarantee that takes three weeks and four emails to collect is a problem under the third point, whatever its wording says. A "money back" badge at checkout makes the same promise, so the same conditions belong beside it; see our post on trust badges.

One rule often gets mixed up with guarantees. The FTC's Mail, Internet, or Telephone Order Merchandise Rule covers orders you can't ship on time: you must offer the buyer the choice of accepting the delay or canceling for a prompt refund, which for most payment methods, third-party credit cards included, means within seven working days (16 CFR Part 435). That's a separate obligation from your guarantee. This isn't legal advice; the VSL compliance guide covers the wider picture.

How long should a money-back guarantee be?

Long enough for a buyer to judge the product, plus delivery time. Beyond that, length is a trade you test.

Match the window to your bundles. If the offer you recommend is a three-month supply and the guarantee lasts 30 days, buyers do the arithmetic, and the short window can read as a lack of confidence in the product.

A worked example with illustrative numbers. The same three-bottle offer at $129 is tested with a 30-day and a 90-day guarantee, 10,000 visitors in each arm. Each order leaves $92.84 after product, shipping and fees, before refunds and ads:

The 90-day version refunds more and still earns about 9 cents more per visitor, with the same ad cost per visitor in both arms. If its refunds had reached about 11%, the two would tie. Two lessons follow. Judge guarantee length by profit per visitor, not by refund rate alone. And don't read the test until 90 days have passed for every order in it, or you'll be comparing a 90-day arm whose refunds haven't arrived yet.

Empty-bottle or unopened only: which terms should you use?

The terms decide how strong the promise really is. Here are clear terms next to weak ones:

Guarantee terms: clear and weak

UseClear terms

• Full refund within 60 days of delivery, even if the bottles are empty
• Email your order number; no reason needed
• Refund sent within two business days of the request
• The same guarantee on every bundle
• Any condition, such as return postage, printed next to the guarantee

AvoidWeak terms

• A “100% satisfaction guaranteed” badge with the conditions in a footnote
• Unopened bottles only, under a satisfaction-guarantee badge
• “Contact us for a return authorization” with no email or phone number
• Shipping and a restocking fee deducted, mentioned only after the sale
• A shorter guarantee on bigger bundles

Empty-bottle guarantees refund buyers even after they've used the product. They're the strongest version, because the buyer can try the product properly, and they suit a supplement that has to be taken for weeks before anyone can judge it. You will refund some people who used every capsule, so price that in.

Unopened-only policies refund buyers who send back sealed bottles. That's closer to a return policy than a satisfaction guarantee, since nobody can judge a supplement they haven't opened. If your refunds depend on unopened bottles, say so next to the guarantee, and think twice before calling it a satisfaction guarantee at all.

Hybrids sit between the two, for example "try the first bottle, and if you're not happy, return the rest, opened or not, for a full refund". Any version can be honest if its conditions are stated where the buyer sees the promise.

Then settle the details buyers will ask about:

• Do they send anything back? Asking for the bottles adds postage and friction for product you probably can't resell. If you require a return, say who pays the postage.
• When does the clock start? From delivery is fairer than from the order date, because shipping time eats into the window.
• Is shipping refunded? If not, say so next to the guarantee.
• Does every bundle get the same terms? It should. A guarantee that shrinks as the order grows works against your bundle pricing.

How to write a money-back guarantee policy

Write the whole policy as one short paragraph a buyer can read in ten seconds, then put the same words everywhere the buyer meets the offer. An example for a fictional brand:

Put it in five places:

One policy, five places

The same words everywhere the buyer meets the offer

1. 1VideoIn the video, at the pitch, in the same words
2. 2Buy buttonNext to the buy button
3. 3CheckoutAt checkout, beside the order summary
4. 4Policy pageOn a refund policy page linked from the footer of every page
5. 5EmailIn the order confirmation email

Processors expect the policy to be easy to find too. Stripe's website checklist, which Stripe says is based on the rules the card networks publish, asks for a refund policy that describes the conditions under which customers can get a refund, and for contact methods such as an email address or phone number, not only a contact form (Stripe's website checklist). What underwriters look for on a supplement site is covered in high-risk merchant accounts.

In RevvyScales, the guarantee is its own block on the VSL page, and the timed pitch reveal keeps offers, the guarantee and the CTA button hidden until the pitch second you set, so the terms appear together with the price (player conversion features). The legal footer carries your disclaimer and links your Privacy Policy and Terms (legal footer).

Then make claiming simple:

• One email address, answered within a business day.
• Ask for the order number and nothing else. A reason can be optional.
• Confirm each refund by email, with the amount and the date.

Can you limit a money-back guarantee?

Yes, as long as the limit is part of the terms the buyer sees before paying. Three questions come up again and again:

• Once per customer? A limit such as one refund per customer, or none on repeat orders, is a material condition. State it with the guarantee itself, not only on the terms page.
• A partial refund or a replacement first? Offering a choice, such as keeping the product with part of the money back, is fine as an option. The full refund has to stay one email away, because that's what the words "money back" promise.
• Must buyers give a reason? Make the reason optional. It's the most useful product feedback you'll get, and a required reason turns into a hurdle.

Track refunds by customer as well as by offer. If the same buyer keeps ordering and refunding, you can stop selling to them. What you can't do is quietly refuse a refund your page promised.

Why fast refunds cost less than chargebacks

A refund costs you the sale. A dispute, also called a chargeback, costs you the sale too, plus fees and a mark on your record with the card networks:

• Dispute fees. On a US Stripe account, a dispute costs a $15 fee that isn't returned, and countering it costs another $15, which is returned if you win (Stripe). Other processors set their own fees.
• Disputes count even after a refund. Card network monitoring programs don't consider refunds or dispute outcomes when they count your disputes (Stripe's guide to monitoring programs). A refund issued after the buyer has gone to their bank doesn't take the dispute off your count.
• Pre-dispute tools are the exception. Visa leaves disputes resolved through pre-dispute products out of its monitoring count, and refunds handled through Visa's Rapid Dispute Resolution don't count as disputes (same source).

Some disputes come from buyers who aren't trying to cheat. Friendly fraud, in Stripe's definition, is a legitimate cardholder disputing a purchase they made. It can be accidental, such as not recognizing the charge on a statement, or deliberate (Stripe). A refund policy that's easy to find and quick to use, plus a billing descriptor buyers recognize, removes two reasons to call the bank. How the networks count disputes is explained in chargeback ratio.

The rule that follows: when a buyer asks for a refund inside the window, refund the same day, without an argument. A slow reply doesn't save the money. It gives the buyer time to go to their bank instead.

A money-back guarantee checklist

Before your next launch, run through these:

Before you launch a guarantee

• Choose a length that covers the time buyers need to judge the product, plus delivery
• Write the terms in one paragraph: length, start date, what is refunded and what, if anything, comes back
• Use the same words in the video, next to the button, at checkout and in the confirmation email
• Link a refund policy from every page footer, with an email address, not only a form
• Print every condition next to the guarantee, never in a footnote
• Set a reply and refund deadline your team can meet every time
• Track refunds by offer, bundle and traffic source once each window has closed

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