Web Hosting Talk : Web Hosting Main Forums : Running a Web Hosting Business : What would you suggest?

[2freehosting]

Hi,
Our company is offering free domain name (.com .net, etc...) with each hosting purchase. We also offer 30 days money back guarantee with no questions asked. However problem is that domain names costs us money as you may know.
The question is, how would you suggest us to protect our company from loosing money once clients cancel account within 30 days and asks for the full refund.

[FernGullyGraphics]

A general rule of thumb is to make the cost of your domain names none refundable. In other words, if someone signs up for a year of service and cancels for what ever reason, you can refund them the full amount minus a small fee for the domain name.

[semoweb]

Ferngullygraphics is correct, Also if you for what ever reason wish to refund the full amount most registrars allow domain deletion for only $1.00 which is simply ICann deletion fee, then they credit you.

Anyhow for the most part most clients agree and understand that you cannot provide refunds for domains, just be sure to have a TOS.

[2freehosting]

Yes our registrar allows us to cancel domains, but only for the first 5 days, so it is not enough as usually clients request for the full refund after 10-15 days lets say.
The other option to exclude the domain fee from the refund is not so much possible as users put a dispute or charge-back via bank. It is actually hard to fight this.

[semoweb]

Originally Posted by 2freehosting

Yes our registrar allows us to cancel domains, but only for the first 5 days, so it is not enough as usually clients request for the full refund after 10-15 days lets say.
The other option to exclude the domain fee from the refund is not so much possible as users put a dispute or charge-back via bank. It is actually hard to fight this.

A dispute is a win with Paypal for most cases since its intangible.

As for a charge back then yeah its a bit harder but if your experiencing that much charge backs and cant afford to eat the losses on domains then stop offering them as it would be only logical if your not making out...

[2freehosting]

We can actually afford it, what is ok with us, however, we are looking for ways to optimize our business and get most of it. That is logical isnt it?

[semoweb]

Originally Posted by 2freehosting

We can actually afford it, what is ok with us, however, we are looking for ways to optimize our business and get most of it. That is logical isnt it?

Its logical indeed if you can afford the charge backs which it seems thats what your most worried about.

Its business and something you have to understand/accept.

[marisc]

Do you usually get a lot of cancellations within those first 30 days?

[The Stealthy One]

Originally Posted by 2freehosting

Yes our registrar allows us to cancel domains, but only for the first 5 days, so it is not enough as usually clients request for the full refund after 10-15 days lets say.
The other option to exclude the domain fee from the refund is not so much possible as users put a dispute or charge-back via bank. It is actually hard to fight this.

Every host I've ever seen (including some I've run) offering free domains will never extend a MBG so that it applies to domain registrations. In my opinion, your fear of chargebacks or disputes for doing so is unfounded - as long as you state this exclusion up-front in your TOS, you have nothing to worry about.

[tacgrp]

You have received some sound advice above. Good luck with your venture!

[activechase]

I would think twice before accepting paypal for domains, you can try to add a term says that in this case you can take over control on the domain since you paid for it.

[ameeriklane]

There may be another way to approach this. If you're confident in your service, then you'll have very few cancellations. So if you lose a few $$ on those few cancellations, that's not a big problem.

If your margins are so thin that a few domain registration fees from cancelled customers are a problem, then the problem is in your overall business model.

[famehosting]

We consider domain charges as advertisement expenses and always offer discounted prices and sometimes offer it free. We lose money in the first year... but over the years it pays off...think longterm.

As suggested by semoweb and The Stealthy One "It helps if you Mention your terms clearly whenever you are making an offer. Below is an extract from our Terms."

Fame Hosting proudly offers its client's a "30-Day Money Back Guarantee." This guarantee allows client to purchase Fame Hosting's services with full confidence and zero-risk. Consequently, client may request a full refund within 30 days of initial sign-up and be refunded all fees paid to-date, including setup fees, less any additional over-usage and domain registration costs. Terminated accounts are not eligible for this guarantee if the termination occurred due to a violation of this TOS.

This guarantee can be requested at anytime within the 30 days of the commencement of service if client is not satisfied with Fame Hosting's services. If the 30-day service of the subscription has been exceeded, client is not eligible for this guarantee. A request for this guarantee must be submitted via Fame Hosting's "Contact Us" form.

[JoeMcluer]

A good Terms of Service is the proper way to protect your business. The other thing is that any refund given in that 30 days must be justified not given to anyone that wants the money back. Justified reasons are considered only if your company does not provide the services that they promised.

[2freehosting]

Well, on our terms of usage we state that we provide 30 days money back without any questions asked. So we need to change our terms a bit probably.