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> They're having a hard time with the funds now, so they probably have to delay refunds in order not to go bankrupt. That right there is a red flag. Sometimes

> They're having a hard time with the funds now, so they probably have to delay refunds in order not to go bankrupt. That right there is a red flag. Sometimes companies don't make it. I've never heard of a story where a company put themselves above their duty to their customers in a way such as that which didn't lead to massive problems down the road. I sincerely hope your interpretation is incorrect.

AnthonyMouse 5y ago
Companies have to develop a product and then recoup the R&D from sales. If it costs $X to do the R&D and your margins are $M, you recover them after N = $X/$M sales. But then you need $X before you can make even the first sale. One way to do that is by taking pre-orders. Then you have money for the R&D before you have a product to ship. The problem comes if the product is late to market and then the people with pre-orders are unhappy. To give them a refund you have to have sold N products -- not including the one they're canceling -- or else you don't have the money because you already spent it on R&D. As long as you eventually sell N products, you can eventually give the refund, but you might not be able to do it yet. And, of course, if you never sell N products, you're in trouble.
- kbenson 5y ago
  I understand this, and I understand the reasoning. I've just never seen it turn out well. That can definitely be a sort of survivorship bias, where I haven't heard of most the companies that did it and succeeded and that didn't have later problems where it came to light. I just think that once you've accepted money for a good or service and haven't delivered that good or service, and the person wants their money back, you should be giving that money back to the degree you're capable. That it's inconvenient and may actually lead to the dissolution of your company or result in people not getting all their money back isn't really relevant. Make a case to the people and see if they are willing to accept it or alternatives (such as waiting a bit for more of their return), but don't make decisions on their behalf when your duty to return their money is clear.

AnthonyMouse 5y ago

Companies have to develop a product and then recoup the R&D from sales. If it costs $X to do the R&D and your margins are $M, you recover them after N = $X/$M sales. But then you need $X before you can make even the first sale. One way to do that is by taking pre-orders. Then you have money for the R&D before you have a product to ship. The problem comes if the product is late to market and then the people with pre-orders are unhappy. To give them a refund you have to have sold N products -- not including the one they're canceling -- or else you don't have the money because you already spent it on R&D. As long as you eventually sell N products, you can eventually give the refund, but you might not be able to do it yet. And, of course, if you never sell N products, you're in trouble.

kbenson 5y ago
I understand this, and I understand the reasoning. I've just never seen it turn out well. That can definitely be a sort of survivorship bias, where I haven't heard of most the companies that did it and succeeded and that didn't have later problems where it came to light. I just think that once you've accepted money for a good or service and haven't delivered that good or service, and the person wants their money back, you should be giving that money back to the degree you're capable. That it's inconvenient and may actually lead to the dissolution of your company or result in people not getting all their money back isn't really relevant. Make a case to the people and see if they are willing to accept it or alternatives (such as waiting a bit for more of their return), but don't make decisions on their behalf when your duty to return their money is clear.