4 ms·
Unearned revenue seems like a very dangerous thing for a most startups to have. It makes accounting more difficult, and unless you are careful not to spend it,
by Andys 17y ago
Unearned revenue seems like a very dangerous thing for a most startups to have.
It makes accounting more difficult, and unless you are careful not to spend it, you risk a 'run on the bank' if a large group of your customers demand refunds.
And unlike a bank, there is probably no insurance for the customers' "deposits". Also, if you need to raise your prices, do you allow people who already deposited money to have access to the old prices as they might expect?
But it sounds like Tarsnap has addressed these issues carefully, and the transparency is a great thing.
- patio11 17y agoyou risk a 'run on the bank' if a large group of your customers demand refunds. Most startups deal with this by putting a ginormous WE DO NOT OFFER REFUNDS FOR ANY CIRCUMSTANCES disclaimer on it. Personally I always hated that so I offer refunds for any circumstances. Since only about 2.6% or so of customers ask for them, I don't need much of a cash cushion at all.
- cperciva 17y agoPersonally I always hated that so I offer refunds for any circumstances. Me too -- tarsnap close their accounts and get a refund whenever they like. Not many do; but in the rare case that someone decides to stop using tarsnap, I'd rather refund their money than feel bad about keeping it.