Tag Archives: refunds

Sunsetting a Product: Pricing

It may sound odd that you need to consider pricing when sunsetting a product or platform but you do – at least in some form.  This is the final installment in a series on decommissioning or sunsetting a product.  First you must get data to know exactly what the situation is; second, you must craft your communication plan, and finally, you need to consider the financial implications.

Refunds

If you are truly turning a service off, or ‘going dark’, you may have to consider whether refunds will be required for your existing customers.  If your business model is one of pre-payment, then you need to look into contractual obligations, notice periods and financial true-ups.  The potential impact of refunds may even dictate your sunsetting strategy, so you can minimize pay outs.

Let’s consider an example.  The company charges annually for the following year.  For example, on November 1st, you are charged fordollar_sign2 November 1st to October 31st of the following year.  The company will need to research the month with the highest number of renewals and you might base your decommissioning date based on that information to minimize the refunds.  If sunsetting this product is a large and complex effort, you might consider a rolling project where customers are moved off of the product or platform as their services expire contractually.  This approach can take up to a year to complete, but that might be ideal in certain circumstances.