Q: If the ideal cancellation rate of classes is 15 t0 20%, should we expect that 15 to 20% of our income should also go to refunds? They are asking because their cancellation rate is at 35% but their refund percentage is only 12%.
A: When you say the refund percentage is 12%, do you mean 12% of income? If so, that is because the average income from classes that are being cancelled is lower than your overall average income, so you will see a lower number. This would make sense, as you are cancelling because of low enrollments (thus, low income). Let's say you are offering 10 Classes. Three of those classes (30%) have enrollments of 5 people and they are paying $40 per person. That is income of $600.
The other 70% of your classes have 20 people. They are also paying $40 per person. That is income of $5600.
Your total income is $6200. Your cancellation rate is 30% but the percentage of your income refunded is only 10.7%, because the cancelled classes generated very little income. If the classes cancelling had a fee lower than the ones that made, then you would have an even lower percentage of your income refunded.