How To Create A Cancellation Policy: I’ve Tested The Best Methods

Working out how to create a cancellation policy stressed me out more than I expected when launching my SaaS product.

I only thought about it after someone got annoyed.

But I realized customers look at your cancellation policy the moment they feel frustrated.

You need to make it clear, fair, and legally sound.

I learned the hard way that it can be the difference between a customer leaving with a smile or torching your brand on the way out.

Yes, a solid cancellation policy can help you avoid unjust negative reviews.

More than two-thirds of SaaS companies had an annual churn rate of 5% or more in a given year - and I believe a lot of this churn can be attributed to poor cancellation flows and policies.

In this article, I’ll walk you through everything I wish I knew about creating a cancellation policy.

I’ll also show you how we use Raaft to turn our cancellation flow into a customer retention engine.

Quick note before we get into it: this article does not provide legal advice.

Always talk to a qualified legal professional before finalizing your policy.

How To Create A Cancellation Policy That Drives User Retention

Sound impossible? It’s not.

I figured out how to create a cancellation policy once I understood what customers expect when they decide to leave.

I didn’t just set rules.

I built a guide that walks someone through an emotional moment in a way that encourages them to return.

When we wrote our first policy, I asked myself: what would I want if I were canceling this product?

That mindset changed everything.

Why You Can't Skip Your Cancellation Policy

A cancellation policy sets clear rules for how customers end their subscription.

It answers questions like:

• How much notice do they need to give?
• Will they get a refund?
• Do we charge any fees?

Before I wrote our policy, we received constant support tickets.

Every customer had different expectations.

Once I documented everything in a standard cancellation policy, things calmed down.

We saved hours of back-and-forth.

Even better, we retained more customers simply because the policy felt clear and fair.

What I Include In My SaaS Cancellation Policy

I always include the following:

• How to cancel (in-app, email, support chat, etc.)
• Required notice period (e.g., 7 days before renewal)
• Refund policy (whether or not we offer prorated refunds)
• Any exceptions (like for annual plans)
• What happens to their data after cancellation

I write everything in plain language.

No legal jargon.

Just human words that reflect our tone and brand.

If you need inspiration, search for a "cancellation policy sample" or "example of cancellation policy."

Even better, explore "cancellation policy examples" in your industry.

Check what the leaders do.

Where To Put Your Cancellation Policy

Don’t hide it in your footer.

We link to ours on the pricing page, checkout page, and inside account settings.

That builds trust.

And it reduces frustration.

Customers hate surprises when money is involved.

Show them you care by being transparent.

Most SaaS companies include their cancellation policies inside the Terms and Conditions.

What Are The Best Cancellation Policy Samples?

Lemlist includes their cancellation policy in the platform’s Terms and Conditions.

That makes sure users agree to the cancellation terms when they accept the overall terms.

It creates a clear paper trail.

And it ensures legal alignment right from the start.

I think this approach works well for self-serve SaaS models.

When To Use A Cancellation Policy Template

If you’re starting from scratch, a "cancellation policy template" saves you time.

But never copy it blindly.

Make it match your business model and values.

When I first used a template, I missed key billing details that didn’t match our flow.

Customers got confused, and we had to rewrite it.

Templates work great as a starting point.

But not as the final product.

How I'm Using Raaft To Turn Cancellations Into Retention

Even with the perfect cancellation policy, people still cancel.

That’s why your cancellation flow matters.

We use Raaft to handle that process.

With Raaft, we:

• Collect feedback from users who cancel
• Offer targeted incentives to stay
• Run tests to learn what works

And yes, we include our full cancellation policy in the flow.

Raaft helps us reduce churn.

And it creates a smoother offboarding experience.

That makes a big difference.

What I Wish I Knew Before Writing Our First Policy

I didn’t realize how important tone would be.

Your policy shouldn’t sound like a punishment.

It should reflect how you treat your customers.

Fair. Transparent. Respectful.

And if I could go back, I’d install a better flow sooner.

Raaft made everything easier and more effective.

I wish I had found it earlier.

Don’t wait for customer complaints.

Write your cancellation policy today.

And build a cancellation flow that brings people back.