Ok, you are sadly lacking in basic business knowledge if you truly believe the bolded lines above, that's just plain ridiculous. Name me a legitimate business that a customer can walk into, pay a price for an item/service, NOT GET WHAT THEY PAID FOR, and be told by the seller "we'll both have to take a hit here"???? That seller would be SHUT DOWN!
It is ALWAYS the buyer that gets the benefit of the situation, you should KNOW this as a "businessman". When a customer PAYS a price, and DOES NOT GET WHAT THEY PAID FOR, they are entitled to a REFUND OF WHAT THEY PAID. Not fair? Tough. You are running a business, this is YOUR COST OF DOING BUSINESS. Do you think the grocery store gets to pull "both take a hit" on their fruit suppliers when stuff goes bad before they sell it? No, it is EXPECTED that some fruit will go bad, and they factor it into their balance sheet as a COST OF DOING BUSINESS. Like anything else that is a required expense to run a business... office supplies, *coughpackingmaterialscough*, credit card fees, rent, utilities, blah blah blah.
Your customer did not get what he paid $390 for. Whether or not you are "out a boa" COULD NOT BE MORE IRRELEVANT to your customer's satisfaction. If the necropsy report confirms death by something it had before you shipped, the ONLY course if action is a full refund of $390. That is what the customer gave you, and that is what you should refund. The customer did not get what he paid for, and if it is shown to be your "fault", then a full refund is the only acceptable outcome. Your customer does not need to know about your "expenses", nor should they have to care. It is not their concern what your costs of doing business are... they are paying for a product. Period. The only number your customer needs to concern themselves with is the price tag. That price they paid is what they are due if they did not receive what they paid for through no fault of their own.
I don't understand how someone stays in "business" when they treat BUSINESS transactions like some type of loosely-negotiable social contract...?