By the time you're reading a bad review, the person who left it has usually already decided how they feel. The reply isn't really for them. It's for the dozens of future customers who will read the review, then read your response, and judge the business by how it handled being criticized in public.
Respond, even if you disagree
A review with no reply at all reads as either not caring or not paying attention. Both are worse than a calm, professional response, even to a review you think is unfair.
Don't argue the specifics in public
Litigating the details of what happened, in the comment thread, in front of everyone else who'll ever read it, rarely helps. Acknowledge the complaint, state briefly and calmly what you'd do differently or how you see it, and invite them to continue the conversation somewhere private: a phone call, an email, a direct message.
Never get defensive or sarcastic
It's tempting, especially when a review feels unfair or exaggerated. A defensive or sarcastic reply doesn't convince the reviewer of anything. It just shows every future reader what tone to expect if something goes wrong with their own project.
Keep it short
A long, detailed rebuttal reads as a business that's rattled. A few calm sentences read as a business that's confident and has nothing to hide.
If the review violates a platform's actual policies, report it
Reviews that are clearly fake, from someone who was never a customer, or that contain unrelated abuse, can be flagged for removal. That's a different situation from a real customer who's genuinely unhappy. See what to do about a fake negative review for how that process actually works and what does and doesn't qualify.
Questions
How fast should I respond?
Within a day or two if possible. A response that shows up weeks later looks like it only happened because someone finally noticed.
Should I offer a refund or fix in the public reply?
State that you'd like to make it right and ask them to reach out directly. Working out the specifics of a refund or redo in public rarely serves either side.
What if the review is just wrong about the facts?
State the facts once, calmly, without accusing the reviewer of lying. Readers can usually tell the difference between a business correcting the record and a business picking a fight.