Photography Contracts and Retainers: Why Mine is Non-Refundable

non-refundable retainers, photographyIn theory, it's hard to understand. But once you've actually suffered a major financial loss due to a wedding cancelation, it starts to make more sense from a business perspective. Let me explain.

Our contract terms have always been to collect 1/3 of the payment at the time of booking. It is a significant amount; and I am making a significant commitment to the client. Doesn’t matter if a “better offer” comes along (or I change my mind, or I win a free trip to Europe, or J.Lo wants me to photograph her 4th wedding) I am committed to the original client and their date. It works both ways, and the non-refundable retainer is the client's way of making that same commitment to me.

Many people think, well, if the wedding hasn't happened yet, you haven’t done much work, so why not offer a refund?

You haven't done the bulk of the work, true. But wedding photographers are often unable to get similar work on that date or replace that lost income due to the nature of the wedding business. And you might be surprised at how much work and time are involved in the administrative side-let's talk about that for a minute.

In order to book a client, we would typically meet with two or three couples. Each consultation takes about two hours, an hour of travel time (for off site meetings), an hour of preparation time and about an hour of follow up time. So that puts us in the neighborhood of fifteen or more hours of time to book a client (2-3 consults). If that client later cancels, and we have to try to rebook that date, we are now looking at an investment of another ten to fifteen hours to meet with new potential clients. Following up with leads, consultation meetings, follow up, this all takes real business time.

OK, fine, so you waste ten to fifteen hours, just charge an administration fee to cover your time, and then rebook the date, right?

Not so fast. Wedding photographers have 3 distinct seasons throughout the year-the busy wedding season, the slow season (marketing season in my book) and booking season. Most wedding photographers will get the bulk of their inquiries and bookings during a certain window of time each year-booking season. The problem with trying to rebook is that if the wedding cancels after your booking season is over, it becomes very difficult to rebook a date.

First Cancellation Experience

Our first cancellation started out as a postponement. We got an email from the groom about 2 months before the wedding (just before the second payment was due) explaining that due to unforeseen circumstances, the wedding was postponed. We suspected a case of cold feet, but the couple assured us everything was on track and they rescheduled to the following summer.

So we book off the new date for them, turning down other couples and other work. And guess what happens right before the second payment is due, one year later? Yep. They email us again, saying that they have had to call the wedding off. This is two months before their wedding, and it's very unlikely we are going to rebook this date. Not only that, but this couple ate up two (!!!) prime wedding dates, and caused us a double financial loss due to losing out on not one but two bookings!

Obviously, they were suffering as well; a breakup is not fun for anyone. Even though our contract very clearly states that the retainer is non-refundable, the client expected that we would “do the right thing” and give them the money back.

We experienced a financial loss of $12,000 or more due to this client rescheduling and then cancelling. The $2,000 retainer was a very small compensation. This was a real financial loss, and it was hard on us. Imagine cutting $6,000 out of your expected revenue for the year-that's gonna hurt, isn’t it? That money is earmarked for expenses, bills, mortgage. Now do it twice.

This is part of the business. If you haven’t had a cancellation yet, you will. Hopefully you are prepared for it, with a good legal contract in place. <– Click to tweet this

Hopefully, that contract indicates what will happen to the retainer in that case-that it is non-refundable. Encourage your clients to read the terms carefully, and if they do not agree, they should not sign.

The thing about a contract is, it goes both ways. It protects the client, and commits you to their wedding date. It's not a “I'll shoot your wedding as long as nothing better comes along” commitment. It's a “I'll shoot your wedding even if my mom's in a coma in the hospital” contract. (2 years ago my friend, I shot a wedding 2 days after my mom unexpectedly went into a coma and on life support). On my end, that contract is a rock solid commitment. Come hell or high water, I will be there, and god forbid I don’t make it, I will personally pay to send someone better than me in my place.

The client has made a commitment as well, and so it is only fair that the contract protect YOU and your business as well as the client.

Exceptions for Every Rule

Do I make exceptions? Sure I do. Last year I had a client who about a week before her wedding, began to realize that all our correspondence with her mentioned a different date than her actual wedding date. She had actually filled out the wrong date in her consultation notes (hey, it happens…I guess), and then when we created the contract (with the wrong date) she signed that as well. Yep. Hard to believe, but true. She'd already paid in full, which according to our contract terms, all payments are non-refundable. If we could have switched her date, we gladly would have, but we did not have her date available. In this case, I refunded all her payments, and that was a big hit financially. I pretty much ate it on that one. But these things balance themselves out, and you have to take each case individually. And because my contract is set to protect me, I was able to make the decision. What if I didn't have $9,000 sitting in the bank, what then?

A Double Whammy

Last year, I also had not one but two postponements. We got client calls on the same day (kinda twilight zone like). In these cases, we always try to accommodate new dates, but the contract states that the choice is entirely up to us, giving us the flexibility. Sometimes you just don't know what the situation will be and if you can financially weather the situation at the time.

For both of these clients, they had extreme emergencies in their lives that caused them to need to post-pone their weddings. Of course we were sad for them to be going through a rough time, and certainly don't want to make things any more difficult on them.

But from a purely business perspective, this was another double whammy, and here's why. Both brides had prime summer wedding dates last year, and when they rebooked their weddings for this year, they chose prime wedding dates as well. Those are dates I KNOW we would have been able to book. But those are two wedding dates we will not earn any income from this year. And that is a real loss, and it is significant. Of course, our brides have suffered devastating personal losses as well, and as people I care about them. But that is different from the financial loss my studio is absorbing due to the situation. By having a flexible contract in place, I have options. Do you?

This is just part of the balance of keeping a retainer on a cancellation. You HAVE to have a contract that protects you. Sometimes the client takes a hit, sometimes you take a hit. But if you don’t have a policy in place that retainers are non-refundable, its always going to be you taking the hit. <– Click to Tweet

photography contract templates

If you are starting to freak out a little bit right now (cause your so-called contract is a fill-in-the-blank form out of a book) I highly suggest you check out these photography contract template options by Rachel Brenke, a photographer and business consultant with an MBA and law degree. For $89 bucks, you can rest at night knowing your a** is covered in case of (in case of what, I'm not saying. Just in case of.) A photography contract template should not replace consulting with an attorney, but if you aren't ready to hire an attorney (and pay hourly attorney fees) then this is a good option.

 

Have you experienced a cancellation? What do you think?  If you want more info on sample photography contracts, check out the post on photography contract ideas.

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{ 14 comments… read them below or add one }

Wendy Roe July 12, 2013 at 10:04 am

Hey Lara!

Great piece as usual 🙂 In 6 years we’ve had 2 cancellations until last month where we had 2 in a month of couples calling it off for this year. It was particularly painful because one of the Saturdays in Sept was one of our most sought after dates (we probably turned down 15 prospective clients). We charge 1/2 upfront of their collection (they range from 4-9k). It’s still a substantial loss but we’re grateful it’s not a double full whammy. The funny thing is that we typically never book last minute but had a couple who booked for one of our last remaining dates in Aug just this week. It does work out in the end!

Hugs to you and baby 🙂

Best,
Wendy

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Laura Kaczmarek July 10, 2012 at 8:18 pm

Great post, Lara! I haven’t been in business that long, and retainers are something I have overlooked. Your post has brought many things to consider. I’ll have to look into Rachel Brenke’s legal forms…I thought my own contract was good enough! Thanks again.

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Lara White July 10, 2012 at 11:09 am

that’s an excellent point, and I think I would tend to agree with you, if the date is otherwise available and not likely to be booked. But if you have to suck it up to the tune of 3-4k+ (when you lose out on another booking), that might not be the easiest call to make.

With our two clients that postponed last summer, both weddings are back on track for prime dates this summer that absolutely would have booked. It was my pleasure (and financial sacrifice-which they will never hear about unless they read this blog) to take that hit financially because I could. What they were going through was terrible, and in need of all the help and understanding they could get. But, at the end of the day, I would not put my own family in great financial peril for that reason-I wouldn’t risk a mortgage payment over it, if you know what I’m saying.

In the end I think its about options that give you flexibility and protections. With your postponement clause, you can enforce it or not, depending. Hopefully someone out there reading this will put just such a clause into their contract, and save themselves grief down the road!

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Rachel Brenke July 10, 2012 at 11:04 am

Great way to put it! I’m half tempted to include this post with my contract when I deliver to a client because most don’t understand why it is there. Working in services is a delicate balance between protecting ourselves and customer service. Like you mentioned the clients expecting you to “do the right thing”. Most do think this, especially when they are already in an emotionally charged situation (throw in money). It’s hard sticking to your guns but that is where contracts comes into play. Let the contract do the talking for you and give you a legal leg to stand on.

Great post!

Rachel Brenke

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ille Photography July 10, 2012 at 10:34 am

My current contract has a section on postponements and states clearly my option to collect an additional, predetermined fee for postponements as liquidated damages. Certainly there are times to enact this clause and other times to go easy but it does allow for at least partial compensation for the date that can’t be re-booked due to a postponement.

I’ve yet to have to use this clause, thankfully, but it’s there as an option to soften the blow of a postponement if I need it.

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Lara White July 10, 2012 at 10:44 am

That’s a great way to handle date postponements Ille. I think that is the whole point, that we put clauses in place that offer us protection and the option to handle each scenario as it comes up.

Another situation can happen is the weddings postponed due to natural disasters, also known as “acts of God” clause. This can be very vague-it’s one thing if the disaster happens the day or day before the wedding, and so of course its going to get post-poned. But what if the wedding is scheduled for a month later, but many of the amenities or special features have (literally) blown away, and the bride simply chooses to reschedule due to the inconvenience of having her wedding at a recently wind-ravaged location? Are you going to give up the profits from an entire other date, simply because she makes the optional choice to hold her wedding at a different date/location? Are you personally able (and willing) to give that bride a wedding gift of several thousand dollars when you take a prime date off to work for free? Maybe yes, and maybe no, right? It depends on BOTH the circumstances and your situation at the time.

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ille Photography July 10, 2012 at 11:01 am

Acts of God is a tough one. Shooting a wedding at a venue that has been wind-ravaged and lost much of the natural beauty will potentially be a more challenging and stressful shoot to deliver the expected level of photography they hired you for. Obviously we’re not miracle workers, we’re photographers (ultimately documenting reality…creatively sure but still what’s available). I might be willing to be more lenient in this case to avoid the potential for more stress overall. Less stress is worth something too in my book. 🙂

-Ken

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Christopher July 10, 2012 at 9:48 am

I’m blessed to only have had one cancellation this year. Two days after booking, they found out that her father had booked another Studio as a gift. The client called back to let us know as a courtesy & never even asked for her non-refundable deposit back. That line is in BOLD in our contract. We returned the retainer anyway (the check hadn’t even been deposited yet) and everyone left friends. It’s always sad when things don’t work out, but I always make sure clients know us as the Studio that does more than expected for them, no matter what. -C.

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Veronica from SC July 10, 2012 at 6:37 am

Great post! Specially for us new small business owners. Thanks for sharing!

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Kyle Bromley July 10, 2012 at 5:31 am

GREAT Article Lara! SO TRUE about putting a CYA plan in action, especially for us film shooters. For me to shoot a wedding I’m paying near 800 in film and 1,200 in processing costs at the lab, so if I order 800 dollars of worth of film and the client backs out my retainer can balance that cost . I’ve had cancellations I wasn’t ready for and it put me in a world of hurt, but you learn really fast not to let it happen again.

Kyle

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Lara White July 10, 2012 at 8:12 am

wow Kyle, that’s a whole other expense to consider!

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Vincent from USB Memory Direct July 17, 2012 at 2:01 pm

Wow Kyle, like Lara I’d never considered that aspect of it either! That’s a very good point.

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Jeni July 10, 2012 at 5:03 am

Awesome article with real life experiences!
Make sure to know and understand the difference between “deposit” and “retainer” as well!

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Lara White July 10, 2012 at 8:12 am

absolutely!

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