In 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
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.