STEP 3: DEPOSITS AND CANCELLATION FEES (ADVANCED OPTION)
If you want to go one step further to help you add more dollars to your bottom line…
Have you ever had a customer not show up? Or cancel at the last minute? We have. It can be very frustrating. You only have so many slots in your day and when someone cancels you often lose that time altogether, costing you money.
In other industries, they solve this by either taking a deposit upfront or charging a cancellation fee.
Many independent repairers won’t charge a deposit or cancellation because they don’t have the confidence to ask the customer. The reality is many other industries and many of your competitors do it. You’re simply protecting yourself at the end of the day.
If a customer is not willing to pay a deposit, then they are not willing to commit to the booking and are probably a customer you don’t want anyway. For your long-term regular clients, you probably wouldn’t put this in place.
CHARGING A DEPOSIT UPFRONT
Some businesses will take a deposit over the phone when they take a booking. If a customer pays a deposit they are committing to a job and are less likely to cancel. If they do cancel, they forfeit at least some of the deposit as a cancellation fee.
When should you charge a deposit? We use it in our business but not all the time. We charge a deposit where we feel there is some risk.
- A new customer where you have some concerns about their character or ability to pay
- A large job where you are paying a substantial amount for parts upfront
- A sublet job where you have to pay for the sublet-up front
How much should you charge? It’s common to charge the callout fee upfront. You can do this over the phone on your EFTPOS. For larger jobs where you’re outlaying a substantial amount don’t be afraid to request the cost of the parts up front.
CHARGING A CANCELLATION FEE
To charge a cancellation fee you must have put something in writing to the customer first. Otherwise, it’s not enforceable. You can do this as part of a written quote. Or you can do this via booking confirmation. What you put in writing should state your cancellation fee terms and when it applies.
We value both your time and ours. If for any reason you have to cancel within 24hours of your booking a cancellation fee of $X applies.
It’s typical in this case to charge your callout fee as the cancellation fee.
The cleanest way to implement this into your business is to:
- Charge your callout fee as a deposit
- Take payment of the deposit over the phone via EFTPOS when the booking is made
- Tell the customer over the phone that the deposit is forfeited if the booking is cancelled within 24 hours
- State your cancellation policy in writing either on a quote or booking confirmation
- Keep the deposit if the customer cancels
If the customer reschedules use your discretion here. If you have other work to get on with and it’s a good customer, you will probably refund the deposit.
Are you too trusting? It’s time to start receiving a deposit upfront!