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How to Protect Your Boundaries With Rescheduling Fees
Rescheduling fees aren’t one of those easy, cut-and-dry issues. In fact, it fully depends on your business, your pricing, and your policies on whether you charge a rescheduling fee.
That said, understanding what is reasonable for a rescheduling fee and the options available to you is fundamental for your business. Knowledge is power and after reading this post, you’ll walk away with confidence in your decision to charge a rescheduling fee or not.
Ready? Let’s dig in...
Should You Charge A Rescheduling Fee?
This answer is going to entirely depend on what is best for your business. Ask yourself, is this the second or third time my clients are rescheduling? Am I missing out on dates that other couples could have booked? Are they wanting to reschedule to a prime Saturday date? If you are answering yes to any of these questions it is probably time to consider a rescheduling fee.
- If you are still rescheduling your clients that booked before Covid-19 you are probably putting in more work to arrange a second (or third) event date and continuing to do unpaid work, not to mention that you’re missing out on dates you could have available to other couples (at your NEW/INCREASED rates!). If this scenario sounds familiar to you then you should fully consider charging a rescheduling fee for your couples. You have to keep your business financially stable and cannot allow endless complimentary reschedules that will affect your bottom line.
Although you may have been waiving rescheduling fees during Covid-19 when shutdowns were occurring, it is not necessary anymore because there is no longer an inability to complete services. However, the Acknowledgement of Covid-19 and No Rescheduling Clause is a resource that still deserves a spot in your contract. This clause will help you communicate to your clients that you DON’T allow complimentary rescheduling due to Covid and that you have business policies in place that will apply if they try to change their date due to fear of Covid (i.e. rescheduling fees should apply!)
To learn more about what Covid-19 clauses you may still need in your contract listen to this recent podcast episode here.
- Now, if this is your client's first time rescheduling and it's not due to Covid whatsoever, you absolutely have the option to decide to give them the first reschedule complementarity. A complimentary reschedule can make sense if they want to reschedule to a date later in the season and they are giving you ample notice. However, this is not something you have to do! I want all service providers to be aware that it is completely reasonable to charge a fee for the first reschedule and put that into your contract.
How Much Should You Charge and What is Reasonable?
If you decide to charge a rescheduling fee, how much you charge is totally up to you.
The main thing you should be aware of when determining the fee amount is making sure the fee is *reasonable*. A reasonable fee shouldn't be too high or too low when compared with similar fees for a similar service. When a court interprets whether a rescheduling fee is reasonable or not, it uses a “reasonableness standard” test which weighs whether an individual or entity engages in a reasonable way with clients and whether an action was taken in a reasonable or unreasonable manner.
At this point in time in the court systems across the U.S., there is no clear case law precedent that sets the standard for a ‘reasonable’ rescheduling fee. Courts are determining reasonableness on a case-by-case basis. Thus, it’s important as service providers to be aware that you should be able to justify your rescheduling fee as a “reasonable” amount that you charge clients for moving their event to a new date. Also, be sure your rescheduling fee is consistent from client to client.
A good rule of thumb is to start with a percentage that is 30% of your average total service package and make that into a flat rescheduling fee (so if you, on average, charge about $4000 for your service packages, 30% of that amount would be a flat rate of $1,200 for a rescheduling fee) OR around what your retainer fee likely is. Then, you can also upcharge for “prime” dates.
So, if $1,200 is your flat fee rescheduling fee for clients, you could keep that amount for all Sunday thru Thursday events, but clients who would want a prime Friday or Saturday date would incur an additional fee of $800 for blocking out another desirable date on your calendar. Thus, you are still keeping the SAME fees for all clients---$1200 and $2000, respectively---and it’s up to them which day of the week they are wanting to reschedule.
A rescheduling fee should compensate you for the loss of income to you, the administrative costs of rescheduling, and the loss of work and income to your business this year. Remember, you basically just lost out on thousands of dollars of income by NOT performing services for them or any other client on the original date they had on our calendar. My hope for you is that you never have to present your rescheduling policies in front of a court, but just in case you do I want you to be prepared to handle whatever arguments come your way.
Finally, whatever amount you charge, it needs to be just high enough that gets clients to second guess if they want to reschedule. That’s the ultimate goal right?! To keep clients from changing their dates and taking one that could open for another couple. It is important to not lowball your rescheduling fee.
For instance, a rescheduling fee of $250 is easy for clients to rationalize as an additional cost. On the flip side, you don’t want the clients to feel like they are paying for an entirely new booking with a $3000 rescheduling fee for a $4000 package. The balance between ensuring it's high enough but not too high is tough but important. If you at least start your rescheduling fee somewhere around your retainer fee it's a bit easier to explain to clients (or a judge) because you’d be losing out on booking another retainer from a new client for that same date.
Rescheduling is an ongoing issue in our industry right now and you are going to have to make a decision on what policies work best for your business. Hopefully though, thinking about why (and when) you should charge a fee will ultimately give you the confidence to form new rescheduling policies as well as explain (and enforce) them with your clients.
If you are needing legal documents to support you with issuing rescheduling fees, TLP suggests using our Rescheduling & Cancellation Bundle which includes two contract addendums, a Rescheduling Contract, and a Cancellation Contract for you to implement your rescheduling fee policy!