Should Your Business Charge A Cancellation Fee?

There is nothing more annoying than last minute cancellations. Whether you’re waiting on a client to turn up, missing out on a perfectly good part of your schedule that’s now empty, or stuck in the middle of nowhere with nothing to do, cancellations can really ruin your day.

To combat this, it’s becoming more popular for large businesses to charge cancellation fees. Hotels, internet providers, insurers, gyms: they all seem to charge a cancellation fee. That said, it’s not always just large businesses charging for cancellations. For example, most airlines tend to charge fees if a passenger decides to cancel within a specific time frame. Interestingly though, this is often a two-way street (or runway, if you will). As airline passenger rights advocates Flightright explain, if an EU-based airline or airport calls for a flight cancellation within 14 days of departure, passengers are awarded compensation of up to €600. Similar regulations are enforced in the Middle East and South America, where most airlines and airports will at the very least have to accommodate passengers after a cancellation.

So, if everyone else seems to benefit in one way or another from cancellation fees, can your business adopt these practices too?

How Can Your Business Charge A Cancellation Fee?

Whether you charge a cancellation fee or not is entirely up to you, but if you decide to go for it then you need to make it clear in your terms and conditions. The simplest way to do this is by editing them on your website, as you will already be ensuring customers and clients read through terms and conditions before requesting your assistance.

If you don’t have a website, you will need to have a solicitor draw up an agreement of some kind. In this, you should explain how customers should cancel, when is a reasonable time to do so, and how much they will be charged if they do not meet these requirements. We do recommend that you list some extenuating circumstances in which cancellation charges will not be applied though, such as a family emergency or extreme weather. Not only is this fair, but if your agreement is not balanced it can be fought against.

When Should Your Customers Be Charged A Cancellation Fee?

While some circumstances cannot be helped, there are plenty that can be, and you’d be surprised what clients will cancel over. To pre-empt this, we recommend ensuring that clients who cancel with too little time to spare are charged if they’re cancelling due to inconvenience, price, or other avoidable difficulties. As for how much they should be charged for cancelling, the fee should be reasonable no matter how annoying it may be. Come up with a fair price and ensure that you make clients aware of how much they will be charged if they decide to cancel.

Ultimately, the decision to charge cancellation fees is up to you. If you do decide to charge clients who fail to turn up or don’t cancel within a reasonable amount of time, then you are within your rights to support cancellation fees. However, just remember that extenuating circumstances shouldn’t be overlooked and, perhaps more importantly, that you yourself may need to cancel on clients at some point. Sure, you can charge cancellation fees, but don’t take it too far.

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