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The Pros and Cons of Cancellation Fees

The Pros and Cons of Cancellation Fees

Many businesses implement cancellation fees into their contracts to avoid service interruptions that could impact their production. For example, doctors have a 24-hour cancellation fee. The amount of time you have to cancel depends on the business itself. Although cancellations fees has its pros, it also comes with some cons. Let’s look at the differences between the pros and cons of having cancellations fee.

Pro: Prevents Cancellations

The biggest pro for your company when it comes to a cancellation policy, is that it prevents last-minute cancellations. A clear cancellation policy on a signed contract will

Pro: It’s a Standard MeasureĀ 

Plenty of service providers use cancellation fees to keep their clients from cancelling with them. Hair stylers, trainers and even doctors have a strict cancellation policy so that their time is not wasted. You’ll have to determine what is a suitable amount of time your client needs to cancel depending on your business.

Pro: Your Time Has Value

When you make time for a client and they cancel, you know that you could have taken the time to take care of other things. Setting up a cancellation fee is giving your time value. Like any other service provider, you may have very well penciled in another client and have the opportunity to make money instead of wasting your time.

Con: You Might Lose Clients

Although cancellation fees are standard, some of your clients may find this penalization unfair and go to another contractor when your contract terminates. Typically these type of clients only think about their lose, and don’t consider what loses you acquire when they cancel.

Con: Emergencies Really Do Exist

Although you may have heard every story in the book from clients that cancel last minute, there are also genuine emergencies that do happen and penalizing these emergencies may seem wrong. Use your judgement skills to determine whether or not you believe a client of yours is really going through a hard time. If you believe they are, waive their cancellation fees.