When Should You Charge The Cancellation Fee?

Hey, friend. Welcome back to The Modern Hairstylist Podcast. Okay, so you get a text, right? You get a text from your client.

It's like the morning of their appointment, and they text you and they say, "Hey, Suzie," 'cause your name is Suzie now. I've declared that. "Hey, Suzie, I know that my appointment today is at 9:00, and I'm so sorry to do this to you, but unfortunately, I had to bring my son to the hospital this morning, because he was having a really hard time breathing, and it was, like, totally out of nowhere, and it was unpredictable. I'm really sorry that I won't be able to come in.

Can we get rescheduled for another time? I really appreciate you, and I don't mean to disrespect your time." Right? You get this text, and of course you feel bad for this woman, right?

Like, of course you feel bad. You hope that her son, like, is okay and that, like, everything's cool. And at the same time, you're, like, a little peeved, right? Just, like, a little bit, because you're gonna lose out on your income that day, right?

Like, you can't fill in an appointment, like, that's happening in, like, an hour from now, you know? Like, it's just impossible. So, of course, you're gonna be a little bit peeved and you're gonna be out on some money, because if we're not doing hair, we're not making money, right? And so, like, let's say you do have a cancellation fee in place.

Let's p- let's say that you do have a policy in place or policies in place. Do you charge this person the cancellation fee or do you secure your income? Like, do you make sure that no matter if you're doing hair or not, that you are gonna make money? Because I think that's what we deserve as hairstylists.

We deserve to have predictable income. That's why I love making sure that you are priced for your time and that you are making money no matter how long it takes you to do a client. But we have to really consider the fact that our businesses, our livelihood, and our income is built off of, like, real human experiences and people feeling like they have real human connections with you and sharing core values with you. And, you know, we just create really intimate relationships with our clients.

And whether, whether we are creating these intimate relationships or we are completely boundary-d- like, and we treat our clients and the clients view us as these big, massive corporations with no human face in front of them, regardless, doing good business is being a good human, and being a good human is doing good business. Like, period. Like, you would be pissed off if a corporation, like, or whatever, didn't give you a refund because of a really extraneous, like, un- unexpectable circumstance, right? Like, i- i- you would be upset.

Like, you would think it was ridiculous. You would be upset that somebody didn't have empathy for you. And so, what I'm getting at here is, I think that people go a little crazy with charging cancellation fees, and I think that there's a lot of things that we need to consider before we just go ahead and charge it. And, uh, I wanna break down those things with you today, and I wanna help you come up with y- a decision for whether you should be charging people in the moment or whether you shouldn't, and also help you become a little bit more prepared for when these things happen, so that way they're not such dreadful and tense decisions.

So, if you're ready to get into it, let's go. Let me guess. You are a hustling, bustling hairstylist behind the chair, working so hard to build a beautiful career for yourself, one that gives you time, freedom, and energy to spend with yourself, your family, and your friends. But you feel like you're always working in your business, even when you're not behind the chair.

My name's Hunter Donia, and I help you automate your systems and implement really beautiful strategies so you can grow your business without the overwhelm. And this is The Modern Hairstylist Podcast. Okay, so the first thing that you wanna ask yourself when you're trying to decide if you should charge a cancellation fee or not is, is this person an ideal client, right? Is this person somebody who, like, would probably stick around with me for a long time?

Is this person somebody who invests in me and my business? Is this somebody who sticks around for the price increases? Is this somebody who cancels often, or is this somebody who never cancels, is always on time and schedules appointments, like, when they're supposed to, right? Th- that is t- this is, like, one of...

This is, like, the question. Like, this is the question I always ask my students whenever they're asking in our Facebook group, because we have, like, a super supportive community and people ask each other for advice all the time, which is so great. But the first question I always ask is, is this person an ideal client? Because that will really help you in your decision.

And I want you to think about when I say, "Ideal client," I don't want you to just think about if they bring you joy. I also want you to think about what it looks like on paper. Like, how often do they come to see you? Do they really just come to see you once a year, or do they see you four times a year plus, right?

Do they refer new guests to you, ideal new clients to you? Are they sending other... more traffic your way? Um, are they well-known in the community?

Do they shout you out on social? Are they, like, really, truly, like, within your niche and specialty, right? Those things are really important to consider, because what I want you to think about, if you don't charge the cancellation fee, right? Like, if you forfeit that time and you don't make money in those two hours that that person just canceled you on, let's say, I want you to think about the investment, the return of investment of you losing that income, right?

I want you to think about you losing that income as you investing income into a long-term relationship with that client and what your ROI looks like on the backend. Because if that client has an amazing experience with you in this extraneous situation, then that will be a client for fucking life. These are the moments, like, these are the customer service moments that sets you apart and really build brand loyalty. Like, this is the make or break for a lot of people as far as consumer behavior goes.

I remember there was one time where... and this is, like, different. Like, this wasn't, like, an extrenuous, uh, extraneous circumstance per se, but...But it- it is an example, just coming from my own personal perspective.

So, I was going to Miami with a lo- with a couple of my friends, um, a couple years ago, and I'm like an Airbnb whore, okay? Like, I I have stayed in... I swear, I have stayed in like 25 Airbnbs in my lifetime, and so I'm obsessed with Airbnb, okay? So, I booked this Airbnb in Miami, like, months ahead, like super far in advance, okay?

I booked the gig, and it's like maybe two months later, okay? Still like four months out from our trip. And I get a message and it says, "Hey," like, "we had to cancel this reservation. Unfortunately, the tenant w- or the, um, the landlord or the, the host," the host, "the host was not allowed to actually be hosting tenants here, so, so we have to cancel your reservation."

I was like, "Okay, whatever, cool. I'll just, like, book a new one." Right? So, I book a new one.

It's all good. It's a month before our Miami trip, and we get the same message for this new Airbnb, okay? Then, th- we yet again, a month out, we get canceled on this reservation. And it would be fine if it wasn't a month out and prices weren't going to be so much higher because of the timeframe, right?

So, I was like, "Okay, this is the moment that I decide whether I'm gonna be doing business with Airbnb or not moving forward." Right? Like, this is the moment. Like, this is the moment.

So, I reach out to customer service, and they took such good care of me. They gave me so much credit towards rebooking an Airbnb that covered the expenses and the difference in the, in the timeframes and the price or whatever it may be, and I was like, "I will be booking with Airbnbs, like period, for the rest of my life." Right? So, a great customer service experience can create a loyal-ass customer, and I want you to think about would you rather get, I don't know, 50% of what the service was gonna be in that two hours, or would you rather get a lifetime, right, of a long-term client who speaks nothing but great things about you to other ideal clients, who is bringing you in more income, who you enjoy seeing, et cetera, et cetera, right?

Caitlin, what are your thoughts? I completely agree, and I, I don't know that I can really add anything. I feel like you said it, like, so perfectly. I- it's never easy 'cause it is, like, there's no, like, right or wrong answer here.

Like, it's basically, like, do what you feel is right, and like, that's what you have to do at the end of the day, and like, make sure that you're- you can live with your conscience at the end of the day as well. But don't let somebody walk all over you either. So, it's just finding that, like, happy balance, and yeah. I mean, there- there really isn't a perfect way to do it, so you just have to kinda, like, listen to your gut on that one.

I love it. Okay, so like, here's the next T, okay? Are we ready? I'm all about boundaries, I'm all about policies, I'm all about having cancellation fees.

Like, I'm all about it, okay? But as we have come to this, like, boundary awakening in the past two, three years, I have been seeing very irresponsible, very irrational, very, like, intense behavior, and I think it comes from fear and I think it comes from intensity, and also people being fed up of being walked all over, um, and- and because we've been walked all over as an industry, as a service industry for so long. But we should not just be charging our fees left and right, okay? Like, we should not be fucking, like, charging everybody, like, like the second that it happens, okay?

Like, we really truly shouldn't be. Like I said, like think about the ROI of, like, what you're doing here. Like, think about the long term of what you are doing in this moment, because, you know, charging that cancellation fee on the flip side can get you a one-star review, right? What does that do for your, for your business, right?

And a one-star review is not a make or break for your business. Don't get it twisted. We could do... We're gonna do a whole episode about that, Caitlin.

Write that down for us. A one-star review could not, is- does not make or break your business. However, if you get multiple or if they are very genuine, like real stories that hit people ha- like home and close, then yeah, that can change how people are viewing your business and how they're doing business with you and considering to do business with you. A- a- and that person literally will go and tell, like, all their friends, all their friends about the bad experience they had with you, right?

So, think about that. Think about what you are really doing in the long term to your business in that moment, and if you need to take a moment so that we don't make any emotional decisions, then take a moment and let them know that you will speak with them later about the situation and that it's all good that you canceled their appointment, right? And then get back to them later about it, so that way you can really think about it, because 85% of all the decisions that human make- humans make on average, this is what studies show, are all emotional decisions. 85% of the decisions that we make as human beings are based upon emotions.

We don't wanna make emotional decisions when it comes to our business. So, take a second, take a step back, and move into it, and- and be great with that. I think that we should be preventing the cancellations. We should be proactive, right?

Like, how much smarter is it to actually kill the problem in the first place instead of having to rectify and deal with the problem after it happens? And so on Pre-Vist Pathway, I teach a lot about how to prevent this from happening. I teach a whole lot about this, and a couple ways that you can do this are, number one, you should be getting a card on file when somebody books with you, and this is the beauty of online booking only, is that everybody will have a card on file, period. Everybody will have a card on file because they literally can't book an appointment with you unless they put the card down, and it's a non-confrontational way of asking for it, right?

Like, it's kind of, like, weird to, like, book an appointment in person and be like, "Okay, I'm gonna need a card on file for that." Like you can do that if you want to, but I mean, it's definitely gonna be more confrontational and take you a lot more time. So like, that's s- that's like, I think, the beauty of online booking is, like, every single person has to put a card on file, and the card on file-... is not to charge it.

It's to prevent the fucking no-show. It's to prevent the cancellation. It's to show that you aren't playing, right? When somebody puts a card down, they know that they are serious about booking this appointment, right?

They know that you have that card and you can charge that card now, so they're not going to F with you. Like, it will literally reduce your no-shows by, like, 80%. I will guarantee you. I would literally bet money, because I literally don't have that happen to me.

Like, I do not have last minute cancellations. Like, it does- it literally does not happen to me. Like, a 24-hour cancellation does not happen for me. So, I highly recommend that you get some card on file.

And if- if a deposit... See, I don't really love deposits too much unless you're doing, like, an ex- a big service. Like, when- when we're talking about, like, a four-hour-plus service, like, yes, like, get those deposits down for sure, or extensions, whatever it may be. Like, if it's a specialty service, it's a really high ticket service, then get those deposits.

But for, like, little things, for average things, like, a card on file is enough in my opinion. Kaylin, what are your thoughts? I also am a firm believer in the card on file. I think that it definitely minimizes the amount of no-shows that you get.

For sure no-shows. So, like, I think that's an important thing to separate here, is that no-shows and cancellations are way different. Like, they're completely two different, like, entities. So, like, if somebody no-shows you, I am firm believer in charging your cancellation fee, because- Yes.

they're freaking not- Yes. They're not even show- showing up. Yes. But, like, if somebody is coming to you and is, like...

Honestly, like, we're still in the COVID era, so, like, a lot of the times people are canceling because they're sick or they have somebody in their family that's sick. So, like, it's all about, like, having that balance. I'm gonna circle back to it, and, like, I'm thinking constantly, too, of, like, what you always say, Hunter, is, like, you don't have your policies to implement them. You have them so that you don't have to implement them.

And it just makes so much sense in, like, every facet of this. Yes. And that brings me to my next point. My next tip is use your policies in a way to prevent the shit from happening.

You wanna prevent the bad behavior. So, you have all these policies in place. Great, fantastic. You should.

And actually, let's talk about this really quick. When you have granular policies, like when you have very granular, very specific policies that break down different situations, and also leave things up to your discretion, that is when you don't have to have this emotional decision or be killing yourself over whether you're gonna be charging the policy or not, right? Because you have standard operating procedures for how you approach these specific situations. For example, in your policies, you could have something that says, "In a specific fam- a strenuous family emergency, this person will get a first strike."

Right? Like, that is a very specific policy. Like, that's a very specific, granular policy, and I think that's what we need to start doing with our SOPs in our policies, so that way we make less emotional decisions, and when we're decide- when we are deciding and making them, we can be like, "Okay, like, we actually have a plan to follow," instead of just, like, doing it in the moment and stressing out about it and having to go onto Facebook and asking everybody their opinions and texting all your hairdresser friends and asking them their opinions, right? Like, if we have just, like, set SOPs, then you don't have to worry about it.

Now, should you be flexible? Should you take, like, specific details into consideration? Should you ask yourself, is this an ideal client or not? Yes, but if you have granular policies, it makes the decision-making a lot easier, right?

So, make sure that your policies are as granular and detailed as possible, so that way you have them in place and they have your back. Systems, such as your policies, they're built to have your back. They're built to support you as you move through being a business owner. That's why I love them so much and that's why I teach them.

So, build a system that has your back when you're in these tough situations. Now, use the damn policies. Not imple- not implement them, not enforce them. Yes, m- in- in certain circumstances, yes, do that.

But what we all too often don't do is make sure our clients are signing, agreeing, and acknowledging these policies. And I'm not just fucking talking about once. I'm not talking about when they first book an appointment with you for the first time. I'm talking about every single time they're going to sit their ass down in your chair.

Okay? And I know that everybody's like, "What are you fucking talking about? Like, I'm not gonna have my client do that every single time." Trust and believe, friend, there is beautiful ways that will make you more money, that will elevate your client experience, that will make you look like a badass to get your clients to sign and acknowledge these policies every single time.

And here's the important part about having your policies signed every single time, is if you have a liability waiver, which I highly recommend that every single person has in their policies and gets them signed, if you have a liability waiver, then it's gonna be making sure that you are, that that person is signing away any liability, right? Or, I guess, like, you're taking away your liability, right? Am I saying... I'm not, I'm no fucking lawyer, okay?

Taking away your liability from anything that might go wrong, right? They're signing that specifically for that specific appointment, every single appointment, right? And when you have somebody who has signed your policies five times, right, like five times, and the sixth time they no-show you and you really do wanna ca- charge them the policy and they run a fit about it, they dispute it with their bank, you can be like, "Bitch, here's my five PDFs of them digitally signing my shit." Right?

And then you're gonna win that dispute, and then that person can't say anything, right? So, you want to have your people sign these policies every single time. We're gonna be coming out with an episode here really soon, and we're gonna be talking about this in Beauty Boundary Workshop, which should be coming up kind of soon, um, depending on the time that you're listening to this, in which there's a really beautiful way, like I was saying, how to actually get your clients to sign these policies every single time, but make it an enjoyable and excellent experience for them. So, we're gonna be talking about that soon.

Make sure to look out for that, for sure, and check out Beauty Boundary Workshop if you never have before. Here's the thing. Here are my key takeaways. Being a good human is doing good business.

Doing good business is being a good human. Okay? We want to be understanding. We wanna be flexible.

We want to understand that these are freaking actual human beings with actual lives who are sitting in our chair. And that does not mean that you aren't an actual human being who needs to make a living for yourself either. But think about the ROI in the moment, and think about the impact that you're making, and think about the long-term, not the short-term. Try and be as proactive in your decision-making as possible, and be prepared instead of reactive and emotional, right?

Take time to think about these decisions, take in consideration all of the things that we talked about in this episode, and you'll be good to go. So, I really hope this was helpful for you, my friend. Thank you so much for tuning in to the Modern Hair Stylist podcast. We are so excited to talk to you more about boundaries and automation and systems and all of the good things here, so make sure to catch us in the next episode.

If you enjoy listening to the Modern Hair Stylist podcast, I would very much appreciate if you left a five-star review wherever you're listening to this, okay? You can spill a little bit of tea about your experience listening and if you've enjoyed your experience with us. And that'll help us reach more people and make a bigger impact in this industry, so thank you so much for helping us with that in advance. So much love to you, my friend.

Peace out, girl scout. Bye-bye.

End of transcript. © 2022 Hunter Donia LLC.