Henna Contracts 101: Deposits vs. Retainers

Hooray!

After all of your hard work marketing and reaching out to your local market, you’ve been booked for a client or event! You’ve likely heard before about the importance of securing every booking with a monetary exchange of some amount in order to reduce the opportunity for last minute cancellations (or worse, no-shows).

Here’s the thing… Not every monetary exchange is equal.

If you’re requesting a “deposit,” a “booking deposit,” or even a “non-refundable deposit,” you’re placing your business at a disadvantage in the case of disputes over any payments received.

Let’s say, for example, you’re approached by a client to service a private henna party in three weeks. Like the savvy business owner that you are, you present your client with a contract and require them to pay 50% of the total cost of services upfront to secure the date.

Fast forward to the week of the appointment, and your client sends you an email with bad news. Her guest list has begun to RSVP, and it looks like she only has a handful of guests for her event. She’s decided not to have you after all because it no longer makes sense for her budget. Not only does she no longer require your services, she also asks for her money back for the deposit that she put down.

Depending on your local legislation, using terms like these might actually require you to return whatever monies were paid in to secure the booking in the case of cancellation.

So what can you do to avoid this issue?
Change your language.

deposit
a returnable sum payable as a first installment on the purchase of something or as a pledge for a contract, the balance being payable later

retainer
a fee paid in advance to someone in order to secure or keep their services when required

You see, by definition a deposit is an amount that is intended to be a first installment for the purchase of your service (or otherwise returned in the event that the service is not rendered, without regard to what the reason for this change might be). A retainer, on the other hand, is an amount that is paid in advance to hold or reserve your services for a specific engagement.

You are strongly encouraged to follow up with a local attorney to assess what the best language for use in your contracts might be. Depending on your federal, state, or local legislation, you may be encouraged to use terms like “retainer,” “booking fee,” or “service fee” noting that variations may present themselves based on your business’ refund policies.

As a rule of thumb, however, the terms “retainer” or “non-refundable retainer” are the best suited for use in contracts requiring advanced payment to secure your services for a future date.

What language are you currently using to describe the monetary exchange required to secure time on your calendar?