Rather you are a veteran wedding pro or just starting, you have probably heard these two terms a time or two: DEPOSIT and RETAINER.
Quick–Pop Quiz!! >>>>>>>>>>
TRUE OR FALSE: A retainer and deposit are the same thing
TRUE OR FALSE: A deposit doesn’t have to be refunded
TRUE OR FALSE: You do not need to charge your clients a deposit or retainer
TRUE OR FALSE: If the wedding pro breeches the contract, the money, albeit a retainer or deposit, does not have to be refunded
If you answered TRUE to any of the above you have failed the pop quiz. If you answered FALSE to all of the above then move to the head of the class!
A RETAINER and DEPOSIT are NOT the same
By definition, a retainer is a fee paid in advance used to hold goods or services. A deposit is a payment towards goods or services, usually returned once the goods or services have been acquired. So it’s very important to know the difference–if you are not refunding the fee, based on this definition it should be called a retainer.
But just calling it a retainer isn’t enough to protect you…
Know your Stuff to Protect Yourself
I strongly advise you to speak to an attorney in your area regarding state, local and federal considerations, but here are a few things you should know:
~ If you intend for the initial down payment to be non-refundable, you must include verbiage stating that the retainer is “non-refundable” and you cannot call it a deposit as deposits are refundable. If not, and should the client breech the contract, you will have to refund it or the client can sue you to get the money back.
~If you, the wedding pro, breech the contract, you might be required to refund even a “non-refundable” retainer. A court case in the state of Wisconsin (Serchen v. Diana Ornes Photography, LLC) found the photographer liable for paying back everything, even the retainer (plus all court costs) as she was the one who breeched the contract. Makes sense to me, but even I didn’t know this until I conducted research for this blog post. Again, know your state laws, but I would say this is probably the case nationwide.
~Include a fee schedule, aka, a plan for how you wish to receive payments. Is the retainer due at the initial booking and then the balance at the final consultation? Does she need to pay 50% down, 25% three months before the wedding and the remaining 25% the day of the wedding? You must clearly and precisely state how much is due when. Be sure to include any late fees or penalties should she not pay on time.
~Include a refund policy in your contract. State that the retainer of XXX (25%, $500, whatever it may be) is non-refundable, then state how the remaining funds are refunded, if at all, should the contract be terminated by the client.
~ALWAYS HAVE A CLIENT SIGN AN AGREEMENT–ALWAYS!!!!!!!!!!!!!!!!!!!! And collect a retainer so your hard work is paid for, even if she bails.
I once had a client breech her contract and attempt to fight me. I say “attempt” because I have a rock-solid contract in place. But one interesting lesson was learned from this experience…
It was nearly a decade ago, please keep in mind, and we were only charging $100 as a retainer. Long story short, my attorney advised I strengthen my retainer and increase it to 25% of my average sale (which at that time was $1000, so $250) or make it a percentage-based retainer and recommended 25%. Why? It invests her more into the contract.
Looking at it another way…if I as the pro were to sue a client for breech of contract, by the bride being more “invested” into the contract, the courts are more likely to favor my side of the argument. Plus having a well written contract helps.
Another way to see it…if a bride has a minimal investment financially, and she just feels like going with another vendor, it makes it easier for her to break the contract with you. If she has considerable amount of money invested, she is going to think longer and harder about losing that money when she breeches your contract.
One more tip on contracts…my attorney advised me to have brides PHYSICALLY sign rather than electronically sign. He said that should there be a case and it goes to court, an electronic signature may not hold up.
Do you have a contract in place? How much of a deposit/retainer do you charge? Leave in the comments below!