One of the best policies for a photographer to have in place for their business and contract is the use of a “reservation fee” (read: deposit or retainer) for the client to secure their spot with you, and for you to ensure that the client will honor their agreement to show up at the designated shooting time.
For the purposes of this blog post I’m going to identify these as a “reservation fee” instead of writing deposit/retainer repeatedly – some photographers may choose to use a refundable deposit, others choose a non-refundable retainer. The choice is yours whether you want to allow it to be refundable or not!
Why should I require a reservation fee?
“Had someone stiff me for a newborn shoot… Spent over and hour getting the entire studio set up. I emailed them asking them what happened and never heard a word back. Never again will I book a last minute session to be nice and not make them do a deposit…even if it’s paypal!!”
“Spent the time planning a boudoir session, had studio all set up (about 2 hrs worth of cleaning & arranging furniture etc), had a professional make-up artist there waiting, & a hair stylist there who drove an hour to be there, only for client to not show up! No call, nothing. I had even confirmed the week before. So I was out all of my time plus we had to go ahead and pay the makeup artist and stylist for their trip out there. We always take deposits now! They are non-refundable and that is always told to the client up front. If they cancel or reschedule it will remain as a credit if they choose to come at a later date. Hard lesson learned.”
“Sure did…had someone book his dog’s birthday, with the dog cake smash and all. He never showed up, and since he’s the guy who’s been doing my hair for years, when I saw him I asked what happened. His excuse was “ten o’clock was just too early to wake up, so I slept in till three I knew you’d understand”. Btw I’ve never stiffed him on a hair spot!”
“I had set a day of on location photography in one of my fav spots (keep in mind I was new to MY photog biz and not working for a big box photog studio that didn’t take deposits/retainers.) I scheduled 3 shoots for the day… to sit there… and wait… and wait…. and… well you get the drift… turns out one forgot, one had an emergency and another decided to just not show. 4 lessons learned that day: Take a retainer, confirm shoot times prior to shoot day, no special treatment for family and MY family is number 1. I wasted an entire Saturday afternoon waiting on the maybes and not with my family. Never happened again!”
Any of these situations sound familiar? Or you want to avoid them?
It is not uncommon in the creative industry to require an reservation fee especially for photographers. As you can see in the situations above – requiring a reservation fee compensates the photographer for their time reserved, gives the photographer peace of mind that the client will show, and adds credibility to the professional relationship between photographer and client (especially when paired with a professional legal contract).
These situations were shared in The Law Tog community on Facebook – feel free to join!
So what term should we use? Retainer or Deposit?
A common question that often surfaces in drafting photography contracts is the differences between the word “retainer” and “deposit” when it comes to spelling out a non-refundable reservation fee. There are a variety of opinions on this, and case law is not particularly instructive. In the real world these terms are defined as follows:
- Retainer – a fee paid in advance to someone, esp. an attorney, in order to secure or keep their services when required.
- Deposit – a sum payable as a first installment on the purchase of something or as a pledge for a contract, the balance being payable later.
Let’s take a gander at what happens though when we slip into the world of contracts and legalese!
Case Law Example #1
In the context of the legal profession, various courts throughout the United States have tended to point out that the word “retainer” has a specific meaning. “‘[A] true retainer “is not a payment for services. It is an advance fee to secure a lawyer’s services, and remunerate him for loss of the opportunity to accept other employment.’ . . . . ‘[i]f the lawyer can substantiate that other employment will probably be lost by obligating himself to represent the client, then the retainer fee should be deemed earned at the moment it is received.’ If a fee is not paid to secure the lawyer’s availability and to compensate him for lost opportunities, then it is a prepayment for services and not a true retainer. ‘A fee is not earned simply because it is designated as non-refundable. If the (true) retainer is not excessive, it will be deemed earned at the time it is received, and may be deposited in the attorney’s account.’” Cluck v. Comm’n for Lawyer for Discipline.
One might argue that this definition is specific to the practice of law, and does not carry over much to the photography business.. so let’s look at case law example #2!
Case Law Example #2
In reality, a “non-refundable” fee may end up being quite “refundable”. A case from Wisconsin is instructive on this point. In this case, a wedding photographer and a couple entered into an agreement to shoot a wedding for 1,600.00 including a 500.00 nonrefundable retainer. After a dispute arose regarding the photographer’s work, the couple emailed the photographer stating: “We are requesting all of the money that you have received from us minus the $500.00 retainer fee as stated in your previous email,” totaling $1,470.” Serchen v. Diana Ornes Photography, LLC.
The photographer responded, “My understanding was that you no longer want me to provide your wedding services[,] [a]s that is exactly what it sounded like in the last email. You were demanding your money back and you wanted to back out of the contract … am I correct?? I just need in writing that you are for sure backing out, that way I can put it in your file.” Id.
The Couple responded, “So, depending on how you feel about all of this we can either honor the contract or we would agree to break our contract with you under the condition that you will sign a document stating you will pay back all of the money that we have given to you to date minus your 500 dollar retainer fee within 4 business days … which would make our current contract void.”
After that e-mail, the photographer stated that the couple was in breach, and citing a provision in their agreement “that breach by the couple would entitle [the photographer] to keep the retainer and all other money paid to her by the couple, [the photographer] stated that she would refund only the $370 paid for the invitation work.” Id.
At trial, the court awarded the couple all $1,600.00 of their fee, plus costs, holding that the contract was breached by the photographer, not the couple, and that all money must be refunded. On appeal, the Court affirmed the decision of the trial court, holding that the Photographer did not develop any arguments that contradicted the finding that she, not the couple had breached the contract. The Court indicated that the e-mail exchange between the parties did not constitute a breach by the couple, but rather showed an intent to continue dialogue, and that the contract was not breached until the photographer terminated the contract.
It is instructive that the breach entitled the couple to a full refund, including the “non-refundable” retainer.
In short, whether the word “deposit” or “retainer” is used may not make a difference if the photographer in fact breaches the contract with the client. Moreover, clear language that outlines the purpose of the “non-refundable” fee will better protect a photographer than merely selecting the word “retainer” or “deposit.” The contractual language on this point should spell out that the fee is being paid to secure the photographers services for a particular date, that securing such services prevents the photographer from booking other clients, and that economic loss will result if the photographer does not collect the fee.
If this type of language is included, it may well not matter whether “deposit” or “retainer” is selected to describe the contractual relationship, just as it wouldn’t matter if the photographer breaches the contract, and thus would owe a client a full refund, despite any terms to the contrary.
So what is the final recommendation?
The typical non-business person has some understanding that a retainer is “to retain” services and is more often than not non-refundable. In the situation of a photography session or event, the client is retaining (ie booking) you for that date and time. Deposits are typically used in the course of situations where a refund of the deposit may happen. These may not be self explanatory to some, but that is where your client education responsibility comes in.
Don’t just blindly use deposit or retainer and hope that you are covered. It is important to look at the contractual language that entitles one to keep the fee (i.e. provisions, language such as non-refundable etc.) Generally, a non-refundable retainer with spelled out liquidated damages will help to reinforce your intended business policy. Always double check with your local jurisdiction for appropriate laws. This is also why it is so important to not self-draft (unless you’re an attorney) or use a contract that you don’t know the credentials of the drafter.
How can I implement a reservation fee (aka deposit -or- retainer)?
– Determine whether you want to allow the reservation fee to be refundable or non-refundable. Typically, having the monies be non-refundable will help to bind the client to your business contract and will compensate you for any lost time.
-Ensure your contract outlines the reservation fee requirement, amount, refundability and any applicable rescheduling policies. It is always best to outline if the amount is non-refundable! (Need a lawyer drafted contract? The Law Tog provides them here!) Keep in mind, you can offer to waive the non-refundability of a retainer for customer service reasons. Just because you may have legal right to withhold that money doesn’t always make it right (consider situations of a wedding where the bride/groom dies, or other extenuating circumstances we never want our clients to face).
-Be consistent in requiring this investment. Whether you use a flat amount or a percentage, [generally it is best to] ensure that you are applying this across the board to all clients. A good rule of thumb is to evaluate your costs of doing business weighed against the barrier it may place for client booking. For example, if a client books you then decides to reschedule, was the reservation fee amount enough to cover you in the event that you are unable to refill that date with another couple – this is especially important in weddings.
-Never consider a client booked without the contract + reservation fee.
Unless of course it is your momma…
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- To Use “Deposit” or “Retainer” in Your Photography Contract - August 29, 2015