When can you use Deposit or Retainer in your Photography
Establishing your deposit policy
It is best practice as a photographer to clearly establish your deposit/retainer policy within the terms and conditions of your contract. In my opinion, this is one of the best policies for a photographer to have in their contract.
Within the contract, expressly state that a deposit is required from each client in order to secure a time slot with your studio. This does two big things for you the photographer. (1) It makes the client realize that your time is valuable, and (2) it gives your client a financial incentive to show up for the shoot in a timely fashion.
Note: You can decide to have a refundable or non-refundable deposit/retainer. Whichever way works, just make sure whichever you decide is included in the signed contract.
For the purposes of this chapter, I am going to identify the deposit/retainer as “payment”. In lieu of writing out deposit/retainer over and over again.
Why Should I Require a “Payment”?
Your time is money, literally. As a small business owner, you may be the sole photographer for your business. This means that the time you set aside for one client is time that you cannot set aside for anyone else. If the client is a no-show, you have potentially lost out on other business.
However, I believe this concept is best expressed in the form of real world stories from some fellow photographers:
“Had someone stiff me for a newborn shoot…Spent over an 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.”
“I had someone book his dogs 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.” By the way, 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!”
How to Avoid these Situations:
Do the above stories sound familiar? Would you like to avoid this happening to you? Then, make sure you get an advanced “payment.” This is not an uncommon practice in the creative industry. Many studios, big and small, require a “payment” up front.
The stories listed above could have been avoided or mitigated if the photographers had required a reservation “payment” fee. This fee would have compensated the photographers for their lost time and mitigated the expenses related to hiring hair and makeup artists. A “payment” clause will give you piece of mind that the client will show, and adds credibility to the professional relationship between the photographer and client. Especially, when paired with a professional legal contract.
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The Difference between a Retainer and a Deposit
This distinction between a retainer and a deposit is a big one. However, the two are frequently confused, and often the terms are used interchangeably; when they are in fact not interchangeable. When it comes to spelling out a non-refundable “payment”, there are a variety of opinions on the matter, with very little case law clearly defining what is acceptable and not acceptable.
Retainer: This is a fee paid in advance to someone, which secures the right for you to have that individual’s services when they are required. An example of this is an attorney receiving a retainer from a client, the client has bought the attorney’s services for a set period of time; or, until the retainer runs out. Typically, retainers are not refundable. You either use them within a given period of time, or lose them.
Deposit: This is a payment made in order to show good faith that the buyer intends to complete his end of the transaction. It functions as a pledge for a contract, with the balance being paid on a later date. Deposits can be either refundable or non-refundable. It is for a specific job at a specific time and place in the future. There is no industry standard here; you have to formulate a refund policy that works for your studio.
In order to solidify your understanding of the distinction, consider the following examples:
Case Law- 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- 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.
The rationale behind the decision to refund the non-refundable retainer is that the photographer, not the client, caused the breach of contract. The court rationalized that it would be an injustice to award the photographer with the non-refundable deposit. It would constitute a “wind fall” for the breaching party, which is contrary to the interests of justice.
In a contract case such as this, the court’s remedy is to simply put the non-breaching party into the same position that they would have been in, had the breach not occurred. In the above example, this meant providing the couple the entirety of their payment, plus court costs. The photographer actually had to pay out more money than he received in payment from the couple.
In looking at the above scenario, some of you may still be confused as to how the court decided that the photographer breached the contract. The emails traded between the two parties are what the court based its determination on.
Yes, the couple indicated their desire to get out of the contract. They asked for all their money back, minus the non-refundable retainer. The court may have considered this to be an express revocation of the contract if the photographer had treated it as such. However, the photographer emailed the couple back, asking for a clear statement of whether the couple intended to cancel their contract.
This led to the couple responding to the photographer, in such a manner as to indicate their willingness to continue with the contract. The couple gave the photographer a choice, to either continue with the contract or for the photographer to sign a document stating that he was willing to cancel the contract and refund them all payments, except for the non-refundable deposit. The couple never said, “O.K., we want out of this contract.”
The photographer “jumped the gun”. The photographer’s belief that the couple had breached the contract was obviously inaccurate. The email from the couple contained an offer to continue with the contract. In suddenly declaring that the couple breached the contract and then keeping all the money, the photographer made a couple of critical errors.
The photographer should have either offered to continue with the contract, offered to cancel the contract pursuant to the cancellation clause contained in his contract, or emailed the couple delineating his belief that the manner in which they were attempting to cancel the contract entitled him to keep all of the money paid for his services. Communication is the key to any good business relationship and the photographer in this case dropped the ball.
An email communicating these options to the client would have placed the ball in their court. The easiest course of action would have been to cancel the contract and keep the retainer. The couple had already agreed that the photographer should keep the retainer; they specifically reference this contractual provision in their email to the photographer. Alternatively, if the photographer had a substitution clause, then he could have given the couple the option to work with a more compatible photographer.
Additionally, the photographer placed himself in the position of the breaching party by not performing according to his contractual obligations. The photographer had received money in excess of his required retainer; which the court probably would consider substantial performance of a contractual duty by the married couple. The photographer then did nothing; he just kept the money and did not perform his contractual duty.
Bottom Line: Clear communication and an intimate knowledge of all the provisions within your contract are of the utmost importance to running a successful photography business. Whatever you do, DO NOT let emotions rule your decisions. If you have a difficult client, take deep breaths and do not get angry. Don’t let an emotional reaction to a problem preclude future communication with the client. Don’t let a lack of fluency in your contractual document influence you to make rash decisions.
In your contract’s cancellation provision, insert text that requires the client to provide you with notice of their intent to cancel the contract in writing. Stick by this and don’t act as if the contract is cancelled until you receive this notice.
Clarity is the Key
In summation, whether the word deposit or retainer is used may make a difference if the photographer in fact breaches the contract with the client.
A client may pay a retainer to a photographer in order for the photographer to ensure the client has the photographer’s services at some future time and place. Upon acceptance of this retainer, the photographer agrees to forgo accepting other clients which might interfere with the retained client’s future photoshoot. If the client then cancels the contract, if the signed contract so delineates, the photographer can then keep the retainer as compensation for the loss of business that they might have been able to book during the period for which the retainer has been paid.
A client may pay a deposit to a photographer in order for the photographer to ensure the client has the photographer’s services at a specific time and place. Upon acceptance of this deposit, the photographer agrees to forgo scheduling any other client at the specified date and time. If the client cancels the contract, if the signed contract so delineates, the photographer can keep the deposit as compensation for the loss of business or preparation that they may have done for the photo shoot on the specified day and time.
Remember, clarity is the key when employing any contractual provision, but even more so when referencing non-refundable “payments”. A clear, express contractual provision will help ease any hard feelings that might grow between you and your client in the event the client cancels and you keep the “payment”. Further, if the client sues to get the retainer back, the first thing the judge will ask is, “Where is the provision in the contract that states the “payment” is non-refundable?”
When constructing the contractual language within your terms and conditions, spell out that the retainer or deposit made by your client is to secure your services on a particular date, at a particular time. State that the monies being accepted for this are in consideration of your photography studio forgoing the further booking of any other clients for that date and time. Lastly, state that cancellation on the part of the client will thereby result in an economic loss to your studio. This should clearly put the client on notice that the “payment” is non-refundable, while giving the client the reason behind its non-refundability.
Your typical consumer will have a very basic understanding of what a retainer is. The client should understand that a retainer is used to retain services and is, more often than not, non-refundable. The client’s retainer is purchasing your future availability to take their pictures, within a specified period of time. The retainer functions to prevent the photographer from booking so many clients, that the client load would preclude you from taking the client’s pictures within the designated timeframe.
Example: Ross really likes the photography work of Owen and Ross needs professional headshots done for his resume. However, over the next few months Ross is extremely busy and cannot easily schedule a photoshoot at a specific day and time. Owen, being a popular photographer, has photoshoots booked months in advance. In order to ensure that Owen will be able to take his photographs in the next few months, Ross retains Owen’s services.
Ross pays Owen $500.00 to guarantee that between March 2016 and June 2016 Owen will perform Ross’ photoshoot. If Ross fails to schedule a photoshoot by the end of June, then the retainer is Owen’s free and clear. If Ross schedules a photoshoot, then, depending on the terms and conditions of the contract, Ross’ retainer may or may not be credited towards the photoshoot.
Remember how in movies, the main character can always get a table at a restaurant by slipping the hostess some money? Well, that is a very simplistic form of a retainer. Simply put, the retainer signifies the photographer’s agreement to put Client X in front of his other clients, because Client X paid him $500.00 to be bumped to the front of the line.
Deposits are more of a grey issue, refund of a deposit is controlled by the photographer’s choice of contractual language. You are taking a partial payment for the job, typically a percentage of the final fee.
Whatever you chose to use in your photography practice, a deposit or a retainer, be clear and concise when writing the terms and conditions, and make sure you are up front with your client about how refunds of retainers or deposits are effectuated.
However, 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 monies (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 your contract (unless you’re an attorney) or use a contract for which you don’t know the credentials of the drafter.
Implementing a Deposit or Retainer Provision
The first decision to make is, “Do you want the “payment” to be refundable?”. Having the client penalized for non-compliance with the contract will help bind the client to you, and will compensate you for your lost time.
Ensure that your contract provision outlines the following:
- The “payment.” Determine whether you are calling it a retainer or a deposit.
- The amount.
- How said amount is either refundable or non-refundable.
- Rescheduling policies.
- If the amount is non-refundable, construct the provision in a way TO ATTRACT THE ATTENTION OF THE READER.
Need a lawyer/photographer drafted contract?
TheLawTog 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 a legal right to keep the retainer, 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).
Ensure that each client makes this investment, every time they enter into a contract with your photography studio. Establish a fee table and stick to it. Make sure you apply this fee scale equally to all your clients. In determining your fee scale, evaluate your cost of doing business and weigh it against the barrier it may create in discouraging future clients.
For instance, if a client books you then decides to reschedule, is the non-refundable fee enough to cover your business costs if you cannot fill that time slot with another client? This is especially important when dealing with weddings, as they are an all-day or weekend affair.
Never consider a client booked without a signed valid contract and a non-refundable deposit or retainer.