The Cost of a Cancellation & What to do About it

Let’s be honest – cancellations suck! There’s nothing worse than that last-minute call, text, or email from a salon client backing out of an appointment due to (insert random excuse here). As salon professionals, we mostly take it in stride with an unexpected – even sometimes welcome – break in the day. However, there’s more behind that empty chair than that momentary gap in your schedule. 

Just like no-shows, cancellations are costly to salons. Suppose the average ticket in your salon is $100, and you have only one last-minute cancellation per day. If your salon is open six days a week, that’s a loss of $600 a week or $31,300 annually. Ouch!

However, your actual losses are higher. In addition to the lost opportunity to earn income for each canceled appointment, you also have to pay your overhead for that portion of your day. And your salon expenses can add up quickly.

Out-of-pocket business expenses typically include:

• Rent or mortgage
• Utilities: water, gas, electricity
• Insurances: business, liability, and property
• Dues & fees: towel service, cable/internet/WiFi, music service, software subscription
• Taxes: payroll, sales, property, etc.
• Professional services: legal, bookkeeping, CPA, business coaching/consultant
• Marketing: branding, advertising, collateral, website design and hosting
• Loan payments: startup & upgrade costs
• Inventory: retail, back-of-house supplies (color, back bar, styling products, and tools)
• Payroll: employees (reception, assistants) and commission service providers
• Training expenses and professional development for your team

Naturally, the expense amounts will vary based on your business structure and location, so you’ll need to list and sum up your own numbers. 

Pro Tip: Knowing these numbers is important for setting salon pricing too.

Do some quick math to calculate the hard costs you’ll pay for a single cancellation. Total your expenses for a given month and then divide that figure by the number of days your salon is open for business in that timeframe. Divide again by the number of stations in your salon and one more time by the number of hours a workstation is used in a day. Unless you split access to chairs in your salon, the hours would be equivalent to what one service provider works, likely an eight-hour day. The number that remains is the sum you’ll actually pay out of your pocket for a single cancellation. Now add in the opportunity cost – in the example, it’s $100 – and there’s the financial impact of just one cancellation on your business.

To soften the blow of cancellations there are a few things you can do: 

1. Have a plan in place for late cancellations: 
   1. Consider starting a wait list so the next person in line can fill the spot.
   2. Post on social about the opening to see if anyone wants to take it.
   3. Offer clients whose services precede the cancellation a chance to add on services.
   4. If realistic, have the service provider take their lunch/dinner or break during the canceled booking.

2. Require a credit card on file for all clients. 

By holding a card on file, you can ensure that your clients will be more careful when they book appointments. That way, you can charge a designated percentage of the service on the card should they cancel their appointment or be a no-show. You’ll find that when there is a financial investment, clients are more likely to respect your time.

3. Take deposits for all or specific clients/services.

Whether done for all services or specific clients, deposits can help solidify the value of your team’s time and let your clients know that your salon needs to be compensated for the time booked, whether they show up or not. Deposits are especially vital to implement for new clients or those booking extensive or cost-heavy services, like extensions, major color and color correction services, smoothing treatments, or wedding parties.

You might also like: Best Practices for Taking Deposits in Your Salon

4. Have a solid cancellation policy. 

Be very clear about how your salon’s cancellation policy works: 

• Outline the difference between a cancellation and a no-show.
• Set concise timelines and percentages:
• For no-shows, X% of the scheduled service fees will be charged.

• For cancellations less than xx-hours in advance of the scheduled service, x% of the service fee and 100% of any special order expenses will be charged.
• For a cancellation more than x-hours in advance of the scheduled service, x% of the service fee and 100% of any special order expenses will be charged. 

State your policy for requiring a credit card on file to book appointments and that the card will be charged for any no-shows and cancellations as outlined above. 

Outline your policy for taking deposits:

• Explain when, how, and why a deposit is taken and when their on-file credit card will be charged.
• Outline how deposits are applied to current or future services.
• State at what point a client would lose their deposit, and their credit card would be charged.

Give your clients a way to communicate directly with you should they have any grievances with your policy. Consider adding (and monitoring) a feedback@ email address to the bottom of your policy.

5.  Implement your cancellation policy by educating your clients.

• Post your policy on your website and social media channels.
• Display your policy or a link to it in your reception area. 
• Add a link to your policy on your confirmation emails and emailed receipts.
• Add a link to your policy in the footer of your marketing emails and newsletters.
• Send an email and/or text outlining or mentioning the new policy and include a link to it on your website.

6.  Have the right system in place.

• Set up the percentage(s) for cancellations and no-shows within your booking software.  
• Implement a paywall to your booking process, both in-house and online.
• Train your staff about your new cancellation policy and how to use it. 
• Set up a means for your team to help add credit cards on file for existing clients.  Even give them a straightforward statement they can use when addressing clients.

(Our salon) now requires a credit card on file in order to make future appointments. It just takes a moment to set up – let me help you. 

7.   Be consistent and enforce your cancellation policy.

When you require a credit card on file to book a service, clients will be more respectful of your time and less likely to skip out on their appointments. As a result, you should see a significant drop in cancellations and no-shows.

Ready to start taking deposits and/or using a card-on-file feature? Check out Rosy Salon Software’s integrated payment processing, RosyPay. These features are exclusive to Rosy customers using RosyPay payment processing.