Updated July 31, 2023
A cancellation policy is a written agreement between a business and a customer that limits when, how, and why either party can cancel an appointment/service or product order. This document safeguards companies from financial losses and liabilities while also protecting the consumer.
Common Types (2)
- Appointment/service cancellation: used by service-based businesses (e.g. hair stylists, plumbers, graphic designers)
- Order cancellation: used by businesses that offer tangible goods and products
- Online Order cancellation: used by online retailers
Table of Contents |
What is a Cancellation Policy?
A cancellation policy is a document that defines the parameters for canceling an appointment/service or product order.
A typical policy will establish timeframes for canceling and define consequences if the client fails to cancel within that respective timeframe. These agreements may also note what happens if the business cancels on its end.
Is a Cancellation Policy Required?
Though a cancellation policy is not legally necessary, it is recommended. A well-written and effectively enforced cancellation policy can help companies:
- Recoup lost costs
- Reduce the volume of returns
- Decrease no-show rates
- Communicate professionalism
- Address customer confusion
What Should Be Included (5)?
The purpose of a cancellation policy is to establish clear expectations for canceling appointments/services and purchase orders. To communicate this information to customers, every policy should include the key elements listed below.
1. Business Details
This section should list:
- Business name
- Address
- Website
- Phone number
Preferred communication methods may also be noted.
2. Process
Businesses should indicate the best practice for canceling an appointment/service or product order. For example, a business may require that customers cancel product orders via phone or through their ecommerce website.
A company may also establish expectations for situations in which they must cancel services or product delivery. For instance, a company may offer a full refund. Or, a company may call the client to reschedule an appointment.
3. Timeframe
The contract should communicate a reasonable timeframe to cancel with or without a penalty.
What is considered reasonable will depend on the respective business. A hair stylist, for example, may require 24 hours’ notice while an architectural firm may require 30 days’ notice. It is recommended that businesses research industry standards before setting this customer expectation.
4. Penalties
The written agreement should define any penalties customers may face upon canceling.
Penalties vary from company to company. Examples include:
- Full payment
- Flat rebooking fee
- Percentage of the total order cost
Some businesses choose to include a section that defines the consequences of repeat cancellations.
5. Exceptions
The contract should list exceptions to cancellation penalties.
For example, many companies waive cancellation fees if a customer has a fever. Others waive cancellation fees in the event of inclement weather.
What is a Good Cancellation Policy?
An effective cancellation policy motivates clients to provide appropriate notice before canceling their appointment or product order.
Other characteristics of an effective cancellation policy include:
- Clear and concise language: The verbiage should be succinct and easy to understand.
- Reasonable timeframes: Businesses should apply an empathetic approach when determining how much notice is reasonable for clients to cancel appointments or product orders.
- Reasonable penalties: Likewise, companies must decide on penalties that are neither too harsh nor too lenient.
It is also a best practice to have clients sign a written cancellation policy agreement. In the event of an online order, this verbiage may be included in the digital terms and conditions.
Samples
APPOINTMENT / RESERVATION
CANCELLATION POLICY
1. Canceling and Rescheduling. Customers may cancel or reschedule without penalty by notifying us at least [# HOURS] hours before their scheduled appointment or reservation time. To cancel or reschedule, please contact us at (fill in those that apply):
Phone: [#]
Email: [EMAIL ADDRESS]
Web: [URL]
2. Late Cancellation. Cancellations are considered “late” when the customer does not cancel or reschedule at least [# HOURS] hours prior to the scheduled appointment or reservation time. Late cancellations will result in the customer being charged a fee of $[DOLLARS].
3. Missed Appointments. If a customer misses their scheduled appointment or reservation without canceling or rescheduling, they will be charged [PERCENT]% of the price of the scheduled service or event.
4. Booking Fees. Any booking fees charged to the customer for scheduling a reservation or an appointment (select one):
☐ will be refunded if the customer cancels or reschedules within the timeframe defined above.
☐ are non-refundable upon cancellation.
5. Provider Cancellation. If, for any reason, we must cancel your scheduled appointment or reservation, we will notify you as soon as possible and will work with you to reschedule or you will receive a full refund.
6. Refunds. Any refunds will be processed in the same method as the original payment.
7. Fee Waiver. We reserve the right, at our discretion, to waive any fee or penalty assessed hereunder for any reason we deem sufficient and reasonable.
8. Other Terms and Conditions. [TERMS AND CONDITIONS]
SERVICE CANCELLATION POLICY
1. Cancellation of Services. To cancel service, customer must provide us with a written [# DAYS]-day notice of cancellation. Until notice of cancellation is received by us, and cancellation is finalized, service will continue and Customer is responsible for paying for said service or services. Please send notice to (fill in those that apply):
Email: [EMAIL ADDRESS]
Web: [URL]
Mail: [ADDRESS, CITY, STATE, ZIP]
2. Service Termination. Upon expiration of customer-provided notice of cancellation, services will (select one):
☐ terminate immediately.
☐ terminate at the end of the current billing cycle.
3. Early Cancellation. (select one):
☐ Customer may not cancel service early.
☐ Customer may cancel service, without penalty, by providing written notice at least [# DAYS] days before the first scheduled service will take place.
4. Cancellation Fee. Customer (select one):
☐ is not required to pay a cancellation fee.
☐ agrees to pay a fee of $ [DOLLARS] upon cancellation of service(s).
5. Provider Initiated Cancellation. We reserve the right to cancel service if the customer’s account remains delinquent for [# DAYS] days after the customer is notified that the account has become delinquent.
6. Other Terms and Conditions. [TERMS AND CONDITIONS]
ONLINE ORDER
CANCELLATION POLICY
1. Canceling Orders. Orders for items that are eligible for return may be canceled. For more information about item eligibility, please see our Return Policy. Orders may be canceled as follows:
2. Shipping. Orders that will be shipped to the Customer (select one):
☐ may be canceled any time before the shipping process has started.
☐ may be canceled up to [# MINUTES] minutes after the order is placed.
☐ may not be canceled. Eligible items may be returned after Customer receives them.
3. In-store Pickup. Orders for in-store pickup may be canceled at any time. Any items eligible for return that remain unclaimed for [# DAYS] days will be restocked, and a refund will be provided to the Customer. To cancel an order that will be shipped or picked up in-store (select all that apply):
☐ Sign in to your online account.
☐ Contact the retailer/merchant directly at: [PHONE OR EMAIL]
4. Scheduled Home Delivery. Orders for items that require scheduled home delivery may be canceled [# HOURS] hours before the scheduled delivery time. To cancel an order that is scheduled for home delivery (select all that apply):
☐ Sign in to your online account.
☐ Contact the retailer/merchant directly at: [PHONE OR EMAIL]
5. Other Terms and Conditions. [TERMS AND CONDITIONS]