Hi all!
I had a bride that booked with me in February for a wedding September 1, 2012. She was an absolute DREAM to work with! Very sweet, understading, punctual and not demanding at all.The wedding was going to be small (75 guest) but we still went over the contract and I obtained 50% deposit.
I get an email from her yesterday saying that the wedding was cancelled due to personal reasons (I think we can all assume couple troubles) and she said she was willing to pay any fees associated with cancelling.
This is the first time I've had to do this and of all people to this wonderful young lady. I've drafted an email with the following:

Good afternoon,

I am very saddened to hear that your wedding will not go on as planned. I was really looking forward to working with you.

As for cancellation fees; 
I obtained a 50% deposit from you when we met on 2/17/2012. The amount was $303.12 which was half of the total of $606.25. As per the contract you are eligible to receive up to 50% of the deposit if cancelled before 8/1/2012 which would end up being $151.56. This would be the amount I can refund to you. 

You are a very lovely client and I really wish I could give you the full deposit amount but unfortunately I did reserve September 1st for your event and I've had to turn down other potential brides for that date. However, if you are able to reschedule your wedding and you decide to book with me, I will gladly apply the forfeited deposit amount of $151.26 to your order.

You will receive a check for $151.26 in the next 30 days. I will mail it to the address I have on file:
1234 plainville lane
Plain Texas 77777
If this is not the correct address, please forward the correct mailing address.

I hope that you are able to find a solution to your situation and wish you the best, whatever the outcome. You are a very pleasant young woman with which I hope to to business again with someday. Thank you,

Fedra

Let me know what you think and if there is anything else I should add. Thanks!
Fedra

You covered all the bases.

Except for one tiny detail: maybe the amount that she forfeited and would be eligible to receive in credit should be limited to say a period of one year?

Editor here:
"with which" should be "with whom"

Thanks for the advice. I kept looking at "with which" knowing something looked wierd about it, lol!
Fedra

Do you do party cakes? Would you be willing to apply to one of those? I would say 'if you have another event'. The comment about rescheduling the wedding just seems unnecessary if it ended badly.

i would say that you actually make it too personal....i would stick to business and just state "per our contract....." and state the facts. obviously you liked this person but you liking her is going to make her try to get ahead with the contract somehow, you just never know. business is business and you don't have to explain anything!

I agree, don't get personal, just stick to the business end.

I agree with the other posters about using the money towards a credit to another cake and keeping it valid for one year.

I also think that there is too much sympathy in the personal tone of the letter. She might just be pleased as punch not to have been stuck with a real louse and is trying to see this as a blessing instead of something that invokes sadness in others. You can express your fondness for her and your disappointment by focusing on your agreement. "I'm sorry that I won't be making this cake because it was such a pleasure to meet you. I surely hope that we can work together in the future."

Did you not take an order on that day because of this order? Did you already buy ingredients? Being three months out, do you have no opportunity to fill that date? Are you booked solid for the year?

If none of the above applied, you are not injured in any way. I have the clause in my contract too, but if none of the above applied, I would refund in full. It may be your policy and there are businesses that are booked out, but if you are a casual baker, the bride will know that no harm was done and it will be a negative feeling for her. It will also be reflected in any reference to you in a negative way.

I personally would give back the entire amount under the circumstances. She will be aware that I could have kept the money, but chose not to. We should be mindful of how our policies impact our business in the long run. She knows and you know that you got free money.

Also, what is your deposit policy? Did she choose half? If your real policy is $100, then the refund should be all but $50.00.

Thanks for the replies.
In her original email she also mentioned that if her situation resolves itself that "she hopes to reschedule with me IF I am willing to accept doing business with her again". This is why I mention applying her forfeited deposit to a possible future order.
scp1127: I guess I am a semi-casual baker. I limit the amount of orders I take a week to 5, that being 3 celebration cakes and 2 wedding cakes because I still have my day job as an RN (which I love!!), teach 3 Wilton courses a week and take care of 3 children all by myself (given that my husband travels around the country for his job). I'm currently booked every weekend until early October and I have turned away two other brides for early September weddings. I certainly thought about how not giving her a FULL refund can possibly hurt my business however, I have lost business because I booked her instead. My deposit policy is 50% of the order at time of contract signing and the remaining balance is due 30 days before event. The date is not reserved until I have received the deposit. I have not had anyone complain about my deposit policy yet or had any cancellations until today.
Yes, the draft does seem too personal. I might change that a bit. I want my clients to feel that they are not just a dollar sign to me, especially in situations like this. Also, this client was out-of-the-ordinary nice which has made this a little harder.
Fedra

fedra, if you have lost business, I would explain that to her and keep the money. But I would leave it on the books as a credit to her. She will understand.

By the way, that's a pretty nice schedule for someone who is still part-time. She will obviously know of your reputation and that will justify your policy.

Some people only do a cake here and there. A customer would see through that.

I choose the full refund route because the opportunity for goodwill doesn't come along very often. I like the word-of-mouth that satisfied customers spread. I would only suggest the full route because the date is still 3 months away.

So I guess my only other question is how much do you really need the $150.00? Will it be worth the opportunity for more word of mouth? If you keep it, busy or not, without a credit on your books, she will think negatively later.

Thanks for all your responses. I have decided to refund her entire deposit balance of $303. All in all, my reputation is really what matters and word of mouth is the only advertising that's currently kept me in business. I appreciate and truly value everyone's input Thanks!
Fedra

I know you liked her and there are exceptions to every rule. But in general, what is the point of having policies and contracts if we are not going to enforce them?

I do not refund retainers. Ever. (balance paid beyond that when no work has been completed is another story). If I am so compelled, I may credit it to another order.

I also have a decent date change policy which is what I would have offered this customer. They can keep the retainer on file for up to one year past the old date before it is forfeited if they think they will be rescheduling the same event. If the new date is 6 months or more past the old date, then the order is recalculated for price and policy changes.

"You are a very pleasant young woman with which I hope to to business again with someday. Thank you,"

I only want to say you have a typo in the last line, probably should be... I hope TO DO business again....

I also mentioned in my first post that this was my the first time in this situation. All of us cake decorators are in the business of making people happy. Yes, it still is s business but I believe I can still provide GREAT customer service even if I am not able to fulfill an order with them. I was teetering on both ends of this deposit debacle and now feel like this client is the exception to this rule.
LoveMeSimeCake615:
I understand your concern as to not following thru with my contract however since I'm still a pretty new business, I'd like to keep my reputation on good standing with the folks in my town. I will let the bride know that this is the only exception I will make given her circumstances.
I work as an RN at a family practice. We have a cancellation fee for no show ir late schedule appointments. That fee is SOMETIMES waived depend on the circumstances and the patient. We had one patient YELP that our office was very understanding and personal because we didn't charge him a cancel fee due to a death in his family. We have since received several referrals from this patient. I feel that this situation is similar to that also.

There's absolutely nothing wrong with waiving fees or making exceptions for customers, as long as you don't make it a habit and are comfortable saying "no" to another customer who hears about the exception and demands the same treatment.

I have to agree with others who are telling you not to refund the entire amount. If you are in business, then you should not treat your policies on a per person basis. If you had not liked this person would you be refunding the whole amount?

She knew cancelling a wedding came with consequences...she even mentioned that. Was your time in dealing with her not worth anything? The planning the emails, the design? Your reputation is also built on being consistent with customers--not just on how much you can bend over to please them. What's good for one should be good for all...otherwise, why have a policy at all?

we shouldn't jump on her for making a decision! it's her business and maybe since the others went through and weighed the options she realized she could book again...end of story, its HER business

I'm sure she expected there to be a cancellation fee, so to give a full refund is really nice. If you don't need the money you will be rewarded tenfold by giving it back. I'm sure other businesses that she is dealing with about the cancellation are not as kind as you. Even if you are entitled to a keep the money it's nice to at least offer a credit for that amount should she need a cake for a graduation, birthday, or holiday in the coming year.

I have made many similar "decisions" to be pro-customer and give them a break, and in 25 years, it has never once, come back to bite me. You have to be a good businessperson, but many lack being a good marketing and PR person, which will take you far in your business. Those decisions are the ones, while my competitors stuck to the policies, that fed my children well during many years of self-employment. It gives me the upper hand now too. How do you think I could grow this business to where it is now in two years?

SoFlo is right. that baker may be the absolute only company that will give her a full refund. That is worth $150.00. She will get more good word of mouth, more recommendations, and the almost bride will tell about how she was understanding because it was still 3 months away.

I am not advocating giving people money when your business can justify it.

The idea of not veering from policy, honoring your contract, it's yours so take it, is great. It gives all of the new businesses an opportuntiy to serve your customers the next time.