Is a retainer fee a deposit?

It is the best practice as a photographer to establish your deposit/retainer policy within your contract’s terms and conditions. A deposit/retainer policy is an essential contract policy for a successful photography business. 

Have you ever been stood up by a client or had them show up to the session and say they would have to send you the money later? You all, in my earlier days of running this photography business, if you have been in those shoes, then this blog post is a must-read for you!

A definitive deposit or retainer plan is an essential contract policy for a successful photography business. You know your time is money! Almost every photographer has had a terrible experience with absentee clients, procrastinators, and no-shows; with these clients, you have most likely lost out on other business opportunities – you know, the family that you had to turn down because you were booked? They wanted to show up for that session that you were just ghosted at.

To help protect yourself as a photographer, your business is essential to establish your deposit/retainer policy in your contracts. It would help if you found a refund policy that works for you. This encourages the client’s understanding that your time is valuable and gives your client financial motivation to show up for the shoot. I haven’t had a single person cancel on me since implementing this into my business, reschedule due to illness? Sure. But cancel and lose their retainer money? Nope. If you need advice on your wedding photography, check out our photography packages and services at Wild Romantic Photography.

So what are the differences between a retainer and a deposit? A retainer is a fee paid in advance to you, which secures your client’s right to have your services when they are required. Typically, retainers are not refundable. You either use them within a given period or lose them. A deposit is a payment made by your client to show good faith that they intend to complete his end of the transaction, with the balance being paid on a future date. Here’s the main difference: deposits can be either refundable or non-refundable.

A retainer and deposit are not the same.

Is a retainer fee a deposit?

By definition, a retainer is a fee paid in advance used to hold goods or services. A deposit is a payment towards goods or services, usually returned once the goods or services have been acquired. So it’s essential to know the difference–if you are not refunding the fee, based on this definition, it should be called a retainer.

What is a Retainer Fee?

A retainer fee is an upfront fee paid by a client for the professional services of an advisor, consultant, lawyer, freelancer, etc. The price is commonly associated with attorneys who are hired to provide legal services. This fee is used to guarantee the service provider’s commitment but does not usually represent all the fees for the entire process.

Additionally, a retainer fee does not ensure a successful final output. Once the payer and receiver have agreed on the work to be performed, the price is sometimes deposited in a different account than the receiver’s performance to ensure that they are not used for other purposes.

Clarity is the Key: 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. But, here’s the thing: “retainer” and “deposit” are not interchangeable.

Retainer

A Retainer is a fee paid in advance to a service provider, 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 purchased the attorney’s services for a set period or until the retainer runs out.

Typically, retainers are not refundable. You either use them within a given period or lose them. You may want to think twice about using “retainer” in your photography contract, however, because this definition has often been interpreted by the courts as having a meaning specific to the practice of law and does not carry over in a substantive way to the photography business.

Courts in the United States have tended to point out that the word “retainer” has a specific meaning, and a faithful retainer is not a payment for services. It is an advance fee to secure a lawyer’s services and indemnify him for losing the opportunity to accept other employment. Suppose the lawyer can substantiate that other employees will probably be lost by obligating himself to represent the client. In that case, the retainer fee should be deemed earned at the moment it is received.

One might argue that the definition of “retainer” is specific to the practice of law and does not carry over to the photography business; for this reason, that “deposit” may be the better choice of word for photographic services contracts. Our exclusive range of Melbourne wedding photography will help you not miss a thing on your wedding day.

Deposit

This is a buyer’s payment to show good faith that they intend to complete his end of the transaction. It functions as a consideration on the buyer’s part to secure services or goods at a specific time and place in the future, with the balance being paid on a future date. Deposits can be either refundable or non-refundable. It is for a specific job at a particular time and place in the future. There is no industry standard here: as a photography business owner, it is up to you to formulate a refund policy that works for your studio.

It is important to note that whether the word “deposit” or “retainer” is used may make a difference if the photographer breaches the contract with the client. 

A client may pay a retainer to a photographer to ensure the client has the photographer’s services at some future time and place. Upon accepting this retainer, the photographer agrees not to take other clients who might interfere with the retained client’s future photoshoot.

If the client cancels the contract, the photographer can keep the retainer as compensation for any services provided and any expenses related explicitly to the compensated job (for example, hair and makeup fees already paid). They may only keep the retainer as compensation for loss of business that they might have been able to book during the period for which the retainer has been paid if, and only if, that is what the signed contract says occurs in the case of contract cancellation.

A client may pay a deposit to a photographer to ensure the client has the photographer’s services at a specific time and place. Upon accepting this deposit, the photographer agrees to forego scheduling any other client at the specified date and time. If the client cancels the contract, the photographer can keep the deposit if the signed contract details the compensation for preparation that they may have done for the photoshoot on the specified day and time and the cost of reserving the services of the photographer if the photographer is not able to find another client to take the place of the client who has cancelled can be deducted from the deposit.

Know your Stuff to Protect Yourself 

I strongly advise you to speak to an attorney in your area regarding state, local and federal considerations, but here are a few things you should know:

  • Suppose you intend for the initial down payment to be non-refundable. In that case, you must include verbiage stating that the retainer is “non-refundable”, and you cannot call it a deposit as deposits are refundable. If not, and should the client breach the contract, you will have to refund it, or the client can sue you to get the money back.
  • If you, the wedding pro, breach the contract, you might be required to refund even a “non-refundable” retainer. Again, know your laws.
  • Include a fee schedule, aka, a plan for how you wish to receive payments. Is the retainer due at the initial booking and then the balance at the final consultation? Does she need to pay 50% down, 25% three months before the wedding and the remaining 25% on the wedding day? You must clearly and precisely state how much is due when. Be sure to include any late fees or penalties should she not pay on time.
  • Include a refund policy in your contract. State that the retainer of XXX (25%, $500, whatever it may be) is non-refundable, then state how the remaining funds are refunded, if at all, should the contract be terminated by the client.
  • Always have a client sign an agreement–always. And collect a retainer, so your hard work is paid for, even if she bails.
  • Looking at it another way, if I as the pro were to sue a client for breach of contract, the bride is more “invested” into the agreement, the courts are more likely to favour my side of the argument. Plus, having a well-written contract helps. Another way to see it…if a bride has a minimal investment financially and feels like going with another vendor, it is easier for her to break the contract with you. If she has a considerable amount of money invested, she will think longer and harder about losing that money when she breaches your contract.
  • One more tip on contracts: have brides physically sign rather than electronically sign. He said that should there be a case and it goes to court, an electronic signature may not hold up.

You can decide to have a refundable or non-refundable deposit/retainer. Whichever you choose, make sure it is included in the signed contract!

Generally, while non-refundability is a crucial contract inclusion, we recommend using the terms “retainer” or “fee” when non-refundability is desired. However, think twice about using retainer in your photography contract because this definition has often been interpreted by the courts as having a meaning specific to the practice of law and does not carry over in a substantive way to the photography business.

Having learned the hard way, I recommend you check with your contract lawyer to determine the best way to protect yourself and your business with non-refundable retainers or deposits. I will never show up to a session or wedding again, not having been paid prior.

These days, my most common practice is to have a session or wedding paid in full before I ever leave my house. Typically, with a wedding, the balance is due to an entire calendar month before the wedding date. Although I do not do as many family or senior sessions any longer, they must be paid in full one week before the session.

Just remember, you do what is right for you and your business–use common sense and common courtesy to make sure your clients know they are taken care of and that their selection of you as their photographer means the world to you. Life gives us lemons– illnesses and emergencies can (and will!) happen. Wild Romantic Photography has the best range of services of wedding photography Yarra Valley. Check them out here.

So How Should Your Deposit/Retainer Policy Be Worded?

Is a retainer fee a deposit?

It is important to expressly state that a deposit is required from a client to secure a time slot with your studio within the contract. This requirement (1) encourages the client’s understanding that your time is valuable, and (2) 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 you choose, make sure it is included in the signed contract. 

How Retainer Agreements Work

Once a client has engaged an attorney to represent him or her in a case, the client is sometimes required to deposit an upfront retainer fee. The attorney should provide a retainer agreement detailing the retainer fee and how to proceed if the price is depleted. If a lawyer charges $200 per hour and the parties estimate that the case will take a minimum of 30 hours, the client may be required to deposit a $6,000 retainer fee.

The attorney will then invoice the client at the end of the month and transfer the special account fee into his account. If the case takes more work than is covered by the retainer, the attorney will bill the client more. However, if the patient takes less time than the initial estimate, the attorney will refund the client the excess amount.

The majority of bar associations prohibit attorneys from charging a retainer fee representing more hours than a case is likely to require. Clients maintain the right to end legal representation whenever they want during the contract if they are unhappy with the attorney.

Once the agreement is terminated, the client may claim the retainer fee’s balance after paying the attorney an amount equivalent to the number of hours worked. Therefore, clients should clarify with the attorney if they notice a “non-refundable” clause regarding retainer fees in the agreement. Starting to think about hiring a wedding photographer? Check out our range of Mornington Peninsula wedding photography here.

Example of a Retainer Agreement

Once a client signs a representation agreement with an attorney stipulating the retainer fee, the client is required to deposit the payment in a particular account. Any time the attorney works on the case, he keeps track of the hours spent and invoices the client at the end of the month.

For example, the attorney may project that he will spend 10 hours, at an hourly rate of $100, amounting to a $1,000 retainer fee. If in the first month, the lawyer spends four hours on the case, he will charge $400 against the $1,000 retainer fee, leaving a balance of $600. If the attorney completes the case in the second month after spending another three hours, he will charge $300 against the remaining fee, leaving a balance of $300.

The billing includes the time spent making phone calls, sending faxes, and preparing records. If all pending issues have been addressed and there is no extra fee, the client gets a refund of the remaining $300.

After the retainer fee is depleted, the attorney may bill the client in several ways. The first option is to enter into a contingency fee agreement with the client. A contingency fee agreement provides that the lawyer does not get paid unless he wins the case. If the case ends in favour of the client, the attorney takes a percentage of the court’s amount awarded. Planning your dream wedding and don’t want to miss out on the special moments on your big day? Worry no more, Wild Romantic Photography has you covered.

Such an option mainly applies in tort and personal injury cases where the client demands a settlement from the other party. The client and attorney must first agree about the payment plan in advance and put it in writing.

If the client needs an attorney for a long-term relationship, the client may engage the attorney on a retainer basis. The retainer is usually a fixed amount that the client commits to pay the attorney every month in exchange for the opportunity to engage him in the future when legal issues come up.

Such agreements are joint among businesses such as tech companies, restaurants, and hospitals that may be threatened with a legal suit by one of their customers. Hiring a lawyer on a retainer basis is usually a cheaper option than hiring an in-house attorney.

Earned Retainer vs. Unearned Retainer Fee

An unearned retainer fee refers to the amount of money deposited in a retainer account before work commencement. The amount serves as a guarantee by the client to pay the attorney upon completing the agreed work. The attorney cannot claim the retainer fee until he has completed the job and invoiced the client. Any remaining retainer fee after paying the hourly attorney fees should be returned to the client.

Earned retainer fee refers to the amount transferred from the particular account to the attorney’s operating account after completing an agreed task. The amount that the lawyer will receive per hour is usually agreed upon before the commencement of the work and indicated in the retainer fee agreement.

The earned retainer fee is paid every month until the case is closed. Sometimes, the lawyer may be paid according to the milestones he has completed, for example, 25% after the pre-trial process, 60% after the hearing, and 100% when the case is determined and closed.

Importance of a Retainer Fee

A retainer fee compensates the attorney for his expertise and reputation. When hiring an attorney, clients choose an attorney with a good reputation in the legal profession to help them win a case. Selecting the right attorney can sometimes help the client obtain a settlement without even going to court.

Also, the retainer fee aims to protect the attorney from unforeseen circumstances in the future that can prevent clients from meeting their obligations. Once the case has started, the attorney can charge any costs against the retainer fee instead of asking the client to provide extra funds.

Suppose an unexpected event occurs during the court process that prevents the client from paying out more money. In that case, the attorney can receive some compensation for the work performed by having received the retainer fee. If you’d like to work with professional photographers for your wedding, book with us at Wild Romantic Photography.

BOTTOM LINE

Generally, while non-refundability is a crucial contract inclusion, we recommend using the terms “retainer” or “fee” when non-refundability is desired. Be sure to check with your local attorney for advice on your circumstances!