f you charge the full amount at the time of booking for your rentals and activities, you may be losing business. I often get asked by businesses that use Booking Central undefinedwhat they should charge. Follow along as we take a closer look at deposit rules and when you should charge the full amount, a deposit or take the credit card to hold on file.
Charging the full amount at the time of booking has several benefits. Most importantly, you get the funds immediately and the booking is locked in. But there is a side-effect; it may deter your customers from making a booking, especially for higher-priced rentals such a boat rental where the total can be hundreds or even thousands of dollars.
There are several reasons why customers may choose not to make the booking:
- The rental or activity is far out in the future
- The customer may need to get money from co-travelers
- The customer may need to save money in order to pay
If you think about it - this is one of the reasons why many hotel sites offer you to either pay at the time of booking or pay at the hotel.
When to charge a deposit
If your rentals or activities are more than a couple of hundred dollars, you can charge a deposit amount at the time of booking and then charge the remaining balance sometime before the rental/activity or when the customer arrives. That way, you lower the barrier for the customer to make a purchasing decision.
For example, you can specify that you want a 20% deposit at the time of reservation and the remaining balance upon arrival. For higher priced rentals, this is a good option as it commits the customer, but doesn't cost them too much up front.
When to charge the full amount
For rentals and activities with a lower price point, there is less hesitation for a customer to pay the full amount. Hourly or half-day rentals and tours and activities are typical examples where you can charge the full amount without the risk of losing customers.
When to hold the credit card on file
A third option is to not charge a deposit but instead hold the credit card on file. Holding the card can be a very good option if you tend to have many cancelations. Since there was no initial payment, you don’t have to process a refund. Note that you may have a higher number of no-shows, compared to reservations that require a deposit at the time of booking.
Here are some industry examples of deposit rules across different segments:
Having the correct deposit rule can help you to get more bookings by allowing the customer additional time to plan for the reservation. Partnering with a booking system, like Booking Central, that offers these deposit choices is important. WebReserv will give you the freedom to decide on your deposit rules, and even set individually based on the rental or activity. This is a great option is you offer both higher-priced rentals and lower-priced tours or activities.
If you want to know more, reach out to our experts. We offer a great solution for online booking that is affordable and filled with features you need to successfully run your business.