Inputs
Graph
Example data table
| Scenario | Booking | Days to Event | Notice Days | Policy | Recovery | Net Cost |
|---|---|---|---|---|---|---|
| Early cancel | USD 1,200.00 | 45 | 20 | Tiered (0%) | 40% | USD 94.68 |
| Mid-window | USD 1,200.00 | 14 | 7 | Tiered (10%) | 30% | USD 189.51 |
| Late cancel | USD 1,200.00 | 3 | 1 | Tiered (50%) | 10% | USD 690.22 |
Formula used
The calculator estimates net cancellation cost by combining nonrefundable loss, policy fees, admin and processing fees, tax on fees, and optional opportunity cost, then subtracting expected recoveries and optional coverage credits.
NoticeFactor ranges from 1.00 to 1.30, based on 0–30 notice days.
How to use this calculator
- Enter the booking amount, deposit, and any nonrefundable portion.
- Select a policy type and set days until the event.
- Adjust tiers or flat rate to match your cancellation rules.
- Add tax and payment processing values to reflect your environment.
- Use recovery and coverage to model realistic offsets.
- Click Calculate to see the cost summary and chart.
- Download CSV or PDF for sharing and recordkeeping.
Key cost drivers
Cancellation cost starts with the booking amount, then adds policy fees, admin charges, payment processing, and tax on fee-based components. In this model, the policy fee is the primary lever because it scales with booking value and time to event. A 10% fee on a 1,000 booking adds 100 before multipliers. Processing at 2.9% plus 0.30 adds about 29.30 on the same base.
Timing sensitivity
Days to event selects a tier rate, while notice days applies a timing factor from 1.00 to 1.30. When notice is 0 days, the fee is increased by 30% relative, reflecting operational disruption. At 30 notice days, the factor returns to 1.00, improving refund outcomes. A notice of 10 days implies a 1.20 factor, changing totals significantly. Align notice inputs with your observed customer behavior.
Policy tier interpretation
Tiered pricing uses thresholds such as 30, 14, and 7 days to apply rates like 0%, 10%, and 25%, with a closest-in rate such as 50%. This mirrors common cancellation windows where proximity increases risk. Flat policies are useful for simple contracts, but tiered rules better match real capacity constraints. Many operators also layer fixed admin fees of 10–50 to cover handling costs. Use the cap to prevent edge cases from exceeding contractual limits.
Offsets and recoveries
Recoveries reduce net cost by estimating resale or rebooking value on the refundable portion. A 40% recovery on a 1,000 booking with 200 nonrefundable reduces cost by up to 320. Optional coverage credit can reduce selected fees by 0–100%, while nonrefundable loss remains excluded by design. Where demand is strong, a recovery rate above 60% may be realistic. Use conservative recoveries for custom work, perishable services, or fixed-date events.
Reporting and governance
Use CSV export for audit trails and reconciliation. Track three indicators: net cost (capped), estimated refund, and raw cost. Review outliers where demand or seasonality multipliers exceed 1.50, and validate tax rates against local rules. Compare results across scenarios to set tier thresholds that balance fairness and margin protection. A quarterly back-test against real cancellations helps keep assumptions calibrated.
FAQs
1) What does “net (capped)” mean?
It is the estimated cancellation cost after coverage and recoveries, limited by your cap setting. Nonrefundable loss is still included because it cannot be recovered under most terms.
2) Why is tax applied only to certain parts?
Tax is applied to fee-like components such as policy, admin, and processing, not to nonrefundable loss or recoveries. This keeps the tax base focused on charges rather than retained value.
3) How is the notice factor calculated?
NoticeFactor ranges from 1.00 to 1.30. It increases as notice approaches zero, using a 0–30 day scale. More notice reduces disruption and therefore reduces the fee.
4) What should I enter for recovery?
Use your historical rebooking or resale rate for similar cancellations. If you typically rebook 3 out of 10 late cancellations, start near 30% and refine with real results.
5) Does coverage remove nonrefundable loss?
No. Coverage credit is applied to selected fee components only. The nonrefundable amount is treated as a direct loss because it is contractually retained or already consumed.
6) Why might the refund show as zero?
If the capped cost equals or exceeds the paid basis, the calculator returns a zero refund. This can happen with late tiers, low recoveries, or large nonrefundable portions.