Pros and cons of asking for a security deposit

Every rental operator decides at some point whether to ask for a security deposit. There’s no single right answer. It depends on your boats, your customers and how much risk you want to carry.

A security deposit is an amount the customer pays before the trip and gets back afterward, as long as the boat comes back on time and undamaged. It’s separate from a down payment. A down payment is part of the rental price, paid up front, and it makes people who book more likely to show up.

Taking a security deposit

Many operators ask for a deposit, especially for bigger or faster boats. It’s usually a fixed amount, but it can also depend on the boat, the number of hours or the rental price.

Advantages

Financial security. When a customer scratches the hull or bends a propeller, the deposit pays for the repair. You don’t have to ask for the money afterward.

More care for the boat. A customer who gets their money back when the boat comes back in good shape tends to take a little more care at the dock.

Extra costs are covered. A group that comes back an hour late, or uses more fuel than included, pays the difference out of the deposit. The rest goes back to them.

Disadvantages

Some customers drop out. A deposit on top of the rental price can put off people on a tight budget, or first-timers who are still comparing.

More to settle after the trip. Every deposit has to go back, in full or in part. When you keep part of it, you need to explain why, and that can lead to a discussion at the dock. On a connected boat, Let’s Book records the trip, so you can show the customer when the boat came back.

The customer waits for their money. A refund to a card can take a few days to show up on the customer’s account. Tell them that up front, so nobody calls on Monday asking where it is.

Not taking a security deposit

Some operators choose not to ask for a deposit. That works well when you have many regulars, or when you want to make it easy for people to try a boat for the first time.

Advantages

Fewer customers drop out. The price the customer sees is the price they pay. That makes it easier to book, especially for first-timers.

Less to settle afterward. No deposits to return and no discussions about who made that scratch.

Trust. Regulars feel you trust them. For a loyal customer, renting without a deposit is a small reward.

Disadvantages

You carry the risk. When a boat comes back damaged or late, the repair or the lost time comes out of your own pocket, unless you manage to recover it afterward.

Less care. A customer with nothing at stake may take less care with your boat.

More to check up front. Without a deposit, you may want to know more about a customer before they leave, like whether they’ve handled a boat before.

Ways in between

You don’t have to choose one or the other for everyone. A few options in between:

• A deposit on the fast boats, and none on the small electric boats.
• A deposit only when the customer books an extra that needs one, like a wakeboard. See the add-ons that sell.
• No deposit for regulars or club members, and a deposit for new customers. See membership systems.

In Let’s Book, the deposit is a fixed amount, or it follows the hours, the passengers or the rental price. You decide when it applies, for example per customer type, so your members rent without one. After the trip, you return it from the booking itself. When there’s damage, you keep back part of it, with a line for each cost. At the end of the day, you return the deposits of several bookings in one go. Let’s Book charges no booking fee on a deposit that goes back to the customer. Your payment provider may still charge its own fee on the full deposit, even when it goes back.

Whatever you choose, tell customers clearly. On the booking form, the deposit has its own line, and there you say in your own words when they get it back. Read more about payments and deposits in Let’s Book.