At tryouts, each athlete pays a $50 family registration fee. It's an annual fee so even returners pay it. It's non-refundable unless you don't make a team (and then we push them into rec classes so it's still not really refunded). It weeds out the riff-raff straight away--you know, the kid that absolutely cannot afford it but spent the night with their cousin and her cousin's friend said "I have tryouts you should try out too", so they came along just to see what it's about and her mom has no idea she's even there.....
After tryouts, we hold a parent meeting during the first practice and outline all of the expenses and what they'll be responsible for during the year. We do have penalties for quitting. In a nutshell, all payments are still due AND you'll owe a $200 quit fee to cover the work needed for finding a replacement or re-working the routine. This is done for several reasons. One, we budget our season and calculate our payments based on the amount of athletes in the program. Two, we usually get 2 or 3 people that don't realize the costs until the meeting and they know then that there is no way they can comfortably assume that responsibility and bow out before signing up. This is a blessing people! If they know that they can't afford to pay for it at all if their fundraisers can't, they should NOT say they can/will and sign up--that's just idiotic. If you can't meet the terms of any contract you sign, you risk being sued.
There is very little cushion in our budget, in order to keep everyone's expenses down, but if you accept a spot on our team and sign the contract (which details the costs and states you are aware of your financial commitment) then you have to pay what you agreed to pay. Now, if the athlete has to quit at any time due to a season ending injury or relocation, all fees are waived and any money we've collected but haven't paid out is refunded. ALSO, I will make exceptions for early quitters with hardship cases (like a sibling/family member being ill or a house burning down) that occur unexpectedly and I will waive fees, and even give refunds, up until choreography camp. After that you're locked in to paying because at that point all of the money is being spent quickly and you may owe us beyond what you've paid in already--ex: we've paid for 3 comps and you quit 2 days before the first...you won't be refunded any of that money b/c we won't be refunded by the EP's. We DO give back comp fees that we haven't paid out and you don't attend, but everything else has already been allotted to pay for something. And anything you pay for, you keep. Apparel, a copy of the music, etc.
The fact is, this is a business and we have bills to pay and the way we do that is with the money you promised to pay when you signed our contract. We are strict on collection at my gym--"No Pay, No Play"--and we are a solid business that is thriving because of it. We're 12 years old so we have come to this contract by many years of trial and error, countless workshops and yearly tweaks and adjustments.
On a side note, we have sued and won a couple of cases but we don't like having to do it. It only makes people mad if they are the ones being sued so I don't see how that would drive away business--it would be bad business to sue our paying customers so I agree to an extent. I don't mind driving away freeloaders though, so if that's the risk I have to take to make sure everyone get's paid, then I guess I'll just have to chance it. At least we will go out of business debt free....