Although I haven't ran a business, I have actually thought much about how a business could ensure that delinquent clients are punished without adversely affecting the clients who do the right thing.

I would most likely implement a '3 strikes' system. If the client is a "no show" or cancels at the very last moment (within 1-2 hours or less), they get 1 strike on their record. Each time the client receives these so-called 'strikes', I will remind them how many available strikes they currently have left and that I could charge them a cancellation penalty fee but I won't.

If, however, they have a legitimate excuse for their absence or late notice, e.g. they were involved in a car accident, a relative/friend had died etc. I would waive the fee.

Fortunately I don't live in a big city such as New York, Tokyo or London so, if I were in business, I can be more flexible with time constraints before I add the fee to the bill.