Most bakers I know have a non-refundable deposit in their contracts.
I have a non-refundable retainer fee (not a deposit) written into my contract as well. If a client cancels an event, I can keep the retainer. Depending on the circumstances, I'll usually keep it or return a part of it.
The last time this happened, I told the bride that I would return X amount, and she responded that she wanted more back because I "hadn't done anything" and I shouldn't be able to keep the money.
I understand that train of thought, but the retainer covers a few things. First, if a date is booked, it's made unavailable to other clients. that means that if you book with me then cancel, I've lost other potential business. The retainer covers some of that loss.
I also book most of my business after doing the tasting appointments. Tastings cost time and money to prepare, so the retainer would cover some of that cost.
The retainer also covers the time that I've spent sending emails, answering phone calls, prepping gumpaste, and doing paperwork related to that cancelled event.
So retainers would cover those costs, probably not even in full, depending on how much is collected.
I always feel bad when someone cancels their wedding, but there's a reason that deposits and retainers aren't refundable.
Do you refund deposits for cancellations? How much of a deposit do you collect in advance? Everyone handles this differently, so it's interesting to see other people's policies.