I’m just seeing your follow-up information.
A 2-hour cancel is a little short notice for both the instructor and the 2 people who signed up if you need 3. The instructor, with a little more notice, could sub somewhere else or make plans. The class attendee who gets cancelled on last minute I think would also be ticked off.
I already posted that the pilates studio where I works cancels between 9:00pm and 10:00pm the night before so that instructors know they have that class off and members can move into another class (we offer several throughout the day), so I won’t rehash that. I have a different idea.
A different place where I taught had a policy similar to your “paying half” idea. As a personal trainer, I’m expensive, and a really small class with me gives a client more attention. So when my class was 2 people or fewer, they only got a 30 minute session instead of a full hour. They could either book and redeem two classes to get a full hour class, or I could work the heck out of them for 30 minutes. That way, they paid full price for the class, got a high-valued class with great attention, but the company didn’t have to pay me for more than 1/2 hour. I wonder if that might work for you. The only difference in what you are doing, I think, is that the instructors would also work for 1/2 hour instead of the full hour, so they’re not getting penalized by your club’s small attendance.