I handled this in two ways, one very professional and one not so professional. Because she thought their instructor was rude, I offered the party organizer a free 1-hour lap dance and striptease lesson in my studio at her convenience for herself and any 6 of her friends. This is a $210 value -- for free!
But I also explained to her that I wasn't going to give her the refund she was requesting for two reasons, one being that the flat rate price for 10 or less women was clearly posted on our website. And the second basically said she wasn't likely to find any business that gives refunds for no-shows. This is a partial quote from the e-mail I sent her:
"If you had booked a wedding reception hall for 50 guests and only showed up with 30 guests, it's unlikely you would get a refund from them because your guests chose to not show up. If you had booked 15 tickets on a flight with an airline but only showed up with 7 girls, it's unlikely the airline would give you a refund for the girls that didn't show up. If you purchased 15 movie tickets online for a movie but only showed up with 7 people, it's unlikely the movie theatre would give you a refund because some of your friends chose not to show up. We are the same as every other business, we can't be responsible when a client agrees to a certain number of people and then doesn't keep the agreement because their friends chose not to show up. If we did, we would lose so much money we wouldn't be able to stay open. So I'm very sorry we can't issue a refund to you. And this is why we have a flat rate and why the rate is clearly posted on our website."
I know this may have been less that professional. But she is getting a $210 lesson for free. So hopefully she can stand being put in her place a bit to get something for free that I have never ever given to anyone for free before.