How to Set Up a Retainer Agreement with Your Most Profitable Clients

A big problem that many freelancers have is a lack of consistency in their schedule.Freelance Retainer Agreement

When you have bills that show up on a regular basis but work that only brings in money when it’s available (and when you’ve put in the time), things can get a bit hectic.

This isn’t just a problem for new freelancers either. It can happen to seasoned pros as well.

Oftentimes, the key to solving this problem is to go beyond traditional freelancing into new types of income, particularly reoccurring sources such as products or retainer agreements.

A well-planned retainer with a top notch client allows you not only to plan your work in advance, but also gives you the freedom to make time for new clients when you’re ready. It gives you the stability that many people who frequent Reddit’s r/Freelance board would kill for.

As you may have guessed, you do have to be careful. Just as a traditional freelance contract may go awry from a deadbeat client refusing to pay, having a poorly planned retainer agreement can result in getting taken advantage of. The goal is to simply to allow yourself to be available to the client in exchange for a predictable income, not to become their lap dog.

Today, we will be going through the essentials of setting up retainer contracts and how to pitch them to clients.

If you’re looking for a steadier stream of income or for a way to supplement your traditional hourly work, listen up and take notes!

What Work Should You Offer?

One of the first steps in making a retainer setup work for you is to decide what sort of services you can realistically offer. You’ll find that some of your usual work may not be a perfect fit for a retainer agreement.

For someone like a content strategist, a retainer may simply be, “Deliver one article a week and two guest posts per month.” But what about for someone who develops websites or handles maintenance? This sort of work can lead to WAY too many calls, emails, and requests. The small details end up eating up too much of your time.

This solid article on setting up your first retainer highlights some of the tasks that may be a better fit for retainer gigs:

  • Handling routine (ie, not out of the ordinary) maintenance work that may not get done without you
  • Being on call for emergency issues (cleary define what these are)
  • Offering extremely fast turnaround for routine tasks
  • Consulting on strategy or planning for the company
  • Handling reoccurring work (like the number of articles per week, as mentioned above)

One thing you definitely need to do is to outline what work you’ll be doing and how much of it you can commit too.

As noted, being at someone’s beck-and-call can get out of hand when they start paying you upfront. They may start demanding too many hours, and you need an agreement in place that says your retainer is good for X, and if they want X + Y they’ll also have to pay your rate. Our integration with time-tracking software Harvest makes it simple to do this!

Additionally, you’ll want to keep tabs on a new agreement as time goes on. One of the best ways to make sure your retainer is working out for you as well as your clients is to closely keep track of your time. Is your rate per hour higher, the same, or less than before?

Once the ink hits the paper, you need to use tools like Harvest or Toggl to closely monitor hours spent working on your retainer contracts vs. what your monthly retainer is (time-tracking 101, you’re likely doing this already). You can find even more productivity and time-tracking tools on our massive list of freelance resources.

This helps you log what you are really earning per hour. If you find you aren’t working close to your rate, you will be able to immediately make a move on renegotiating the price, terms, or you can cancel the contract and move on.

Pitching the Idea to Clients

Well all know that a perfect proposal is one that appeals to a client’s needs, so you can be sure that it takes a bit of positioning to correctly pitch the idea of a retainer agreement to clients. Check out this marketing retainer proposal template to get an idea of what it might look like.

First things first, the very reason that you are likely interested in a retainer agreement is that at a certain point in building your freelance / consulting business, you found that you were doing more and more work for a smaller segment of important clients.

These are the clients you need to target for retainer agreements.

Why?

Since these are the clients that have slowly been “funneled” by your premium rate, it is clear that you kept them around for a reason—they pay well and on time. Since you won’t have to worry about marketing yourself to gain new clients when you have a few solid retainer contracts, it makes sense to take the relationships with these top tier clients beyond an hourly basis because they can afford it and it will give you an opportunity to spend less time on promotion, and more time on getting paid.

It’s the 80 / 20 rule that plays out in many a freelancing career—a large segment of our ilk soon realize that only 20% of their clients are producing the lion’s share of their income.

To sweeten the deal, these super clients are often the most willing to commit to retainers since your expenses aren’t as large of a dent in their budget as a smaller client. In short, these are the people you dream of finding when you’re just starting out and searching far and wide for those very first clients.

Here are a few ways you make it a “no-brainer” for these winning clients to see the value in a retainer contract with you:

Remind them of your dependability. If you’ve been over-delivering on your contract work, the thought of hiring you on retainer has probably already been discussed, or at least mentioned. No surprise then that the best thing to remind your clients of is how much value you’ve delivered on such a consistent basis. Make it obvious that you are serious about transforming this business relationship to something more consistent, and put your track record front and center to let it speak for itself. Be like Han Solo: calm, collected, and confident in your ability to create value.

Do the math for them. If a client just closed two $2,500 contracts with you over the span of 2 months, a $4k+ monthly retainer sounds like a deal if they plan on having more projects in the future. You get to stop chasing clients and work with the best, they get to save a few dollars and have you available for regular work. They get to save time they would have spent trolling freelance brokering websites looking for help from someone else.

Offer different commitments. Sure, a 3-month retainer may sound great to you (especially if it’s with an ideal client), but people are scared of commitments. You could instead offer a monthly retainer that requires a notice to cancel and an extended retainer contract for those clients who are ready to invest in your time. Just as you may position your prices for your “regular” freelance work, remember that retainers don’t have to be sold as a single package.

Assemble benchmark reports. If your work directly contributes to closely monitored metrics (a better customer experience, better conversions, or more leads/traffic if you’re a content creator), offer to assemble quick reports on how your work has improved their business. This is especially useful if you’re looking to land a long-term agreement (6 months+), as it will put many business owners at ease to know that you take an active interest in delivering them measurable results.

Give both of you an easy out. As counter-productive as this might seem at first, trust me, you’ll want an easy way to end this relationship. The thing is, great clients rarely go sour unless there is a change in management, and you can almost always tell if a contract isn’t going to work out shortly after it’s been signed. For these “barnacle” clients, you’ll want a way to easily escape that’s written into the contract. For top-tier clients, this serves more or less as a guarantee, and since they are the least likely to use it, it is really a win-win for both of you.

The Finishing Touches

If this sounds good and you’re ready to start making moves on getting clients on retainer, let me offer one final word of warning—you must get certain things down in writing or you’ll end up in trouble.

It’s not rocket science either, just a few basic, iron-clad parameters that will keep you safe from rotten clients. Any upstanding client will see the need for it and won’t offer you resistance.

Make sure the following details all make it into your retainer contract:

  • The amount you’re to receive each month
  • The date you’re to be paid by
  • Any invoicing procedures you’re expected to follow
  • Exactly how much work and what type of work you expect to do
  • When your client needs to let you know about the month’s work by
  • What notification you need before the retainer relationship can be ended
  • Anything else that is relevant for ensuring that work is completed in a timely fashion

Your Turn

Have you worked on retainer for any clients in the past?

Which of your freelance marketing strategies has brought in the most retainer agreements and long-term clients?

Share your tips and advice in the comments below, and thanks for reading!

About Gregory Ciotti


Gregory Ciotti loves small businesses & startups and gets nerdy about behavioral psychology on his blog Sparring Mind.

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Joel

Thanks for this, Gregory. (And thanks Bidsketch for consistently providing such great articles.) Retainers have been a Godsend for us. Now we just need to find more of those top-tier clients.

tim chan

This is really good and practice advice!

Andy

Thanks Gregory! this is just what I needed. Time management is tough to learn but Im realizing just how important it is. With so many variables out of your control makes sense to manage the ones you can.

Cornelia

Thanks Gregory. Really great article and I agree with the relevance of the 80/20 principle

Sean Cook

Good article Gregory. I also add that if the monthly maintenance is really minimal for that month, I send them some free traffic stats and analytics so they always get their money’s worth. This keeps them happy. 🙂

Edwin

Weirdly, I’ve done something like this very recently. As Wordpress needs constant tweaks and fiddles to keep it up to date and working correctly (without being hacked) – I now charge my clients a yearly update fee at the same time as their hosting fee. Call me nuts but up until recently I did this for free. I can’t really charge a monthly retainer, so what I do is on-sell new services and functionality to existing websites and give clients the opportunity of a whole site upgrade after the first 2 years (say from non-responsive layout to responsive) with larger-than-usual loyalty upgrade discounts. So it’s a kind of hybrid of your post, but the client gets to see the differences rather than “paying for the invisible stuff” (a common bugbear in this industry).

Andrei

Another way we use to negotiate retainers is to make available for the client a pool of hours for which he commits a monthly payment. The larger the amount of hours bought, the bigger the discount we offer.

A very simple online time tracker we use for our retainer contracts is http://www.upyourtime.com

Rui Figueiredo

Great article, as always!
The company I work for has done the same thing Andrei mentioned – making a pool of hours available for certain clients – and it does seem to work quite well.

Looking forward to read the next blog post.

Jason Pelker

The only thing I would add would be a ceiling for hours workable in the contract. These hours should not roll over, either. That’s the cost of having a third-party business on call and not paying their taxes and other expenses.

If the client needs additional hours, he could have them at a [very] slight discount, but he’d need to pay out of pocket. For this reason, time-tracking is a necessity with retainers.

Personally, I just do 10 hour blocks (to keep everything simple), but I’d love to move to monthly retainers, just to ensure revenue and to expand my client base.

Dana Thompson

Timely post with great advice. I’m just starting to offer a monthly retainer to some of my web design clients. Trying to smooth out the ups and downs and my income stream and give those clients juggling way too many things to keep their sites current. I think it’s a win-win for both parties!

Coral Cashes

Coincidentally, I’ve just started coming up with ways to do this within my graphic design business. It’s a little tricky trying to figure out a way to sell a monthly flat-rate graphic package, but I’ve found certain industries that can work with. But, I’ve never thought about doing the whole contract. I really like the idea of that because I always end up explaining the stipulations through email, which wastes a lot of my time. Also, since I do use it to market myself, as opposed to keeping it for my good clients only, it would really protect me, too. As a print designer, I don’t have a lot of clients that do repeat business that would warrant a contract like this. Most people do their 1-3 things a year, and that’s it. So I *have* to market the package to people I don’t know. An easy out would be great with those types, since I don’t know about their dependability.

Similarly, I do have one client who is a design broker. She’s my biggest client–she probably sends more than 20% of my work, always pays on time, etc. She recently offered me a weekly salary to handle her customer service since she is getting too busy to take care of it. We haven’t discussed this in detail yet, so a contract would be a good idea for that too, just so I’m not completely in over my head with work for her, forcing me to ignore my other clients.

Anyway, that offer from my client paired with this article really has me thinking about marketing my services to other print shops. Thanks for the ideas and advice!

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