Working on retainer is something you may have only heard of when watching your favorite legal drama but it’s a concept that’s gaining traction in all areas of business. In fact, a growing number of other professionals use retainers as a way to secure their business and help it grow. Not just for the likes of Ally McBeal anymore (millennial translation: Suits), we can all get a slice of that sweet retainer pie!
A retainer is a contract between you and a client wherein you are paid in advance for work that you’ve not completed yet. The client pays a set amount for a scope of work or deliverables that you agree upon in advance. In exchange, you make yourself and your mad skills available to the client for a certain number of hours per week or per month.
At first glance, a retainer agreement may not seem like it has any downsides. Set income you can depend on? Where do I sign up, right? But if you’ve learned anything by now then you know that nothing in the world of client agreements/contracts is as simple as it first seems. That’s because while there are some great things about retainer agreements, there are some not-so-great things too.
Here are a few of the pros and cons to help you decide when a retainer will work best for you – and when it won’t.
Working on retainer can have a ton of benefits (provided that you know how to work them), including:
More Reliable Pay
Perhaps your business is large enough that you no longer feel the feast-or-famine cycle that a lot of other businesses suffer from; however, no matter who you are, there’s never anything bad about getting guaranteed pay on the reg. After all, your business expenses won’t stop simply because you’re waiting on payment from a client. Take some of the stress out of chasing invoices with a retainer structure for breezy, smooth-payment sailing.
The Clients Are Better (And Easier To Keep)
If there’s one word to describe a retainer agreement between your agency and a client, it’s ‘trust’.
This is a pro because the only clients who will enter into a retainer agreement will be those with whom you’ve established a relationship and who plan on sticking with you for a while. They realize your team is dependable, hard-working, smart, and are willing to secure your services for the foreseeable future.
In general, only the crème de la crème of clients will agree to retainers, helping you to increase your profits without spreading your resources too thin.
Clients Love Them (They Just Might Not Know It Yet)
While not every client is going to get onboard with a retainer, you can assume that any client that does agree to one will know they can rely on you and your team to get the job done. In this way, a retainer helps to give your client a sense of security because they know they have your services on lockdown. They don’t need to search for someone new every time they need work done and go through that awkward introductory period. And you don’t either.
It can’t all be good news, right? There are some definite downsides to working on a retainer, so brace yourself for these minor disappointments:
There’s no way to sugar-coat this: many clients will expect a slight discount in exchange for essentially purchasing your services in bulk…as if you’re the wholesale club of deliverables.
You have to look at the bigger picture here. The client is likely going to be a long-term client, so the money will likely balance out in the end if they provide a steady stream of work for months or even years on end. Plus, you don’t have to spend as much time courting and pitching to new clients when you’ve already built a solid foundation with rolling retainers.
The Levels Of Work Can Vary
Another slight con to retainers is that you could get hit with a lot of work very suddenly when the client has a big project for you. When hashing out details of the retainer agreement with your clients, it’s important to clearly spell out that you simply won’t be available to them 40 hours per week! Communicate about deadlines, the scope of work, and expectations so they don’t make assumptions about your time.
Scheduling Conflicts May Occur
Working on retainer has the potential to raise your blood pressure simply because that deadline will always be out there, hovering over you like a Damoclesian sword of workload. Deadlines can also be very inconsistent, which makes it difficult to accept other jobs.
Remember, even when your deadlines are crystal clear you still don’t know what will happen from month to month and you run the risk of overextending your resources.
You Have Dependency Issues
It’s great that you have a client that you can depend on but don’t become reliant on only a couple of clients to support your business. You must find a balance of clients, both retainer and non-retainer, which will allow your business to thrive even if one or two of them drop out.
Make The Most Of Your Retainer!
At Productive, we understand the needs of agencies just like yours. Our tool helps you handle retainer deals by setting up re-occuring budgets which automate your entire workflow. Working on a fixed budget every month, or quarter? Not a problem. We help you save time on administration and invoicing. You should focus on getting the job done which is exactly what you can do, if you have a tool that does the rest.
Retainers can be a boon to your business as long as you understand how they can hurt and how they can help. It’s crucial to remember that retainer clients are generally good if you manage them appropriately. Set appropriate guidelines and boundaries and then get “busy, busy makin’ money, alright….” (The millennials are singing along with me, right guys?)