If you run your own design, development, or marketing consultancy, you don’t need me to stress the importance of generating a constant stream of new work.
You’ve heard all the client acquisition tactics before: design a beautiful portfolio site and build a lead funnel, host meetups and win clients face-to-face, and respond to the ever-growing onslaught of request for proposals.
While you should undoubtedly follow all that advice to find new clients (we’ve seen it work firsthand), there’s another way to generate new projects for your consultancy, and it’s right under your nose; work on-retainer for your existing clients.
Instead of investing all your business development efforts into client acquisition, start building ongoing, long-term relationships with your existing client roster through retainers. These long-term project agreements will allow you to evolve your business from a one-project shop, into a strategic partner for your top clients.
If you’ve never worked on-retainer before then this advice might seem pretty foreign to you, so we’ve decided to cover the basics within this article.
Good luck and start retaining your clients!
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What does it mean to work on-retainer?
A retainer is a contractual agreement between you and your client, in which you have guaranteed a specified amount of your monthly working hours to their needs alone.
Think of it this way; say you get approached to work on a long-term optimization project for a client. Since the work will be ongoing and will require continuous maintenance and support, you feel like you’ll need to invest a minimum of five hours a week, for at least four weeks, to accomplish any substantial optimization.
Rather than charging a fixed rate for the work, you could enter a monthly retainer agreement with that client for twenty-hours-a-month, at a slightly reduced hourly rate. This would mean that the client would secure twenty hours of your services over the next month, while you would have guaranteed work (and income) throughout the same time period.
The proportion of hours you decide to allocate to your retainer is subjective — to be determined in advance alongside your client, and clearly indicated within your initial contract. As you start working within a retainer, you’ll need to track how many of your predesignated hours are being used and bill accordingly based on your agreement.
In return for your focused attention on their business, the client agrees to provide advanced payment for your work usually in either monthly, quarterly, or annual intervals depending on the length of your agreement. Retainer fees are normally paid as a pre-negotiated fixed amount or rate (usually slightly discounted from your regular rate, due to volume), but can also be paid on a variable hour rate depending on the nature of the work being contracted.
While working on-retainer is an attractive option for many developers, not every task is appropriate for retainer agreements. Here are a few examples of the types of services you could comfortably offer within a retainer:
- Routine website maintenance and updating
- A/B testing and conversion optimization
- Search engine optimization
- Analytic tracking, reporting, and analysis
- Digital marketing campaign management
- Social media coordination and content writing
- Being “on call” for emergency situations
At this point, it’s important to mention that clients who become accustomed to working with you within the confines of a retainer may try to squeeze in larger requests under the veil of the retainer. If these situations arise, you should always scope out larger projects outside of your long-term agreement to avoid losing out on additional revenue opportunities.
The benefits of working on-retainer
Just like any form of client work, retainers come with their own unique set of benefits and challenges. I’ve included some of the most common ones we’ve seen within the Shopify ecosystem, as well as some that I’ve faced personally in my own experience. Just remember that the benefits and challenges felt within a retainer will often be subjective to the agreement, client, and service provider.
If you’ve never worked on retainer before, here are some of the benefits you can expect.
1. Your income will become more secure
Retainers can be one of the best ways to ensure your business has regular revenue coming in the door. These anticipated paycheques will not only provide you peace of mind in the form of financial security, but they’ll also help remove some of the pressure to find net new clients to keep your business afloat.
In many cases, your retainer fees will be paid before the work even begins, which can help alleviate any concerns around making rent, paying employees, and putting food on the table. As with every project, just make sure that you have your terms of agreement clearly defined in your initial contract.
2. You’ll develop stronger relationships with your clients
Retainer agreements are long-term partnerships between you and a client. If everything goes smoothly and they are happy with your services, you’ll end up developing a very strong relationship, and may be even considered as an extension of their internal team.
For the most part, retainer clients can be the easiest to work with since they’ll have a thorough understanding of how to work best within your pre-established processes. This free-flowing style of relationship can help work progress more smoothly than with other clients, which in turn will create a happier working environment for you or your employees.
3. You can reduce your administrative overhead
If you find yourself consistently working on smaller, one-off projects with the same client, you’ll be forced to continuously jump through the hoops of the pitching process (groan!). The need to pitch often begins to dissipate once you start bringing on more retainer agreements, which will help save you both time and money in the long run.
By avoiding the back and forth process required for estimating small jobs, you can direct your energy away from selling your services and focus on completing the work as best as possible. This reduction of administrative friction can also lead to more highly aligned client relationships, in which you can focus your efforts on tasks that strategically improve your client’s business, rather than making the initial sale.
The challenges of working on-retainer
On the other hand, retainers aren’t all rainbows and sunshine. Before you dive into a retainer agreement with a client, you should be aware of some of the challenges you might encounter.
1. You’ll have less creative autonomy with your client
As you’ve seen from the list above, services that are perfect for retainer agreements aren’t always those that will interest you the most. Dedicating several hours of your time per week to tasks like website maintenance or analytics may be great for some, but they’re usually not everyone’s first choice.
Depending on the type of services you’ve agreed on in your retainer, you may also end up with overly prescriptive clients. These clients might start treating you less like a consultant and more like an employee. They will not be coming to you for your creative consul, but rather just your technical implementation.
These types of clients also tend to be the ones who’ll begin to expect near instantaneous turnaround on requests and will act confused, or even mad, when you don’t drop your other commitments when they ask for something.
You can help avoid those types of situations by clearly outlining the scope of your retainer within your agreement, which we’ll touch on more further down.
2. Your retainers can get in the way of other projects
The upside of retainer work is that you have guaranteed projects and income, but this can also become a challenge when that very same work competes with other projects.
Say you’ve promised a client 40 hours of your time per month for a period of four months. When broken down weekly, that’s an average of ten hours per week (or more than a full day) that you’ll be dedicating to their company alone, and no other client work. Depending on the size of your team, as well as your personal commitments, it can become challenging to balance your retainer responsibilities with other client projects.
As you can imagine, this challenge can snowball into a serious roadblock once you start bringing on multiple clients under retainer agreements. That’s why you always need to be diligently evaluating your existing commitments prior to bringing on new clients — just to ensure you can actually manage them all.
3. You can become dependent on your retainer
In extreme cases, some freelancers and agencies end up dependent on their retainers. They will grow to expect that this income will always be there, and will include them as absolutes in their financial forecasting. This can be a major mistake and, if anything changes between you and your client, can result in serious financial implications for your business.
If you do end up working in a retainer for a long-term period, be sure to keep pitching on new projects and expanding your client roster to safeguard yourself in case a long-term client decides they’re ready for a change.
How to pitch retainers to your existing clients
Given the fundamental differences between retainers and standard project work, you’ll need to slightly tweak the way you approach pitching for your long-term agreements.
Unless you are one of the world’s most prolific developers, it’s significantly harder to begin a client relationship with a retainer. This is for a very simple reason; you have yet to prove your skill and impact. That’s why I recommend reserving the majority of your conversations around retainers for existing clients who’ve already seen success from purchasing your services.
Before even approaching the subject of retainers, make sure you have some quick wins under your belt, by completing a few one-off projects that help prove your value and earn their trust. Once you’ve gotten a chance to showcase the potential impact of your services, persuading a client to hire you on-retainer becomes much easier.
A perfect example of this situation is probably something you’re all too familiar with. Say you have a client who hires you to create, redesign, or update their website or online store. You put in the hours, launch a beautiful and functional website, and the client is over the moon. They pay you for a job well done and you both go your separate ways.
This is a major missed opportunity.
Rather than accepting your payment and moving onto the next job, you could offer to extend your services to support their business objectives through services like conversion rate optimization or digital marketing management.
When starting this conversation, you should focus on the value and benefits for their business instead of specific tasks or accompanying costs. Remind them of the impact your previous work brought them, and communicate all of the potential ways you can add even more value.
For example if you were were pitching ideas for an A/B testing retainer, focus on the potential impact your optimization could have on their bottom line through increased conversion rates and average order value.
There will always be some clients who will feel apprehensive to committing to a long-term agreement, even if you have shown value in the past. In these cases, you can ease the transition by suggestion a trial period. The length of this trial period will depend on the services you’re pitching, but it can be a great way to find out if a retainer agreement will work for both of you.
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What to include in your retainer agreement
Once you’ve convinced a client to enter a retainer agreement with you, it’s important to set the groundwork with the client upfront. While your retainer agreement will mirror a typical project contract in many ways, there a few unique items that you’re going to want to make sure you include.
To help you get started, I’ve covered these sections below.
1. Scope of work
Your scope of work statements (SOW) will be very similar to regular projects when working on-retainer, so I won’t focus on this section for too long. The main thing you’ll want to do when drafting out your scope is to indicate exactly what services or tasks are covered under the agreement. For example, if you’re being retained for social media management, you would indicate copywriting, scheduling, design, and analysis as some of the services covered.
While it may seem over the top, going into this level of detail in your SOW will help protect you from clients who’ll want to get you to do anything under the sun, just because you’re working for them on retainer. Just make sure you also include a caveat that for any requests that fall outside of your agreement’s focus, a new estimate will be drafted and submitted to the client.
2. Payment terms and timeframes
While payment terms aren’t unique to retainer agreements, they should be presented a bit differently than how they’d appear in a traditional contract. One of the main ways that they differ is how you approach timelines.
Your retainer agreements can exist across a variety of timeframes, based on the nature and scope of your project. The most commonly seen payment terms into one of three periods.
Monthly — You and the client have agreed upon a monthly fee for a certain amount of hours worked. When working on monthly retainers, it’s up to you to track the total amount of billable hours and invoice accordingly.
If you end up working under the allotted monthly hours, you have the option of rolling them into the next monthly period (more on that later). If you end up exceeding your hourly agreement, it’s up to you how billing will take place — just make sure the way you treat overages are covered in your contract (also, more on that later).
Yearly — Yearly retainer agreements follow a similar formula as their monthly counterparts. Both parties have agreed that you will be paid for a certain amount of hours worked per year, which you’ll need to track diligently. Both monthly and yearly agreements are best for ongoing work that isn’t necessarily tied down to a specific project.
Project — Another option is to work on retainer for a specific project, like the redesign of a website or the migration of an ecommerce store. In these situations, your services will be retained for the continuation of the project, either for a set amount of time or until the project has fully concluded. If you’re working on a project-based retainer, be sure to stipulate in your contract that all extraneous work outside the confines of the project in question, will need to be estimated distinctly from the retainer agreement.
Depending on what timeframe you’ve agreed on, your payment terms will differ slightly. Each agreement should cover the acceptable methods of payment, the schedule for which you’ll receive payment, as well as the total amount you’ll be paid at each milestone.
The above three timeframe periods are what are most commonly seen within retainer agreements. However, it is important to note that they are not the only options you have at your disposal. Each and every project is unique, so go with what works best for you.
3. Reporting and communications
Communication is vital for a successful retainer-based relationship. You’ll need to constantly update your client on the progress of your work, and how many hours you’ve used up from your initial contract.
To make things a little more predictable, you should clearly state what communication methods you’ll use and the frequency in which you’ll deliver these updates within your retainer agreement. By identifying these communication tactics upfront, you’ll help establish expectations with your client before the project begins, which should help avoid any overbearing client demands.
4. Overage work
As with all of your project contracts, you should clearly state how overages (things like extra hours and additional revisions) will be treated throughout the duration of your retainer. Most developers or agencies will charge a higher hourly rate for overage work, since your hourly rate is often discounted while working on-retainer.
When dealing with additional revisions, I’d recommend including a caveat that outlines an acceptable timeframe for the completion and delivery of such requests (usually within 48 to 72 hours). This will help safeguard you from clients who expect you to turnaround last minute requests immediately. Just like hourly overages, make sure to include a cost associated with any revisions that exceed what was originally agreed upon.
Remember that you should always inform your client if you’re starting to get close to meeting or exceeding the allotted hours in your agreement. Make sure to get their permission before working above and beyond what was agreed on, and remind them that they’ll be billed at a higher hourly rate.
On the other side of the spectrum, you may end up in a situation where not all of your allotted hours were used during the designated timeframe. When faced with this situation you have two options: charge them for all the hours regardless of usage, or rollover the unused time into the following month.
What you decide to do regarding rollovers is a subjective decision that rests upon a mutual agreement between you and your client. There are some freelancers who have no problem rolling hours into the following month, as a gesture of goodwill in the relationship (“you paid me for X hours, so I intend to give you everything you paid for”).
Others refuse to rollover unused hours as a way to encourage the client to get the most out of the partnership, and ensure the value of the retainer isn’t called into question.
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Start retaining your design and development clients
From happier clients to more stable income, working on-retainer can present countless benefits for your design or development business. It allows you to evolve from one-project client relationships, to long-term partnerships that can satisfy your team and your bottom line.
Regardless of whether it makes up part of your workload or represents all of it, retainer work should be an integral part of your business development strategy if you want to survive and thrive as a web-based consultant.