Focusing on making your work the best it can be is just one piece of the puzzle as a freelancer. You also need to get great at running a business. Here’s how to set goals for your freelance business.
Retainer (noun) : A fee paid in advance to someone, in order to secure their services for use when required.
Irregular income is one of the challenges freelancers have to face, especially when starting off. We tend to burn through clients faster than George R. R. Martin kills off characters and attaining consistent work can feel like far-fetched dream.
This is where retainers come in.
Simply put, a retainer is an agreement between your client and you, wherein they pay you a set amount each month. The amount is determined by the overall scope of the ongoing services rendered, and is oftentimes not tied to specific projects or deliverables. Instead, it’s a more strategic partnership by which a client is entrusting you as an ongoing resource.
Retainers are different from project-based work in many ways, but most importantly, you will be paid for reserving time for the client whenever they need work done. You can’t tell them, “Sorry, I am busy. Can this wait till next week?”
Typically, a certain amount will be agreed up for a certain number of hours or tasks. This may be slightly lower than your hourly rate, but not necessarily. So, for instance, a client might pay you a retainer of $1,000 per month for 10 hours of your time. By the end of the month they might have only used 7. 5 or no hours at all. Irrespective, the number of hours left do not carry over to the next month. The clock starts again with $1,000 for 10 hours of your time.
What kind of work is suitable for retainers
Some industries are more conducive to retainer work than others. If you have a certain client coming back again and again for routine work, drafting up a new contract and SOW that is designed as a retainer arrangement is a good way to go.
In software development, for instance, staffing someone to handle maintenance tasks on a retainer basis is a common practice. Handling copywriting work as and when it arises is another example.
In general, you can draw up retainers for:
- Being available for emergency issues or services
- Delivering fast turnaround for routine projects
- Regular consulting or strategy suggestions
- Handling routine maintenance work
- Handling repetitive tasks that the client may not have the bandwidth to handle
The biggest pros are quite obvious: You’ll get more regular work, recurring income, financial stability, loyal clients and you won’t have to spend as much time chasing down leads. At the same time, clients benefit from the assurance that you’re on call as needed. And they don’t have to waste their time vetting new resources all the time.
The clients you can get on retainer are more valuable than any leads you can chase. They are not only sources of consistent income, they are also clients who value your work highly and respect your skills—and that, as freelancers, are clients we should all be looking for.
Some freelancers tend to overbook on retainers. If you have a few big projects running and your retainer clients send in their work too, you may find yourself in a pickle. Because, with retainers, you really need to keep those hours available.
If you know the work from a particular client will be light despite the retainer, you can, of course, take on more projects, but it’s a risky practice. A cardinal rule of freelance is to avoid over-extending, over-promising and under-delivering. That is a very easy way to lose a client’s trust (and lose work in some cases).
Nanette Miner, who has been freelancing for more than 25 years, says, “I have experienced no cons. In fact, in one case, the client that hired me got fired by the company, but since I was under contract with a retainer, I continued to get paid for three months, without having to do any work!”
The retainer agreement
As with any other project you may take on as a freelancer, it is crucial to get your retainer agreement down in writing. Nothing should be verbal. As we’ve written before here on Hustle&Co, 71 percent of freelancers say they’ve been stiffed by a client, and many times this is due to miscommunications that begin with a vague SOW and contract. If you want a starting point for drafting up a contract, Fiverr Workspace and the Freelancers Union have you covered with the Freelance Contract.
Be sure to discuss and include these details into the contract, even with a client you trust implicitly:
- The retainer amount you’d be paid every month
- The kind and amount of work you’d be expected to do
- The date you’d receive your payment, and method by which you will be paid
- How much in advance you need to be told about the work the client expects each month
- The notice period that you or the client need to give each other if either of you decides to end the retainer relationship
- An end date for the retainer, just so that you can re-assess the terms of the retainer and revise your rates if you need to
If you don’t already work on retainer, it might be worth it to give it a try. When handled correctly, it’s a win-win for freelancers and clients.
What has your experience been with retainer agreements? Let’s discuss in the comments below!