If you’ve been working for some time as a freelancer or independent consultant, you’re probably familiar with the project-to-project hustle which often characterizes freelance work. To be successful working on this basis, you need a constant stream of new clients and the ability to book yourself out far in advance.
While some people thrive in and enjoy this environment, others may be looking for a more reliable monthly income stream and perhaps more free time.
Retainer agreements could be a good solution for anyone in that second group. Typically, retainers involve your client paying you a monthly fee in exchange for you making yourself available for an agreed number of hours. They don’t guarantee an outcome because it’s up to the client to provide the work and use the hours.
Here we’re looking at 5 reasons freelancers should switch from project-based to retainer clients and tips for implementing those retainers…
#1 – Regular Income
Let’s not mess about with any fluff about being in business to improve people’s lives: you’re in business because this is how you support yourself; improving the lives of your clients is why you get paid. You’ve got bills to pay, so having a regular, reliable income is important no matter what type of business you’re in.
Whether you’re a full-time freelancer or hoping to transition your side-gig into full-time work, retainer agreements allow you to create a mechanism that gives you a regular paycheck.
The benefits go both ways; you get a guaranteed income and an easier task filling out the “monthly income” section on any personal forms, while the client gets a guarantee that you will provide them with a certain amount of completed work, as long as they’ve given you something to do.
While the regular income is a definite pro, the pitfall to look out for is that many clients expect retainer packages to be offered at a discount on your regular hourly rate. If you’re prepared to do that in return for the guaranteed income, great, but you’re better off if you’re able to keep your rates at the fair price you already offer.
Jarrod Drysdale suggests avoiding discounts or counting hours in your retainers. His approach is to focus on the value of deliverables to the client and to specify in a contract exactly what that entails. For example, his contract might say “entitles the client to a small monthly project of up to X days work”. A slightly different approach to the traditional model, but operating on the same principle.
What should you include in a retainer agreement? Get our free checklist here.
#2 – Less Time Spent Prospecting
A huge benefit of retainer agreements (if you have enough of them lined up), is that you don’t need to spend as much of your time prospecting for new clients. That’s not to say you should stop completely; we’ve mentioned previously the importance of freelancers maintaining a client pipeline and that remains true with retainers. The difference is, you won’t need as many new clients as you do working on a per-project basis.
What to do with your time instead? Here are a few suggestions;
- Your own side-projects.
- Large one-off projects which add to your portfolio and skill-base.
- Be more responsive and more available to meet the needs of your retainer clients.
- Take care of yourself – freelancer burnout is common, especially among those who scramble from project to project and never have a lot of downtime.
On the other hand, if you’re spending less time in the “famine” mode of a typical freelancer work-cycle, then you’ve probably also got less downtime. This is obviously a good thing for your income, but make sure you’re not too tied up with non-billable activities. You will need an efficient system of reliable tools in place to make sure you still have free time.
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#3 – Work More With People You Like
We’ve all had experiences with clients we really don’t want to work with again, and the problem with going from project to project is that you will keep on finding them! You’ve probably also had clients who you really enjoyed working with and wouldn’t mind spending more time with.
Strong relationships are the essence of what makes a retainer agreement work, whereas working project to project tends to make you very task-focused.
Retainers give you the opportunity to build lasting, mutually-beneficial relationships with your clients. Essentially, you become a partner in their business: you are able to intimately understand their operation and offer strategic solutions based on their needs.
Clients tend to be very happy when they see tangible results from your work and when they enjoy their working relationship with you. This is when you also see other benefits such as referrals and testimonials.
#4 – More Efficient Workflow
Getting an intimate knowledge of your client’s business from retainers has another distinct benefit – familiarity leads to more efficient workflow. You don’t need the same back and forth you do with new clients, since you understand the client and “get” how they think.
This means it’s easier to develop a pattern of work, especially if you have repetitive tasks to complete for them. The more efficient you become, the more time you have for other things as outlined in #2…
#5 – A Step Toward A Productized Service
Have you thought about when or if you’re going to scale up your business? We discussed this recently in our post on productized services; one of the keys is picking a specific solution to a specific problem and offering that as your service.
Having retainer clients is a great way to discover what the specific problem is that you can solve. Is there a common theme or type of request made from your retainer clients? The difference between the retainer and the productized service is that you will have a very specific scope for what you offer on the productized service, so you avoid doing custom packages for each client. While you may have scope with your retainers (in fact, it’s better if you do), it will tend to cover a broader, more customized range of activities, especially if the client is buying a certain number of hours.
Once you’ve identified your productized service, it’s much easier for you to put a replicable system around it so that you’re able to scale up your business.
Some Tips On Retainers
Work with new clients on a project first
Retainers are about building an ongoing relationship with a client, something they may be unwilling to do if they haven’t had experience with your work. On the flipside, you haven’t worked with them yet either, and you really want to understand what you’re getting into before committing to that ongoing relationship (like any relationship!).
What if clients are reluctant to go on retainer?
Sometimes clients are wary of retainers, but that reluctance usually comes down to one of these reasons;
- They feel that any “use it or lose it” allotment of hours could be a scam to expedite their parting with their money.
- They have been burnt previously.
- They can’t see the value in the retainer.
In each of these cases it’s up to you to frame it so that the client can clearly see the value for their own business goals. What impact could your work have on their bottom line? What other value will they see from it? Besides profits, benefits might include freeing up their time, creating a professional impression for their clients, boosting their authority or visibility…
Jarrod Drysdale has another strategy for alleviating any fears from the client about retainers: offering them a trial month where they are able to cancel at any time without notice in that month (no refunds). The monthly project is still due, even if they cancel.
What should you include in a retainer agreement? Get our free checklist here.
Freelancers often have trouble saying “no”, especially if they’ve been through lean periods of work. This often results in a frenzy of “yes” to everything, even when you don’t have time. In the case of retainers, some freelancers even bank on the fact that clients won’t use all of their hours.
Unless you have reliable people who you can share some work with, don’t put yourself in this position. You really can’t predict that retainer clients won’t use all of the hours they’ve paid for and you will only end up damaging your reputation if you can’t deliver. (And that’s not to mention the ethical issues of accepting a retainer when you know you don’t have the capacity to follow through).
So, Are Retainers For You?
Making the move to retainers can be a real turning point for freelancers who have been scrambling from project to project. Retainers can provide you with a reliable income, more free time and the opportunity to develop lasting client relationships with people you enjoy working with.
Moving to retainers also gives you the opportunity to notice the patterns of problems which clients ask you to solve – these could be your opportunity for scaling your business and offering productized services.
Clients will purchase your retainer packages if they have a clear vision of their value. This doesn’t mean offering discounted services, but providing a clear path to achieving their business goals and always delivering a high standard of work. Become a partner to your clients and they will find your retainer agreement invaluable.