When you’re running a consulting or advisory business, a handful of stellar retainer clients can change your life.
You can concentrate on producing big results without constantly chasing new clients or new projects.
You can hire associates and leverage your business.
Your banker takes your calls.
Or those same retainers can be the kiss of death.
Think broken promises (doesn’t everyone have at least one nightmare retainer story?), lost revenue, frustrated consultants and messy client relationships.
So should you really work on retainer?
Let’s start with this:
A retainer is a fixed monthly fee in exchange for a service. That service can be expressed as hours (effort), deliverables or results.
Many freelancers define their retainers in terms of hours—$2,500 a month for 10 hours—and discount their hourly rate in exchange for fixed revenue. FYI—this may work fine in the beginning to build your client base, but beware of tying yourself completely to exchanging hours for money.
Another option is to tie your retainer to deliverables—mini-projects that you can do on an ongoing or perhaps rotating basis. The marketing consultant who writes monthly blog posts or the technology wizard that monitors websites can create retainers tied to their production.
The holy grail for clients—when it’s almost impossible to say no to a retainer—is when you can tie it to a high-value result. That can look like outsourcing a worry (I’ll handle all your HR questions) to expediting strategy (I’ll train/coach your leadership team on this new technology).
Whether you should work on retainer depends on your business/revenue model, your sweet spot clients and the work you do that most moves the needle for them.
Start by looking at the clients where can you create win-win opportunities with some version of a retainer.
Once you’ve identified some possibilities, ask yourself these questions before pursuing it further with your client(s).
Is this someone I trust? Well-designed retainers will bring you closer to your client. To allow you the freedom to dig deeper and serve in ways that one-off projects or bill-by-the-hour arrangements rarely permit. So if your client has questionable ethics or is a slow payer or just not in your true sweet-spot, a retainer is a bad idea. It’s also not the place to experiment with a new client—earned mutual trust and respect is the price of admission.
What do I want to accomplish with this arrangement? Absolute clarity is your wisest option. Maybe your goal is to lock in a portion of your schedule (to give you freedom to experiment elsewhere) or have firm client commitments that allow you to hire the support you need to grow. Because retainer discussions can take off in a direction you might not anticipate, it’s vital to stay connected to your purpose.
What’s the right scope? Define the presenting issue from your client’s perspective. What vexing problems can you solve? Can you translate that into a line-of-sight set of bullet points that tie what they need to what you have to offer? It’s tempting to closely scope retainers—that’s where those banks of hours proposals come from—but sometimes opening up and being generous is the better way to build the relationship. Just work in a review process so both parties can adjust the work and/or fees as you build your experience together.
What do I need to make this work? Before you broach the topic with your client, be sure you know the boundaries of your own needs. If you’re promising to produce content for example, will you do it all yourself or will you need to contract some out? How much of your time will it take to review someone else’s work? Will your contractors work within the rates you’ve set and will your margin be sufficient to pay for your effort?
And finally, just a few more nuggets about setting up retainers.
Yes, retainers can work beautifully as a springboard to grow your business. Just craft them thoughtfully and tend to them carefully.