Repost from 2022
Are you a freelancer or contractor constantly looking for new projects or clients? Do you have a roller-coaster income that changes from month to month?
If your answer is yes, then consider negotiating for a monthly retainer. A retainer contract is an agreement between a freelancer and their client for ongoing, monthly services for a set fee. The client pays monthly for your services in advance.
The benefit to the freelancer is consistent, guaranteed income. The benefit to the client is secured services with someone they can depend on.
The client prefers to work with a freelancer or contractor with the needed skills, but finding a freelancer-client relationship that is the right fit takes time.
Freelancers with a high-demand skillset and sharp negotiation skills know how to negotiate and secure retainer agreements with their ideal clients.
Benefits of Retainers for Freelancers
A tremendous benefit of a retainer fee is a guaranteed, steady income. Freelancers who work project after project face a lot of unpredictability with cash flow and budgeting.
They need to negotiate a 25 percent or 50 percent downpayment at the start of a project and remember to request a final payment when a project is incomplete. When working with new clients on projects, they also deal with unpredictability. Bad clients might not pay on time or at all, citing bad freelancer work as an excuse to withhold their pay.
With a retainer, the freelancer’s monthly income is stable. Instead of constantly searching for new clients and projects, you have more time and energy to dedicate to your retainer contracts. You aren’t frequently checking your bank account to ensure you have enough funds for unexpected expenses.
Retainer contracts are similar to the steady income of having a job.
Just how steady is a retainer fee income? If you have just three retainer clients, one paying you $3000 a month for services, another paying $2500, and a third paying $1500, you would have an income of $7000 at the start of each month.
When you can focus your energy on providing quality services to ongoing clients, you can also build your reputation and take on more retainer work… if you have the time.
Benefits for Clients Who Are on a Retainer
Just like how freelancers enjoy the stability of a steady income, clients prefer the stability of reliable, high-quality services. It takes time for freelancers and clients to build rapport and find the perfect fit. A client likes to do things a certain way and prefers to find someone who understands their brand and their approach to projects.
To close a client on signing a retainer agreement with you, you need to be clear about what benefits you are providing them. These benefits should match what they are looking for.
They may need marketing services, website maintenance, content writing, or graphic design, to name just a few examples. They will expect their services to be delivered on time and at their desired quality.
They anticipate you to be available for a specific number of hours per week or per month and dedicate your time to their projects and meeting their business goals.
Unlike a per-project client, a retainer client won’t need to wait weeks or months until a highly skilled freelancer can work on a project with them.
Another benefit you can offer a retainer client is extra value services, such as a few bonus hours of meetings, a report, free consultations, or a discount on a smaller, one-time project.
When Should You Negotiate a Retainer with a Client?
A client with an ongoing need for your services is a great candidate for a retainer agreement. For example, retainer clients may require services such as cold calling, daily social media engagement, or regular administrative assistance.
You may have started with one project with the client and decided you both work well together. They value your work and see a need for you to continue providing services at a fixed budget on a monthly basis.
You may have liked working with the client on the project: they pay on time, are clear with expectations, and don’t micromanage your every decision. The logical next step is to propose a retainer fee for steady, ongoing work with this ideal client.
On the other hand, proposing a retainer agreement with a new client can intimidate freelancers. You haven’t built any rapport with a new client. They haven’t seen your skills at work, and you don’t know if they would be a dream or hell to work with. Should you even suggest starting with a long-term partnership?
One way to begin working with a new client is a short term project. For example, you build their website. Upon completing the project, you propose a retainer fee to assist with website maintenance and future IT issues.
Another way is to find retainer clients through referrals. A new client recommended by one of your clients would be more likely to trust you before working with you. Similarly, you would be more likely to trust a new client if a client referred them to you.
That referral will help you close a retainer agreement with a new client from day one.
Why Should Clients Pre-Pay Before Seeing Results?
From the freelancer’s point of view, clients who pre-pay are serious clients. You know they aren’t going to ask you to provide your services, then disappear without paying. Also, if they pre-pay, you know they are invested in the results.
However, before you pocket that pre-payment, you must convince them of your value. To do that, you first need to establish rapport with the new client and make them confident that you have the skills they are looking for.
Have a portfolio of past work and a list of testimonials or references to show the client. Your portfolio should have examples of the skills they need.
Be clear about what services and value you will provide, from monthly deliverables to monthly results. Show that you understand their pain points and how you will solve those challenges for them.
Explain that a pre-payment is needed to reserve your time for them because you’re currently taking on new clients and have limited availability in your schedule.
Common Objections to Monthly Retainers
A new client may object to starting with a retainer agreement for many reasons. Find out what is holding them back.
Are they unable to pay the price you are asking for? Are they concerned about your skills because they haven’t worked with you before? Or are they worried that you won’t deliver the results they want?
If the concern is price, work with their budget and decide what you can offer them for that price. Some freelancers offer services at various pricing tiers. You can add more value to your services at the price point you agree on. For example, adding some hours of free consultation or additional services.
If the concern is your skills and the results, suggest a paid trial period. At this point in the discussion, you’ve already shared with them samples of your past work and testimonials from clients. They’ve seen your skills, and you can negotiate your value for your price.
Emphasize that with a retainer, a set number of hours each month of your time is dedicated to providing services to that specific client. They will have peace of mind if they need work completed on time.
Steps to Follow to Close Your Client on a Retainer Agreement
Closing a current or new client on a monthly payment model can be done in person or online. It may be easier to close a client in person because you can build rapport and trust first. However, with the global economy and remote work, it’s also possible to close a client in another city.
First, introduce the idea of a retainer agreement at your in-person or virtual meeting. This can also be done over the phone but with fewer visual cues. (Some people find it easier to judge a client’s reactions based on facial expression and body language, not just verbal cues.)
Then, clarify the details by email and written contract. Some points to cover:
Meet with the person who will make the final decision on the retainer agreement details.
Discuss what they think your expected deliverables, volume of work, and expected results will be. What are the client’s goals? Be prepared to discuss the value of having a retainer agreement.
Confirm what monthly services you will offer and suggest additional services that you may provide.
Discuss your flat monthly fee for these services. If you have a package of services that you offer at tiers, share these offers. For example, Tier 1 is $1000 for x, y, z services, and Tier 2 is $2000 a month for x, y, z, and a.
Explain how a retainer agreement works and include the benefits of having a retainer agreement.
Follow up with an email proposal with your rates and retainer options. Include any add-on services. Set a date for the follow up on your proposal. Then formalize a retainer contract for yourself and your client to sign.
How to Keep Your Retained Clients Happy
Managing expectations keeps both clients and freelancers happy. When you’re working on the details for your retainer agreement, clarify what you expect from each other.
For yourself: What day of the month do you expect to receive your monthly retainer? What is the specific amount you’ll be paid? How will you be paid? For example, through an app, etransfer, or third party service?
For your client: What deliverables will they receive? What results will they see? If they aren’t detail-oriented and don’t track results, you can keep track of that data for them. Report on your progress and results. Have you met the monthly goals set out in your contract?
Keeping a record of what you’ve accomplished for your client demonstrates your accountability. It’s also effective when you need to raise your rates because you can show that you are worth the value you deliver.
Also, your happy client is more likely to provide testimonials and refer other clients to you. Negotiating retainers with a referral is much easier than a cold lead who knows little about your skills and value.
Key Takeaways
Negotiating a monthly retainer agreement is the best payment model for a steady income for freelancers and contractors.
You benefit from regular cash flow, so you can focus on providing value to your clients instead of constantly looking for new projects and clients.
Clients prefer to work long-term with someone they trust who provides the value and skills they need to meet their business objectives.
You can negotiate a retainer agreement with an existing client after the end of a project. Or you can negotiate a retainer agreement with a new client on a trial basis.
Continue to provide value and reliable service to your retained clients. Keep them updated on your progress and results. In the long term, you will have a reliable income and your clients will have the value and skills they can trust.
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