When you’re a freelancer or consulting professional and work project-to-project, you experience a lack of consistency in your schedule and income. While your bills still show up regularly, you’re faced with infrequent work that brings in money only when it’s available and only after you’ve put in the time and have completed the work, making things extremely stressful — but, it doesn’t have to be this way.
So, how do you get over these challenges of irregular income and scheduling faced in freelance work life? The key is to look beyond traditional freelancing short-term or one-off projects and take advantage of recurring, consistent work sources like freelance retainer agreements.
A retainer agreement is simply a contractual relationship between you, the freelancer, and a company. Freelancer retainer agreements guarantee a certain number of work hours per month to your client at a specified rate for a predetermined amount of time. This allows you to schedule work in advance. It also provides you with a consistent flow of income as long as the retainer is in effect.
Top benefits of a freelance retainer agreement include:
- Income stability
- Consistent work schedule
- Less stress
In this article, we’ll take you through the ins and outs of what a retainer agreement is, the pros and cons of a freelance retainer, and how to get started working on a retainer agreement. We’ll also talk about how to reduce the stresses and irregularities of freelance work life.What is a retainer agreement? Hubstaff shows you the ins and outs. Click To Tweet
What is a retainer agreement?
Briefly mentioned above, a retainer agreement is a contractual agreement between a freelancer and a company that guarantees a freelancer will work a certain number of hours per month for the client at a specified rate for a predetermined amount of time.
Retainer agreements can be time-based, project based or type-of-work based. They are typically paid in advance of the work in order for a company to secure a freelancer’s work and time for a designated period.
This type of work arrangement over one-off projects is also a better option for freelancers and consultants because it allows them to have money upfront, making it possible for them to better budget their time and money for the month. Since a retainer agreement is guaranteed income, it is highly sought after by independent contractors.
With a good freelancer retainer agreement, as the freelancer, you’ll be fully aware of your client’s needs and services and be able to plan your work well in advance, giving you income stability and enable you to take on additional clients on your own terms.
Freelance retainers: Pros
The advantages of a freelance retainer agreement are life-changing for freelancers. Recurring income, regular work and less time spent chasing down client leads — what’s not to love?
Not knowing where and when money is coming from is stressful. A retainer agreement grants you regularity and the security of a paycheck, allowing you to get paid on a consistent basis.
As the freelancer, you’ll need to agree on a certain number of work hours per month to your client at a specified rate for a predetermined amount of time.
Since retainers are paid in advance of performance, guaranteeing that you’ll get paid, you don’t have to chase down payments from clients. This means that you receive payment from the client up front and then perform the work for that month. If the client does not pay the retainer, you don’t do the work. If the client pays late, you don’t do the work until they pay you. You can also charge a late fee if it’s included in your contract.
Consistent work schedule
A retainer agreement also means consistent work. Since the retainer is a contractual agreement between you and a company, it guarantees that you will work a certain number of hours per month or noted period for the client at a specified rate for a predetermined amount of time.
Whether the retainer agreement is time-based, project based or type-of-work based, you’ll be guaranteed consistent work and will be paid in advance of the work as part of the agreement in order for the client to secure your services for a given retainer time period.
When you have one or more clients on retainer agreements, you won’t need to constantly look for new clients. You also won’t be stressing out about marketing and new business efforts.
With clients on retainers, simply change your marketing strategy to pursue better quality clients. Clients on retainers equal less stress and are more valuable than any leads you can chase.
Additionally, when you have clients on retainers, you do have the freedom to continue working and/or pursuing project-based clients if you desire. While your goal might be to build your pool of retainer clients to a certain total of hours or percentage of revenue per month, you are free to pursue and work on project work.
It’s a win-win
Retainer agreements are a win-win for you and your clients.
With retainers, clients enjoy flat pay rates and consistent billing for freelancers. Ultimately, you want a mutually agreed upon retainer proposal that will both benefit the client’s budget and reflect the value of the work that will be performed over the duration of the relationship.
You also have the ability to customize the retainer services to meet your client’s specific needs — your client can then solely rely on you for various professional services rather than waste time and hire multiple people for one project.
Freelance retainers: Cons
While the benefits of freelance retainer agreements are substantial, it’s important to evaluate the cons of these types of working agreements.
Over-delivering or under-delivering on retainer terms
Since your client will have prepaid you upfront for the services outlined in your retainer agreement, it’s common to forget to track your work hours or feel the need to not track your work hours altogether since you’ve already received a paycheck — think again!
Failing to track your time correctly or altogether, often results in the under-delivery and over-delivery of client billable work hours. It’s important to accurately fulfill your promised client deliverables based on the agreed upon work hours.
To avoid the negative implications of mistracking your work hours, it’s recommended to not only accurately track your work hours, but make a provision in your freelance retainer agreement for periods when your client uses more than or less than the time for agreed upon services you’ve sold them in advance. You’ll want to outline in the contract a negotiated fee to bill them for the extra time you’ve spent rather than carrying it over to another period in order to make things simple and straightforward.
“You’re on call”
A common misconception clients have about working with freelancers on retainer is that you’re “on call” 24/7. While you’re available for the work and time outlined in your freelance retainer, it’s easy for clients to forget that you’re not a full-time employee.
Too much work
Some freelancers tend to overbook on retainers — while the consistency is great, it’s a risky practice when you overbook. A cardinal rule of freelancing is to avoid over-extending, over-promising and under-delivering.
If you know the work from a particular client will be light despite the retainer, you can of course, take on more projects, but be conscious of your retainer agreement terms so you don’t find yourself in a pickle and lose clients’ trust or even lose your retainer work.
Now that you’ve learned the basics of what a freelance retainer agreement is including the pros and cons of being on retainer, we’ve provided some tips to help you get started working with a retainer.
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Tips for working on a retainer
Retainers don’t have to be complicated and can be really helpful. Here’s a list of tips to help you get started working on a freelance retainer.
What services will you be offering?
One of the first steps to making a retainer work for you is to decide what sort of services you can realistically offer clients.
Retainer agreements are ideal for various types of ongoing creative and suppose services, including:
- Social media marketing
- Newsletter design
- Email marketing
- Website updates and maintenance
- Visual branding programs
- Marketing and branding strategy
- Content creation
- Recurring work
- Complex, long-term projects
If you’re a social media marketing strategist, a retainer option might be to “deliver ten social media posts a week for three months.” Another example could be if you’re a website design specialist, you’ll “update the website one per month for six months.”
If you have the ability to decide what services you’ll be offering, you can customize your services to meet the specific needs of clients you work with and/or would like to work with. This is also beneficial for clients because they can then rely on you for various services rather than hire multiple freelancers for one project.
What type of clients do you want to work with?
To make retainer arrangements work, you need to be strategic in who you work with. Not every client is right for a retainer agreement relationship.
What type of clients do you want to work with? It’s important to ask yourself this before getting started with a retainer agreement.
Since a retainer agreement is typically long-term, it’s important for retainer clients to be people you want to work with for a long period and feel comfortable working with. You need to choose clients who will not expect you to provide services beyond your normal scope of work not agreed upon in your retainer, who will pay you up front, and who will provide meaningful work.
If you’re unsure of a new client, work on one short-term or trial run project to test out the client before proposing a retainer.
Don’t forget about retainers options for your existing clientele base. Retainers are a huge asset to your business and can easily start with your current clients. Think about your customers you enjoy working with and whose business has been fairly steady. How can you help solve some of your clients’ problems? Offer a retainer agreement as a useful solution by handling projects for one month for a set fee. Over time, the client will see the value of a long-term partnership and likely will extend the retainer over several months.
Choose a rate
Before you start a retainer agreement with a client, it’s important for you to decide what your rate will be for specific services.
A common client misconception is that there will be a discount for signing a retainer agreement upfront, but as a consultant, that isn’t fair to you. You deserve to be compensated for the hours worked, so it’s recommended that you don’t offer a discount, but instead, offer a package of hours at your normal rate — focus on the benefit to the client.
The key here is to understand how much you’re really earning per hour. If you discover you aren’t working close to your target rate, you can make a move to renegotiate the terms or price, or you can cancel the contract.
Get it in writing
It’s crucial to get your retainer agreement down in writing — nothing should be verbal. Generally, a written freelance retainer agreement will outline the following:
1) What services you’ll be providing
2) How much time you’re committing
3) The agreed upon rate for the work and hours to be provided
Important details to discuss and include your retainer agreement, even with clients you trust, include:
- The kind and amount of work you’d be expected to do
- The amount you’re to receive each month
- The date you’d receive your payment, and method by which you will be paid
- Any invoicing procedures you’re expected to follow
- When your client needs to let you know about the month’s work by
- A contract provision for additional hours spent each month
- What notification you need before the retainer relationship can be ended
- An end date for the retainer, so you can reassess the terms of the retainer and rates, if needed
- Anything else that is relevant for ensuring that work is completed in a timely fashion
Some clients won’t be ready for a long-term commitment. As an alternative, you can offer a shorter trial period such as 60 or 90 days for both parties to decide if the working relationship is a good fit.
Another short-term option for you and the client is to work on a single project and then decide if a retainer is the best option going forward.
Track your time
Since you’re not “on call” and available to retainer clients at all times, it’s important to track your work hours to make sure you’re not over-extending, over-promising and under-delivering yourself to clients.
Retainers mean you can schedule the work in advance and tracking your time will help you to avoid rush work and keep you from being over-worked. You’ll want to keep track of the hours you spend for each client so that you’re not overworking and losing money on the deal.
You’ll also want to keep tabs on the retainer agreement as time goes on. Understanding how much you’re really earning per hour and how much work your client is receiving, will help evaluate the terms of the agreement. It will also help you determine if you can renegotiate the terms or price, or if you should cancel the contract and move on.
Make retainer clients a priority
Retainer clients are your scheduling priority each month.
Don’t overbook your work schedule with too many retainers — you’ll find yourself in a pinch and lose client trust. Avoid over-extending, over-promising and under-delivering to your clients.
Assemble client benchmark reports
Assembling client benchmark reports is an easy and efficient way to showcase your hard work to your clients — this is especially useful if you’re looking to land and/or expand a long-term agreement as it will put many business owners at ease to see that you’re taking an active interest in delivering measurable results.
If your work directly contributes to closely-monitored metrics such as an increase in social media followers, sales conversions or a growth in website traffic, offer to assemble a quick benchmark report on how your work has improved your client’s business.
Now that you know the ins and outs of freelance retainers, you can see retainers don’t have to be complicated and are extremely beneficial to reducing the stresses and irregularities of freelance work life.
Have you worked on a retainer for any clients in the past? Share your tips and advice in the comment section below!