Companies often engage agencies like me in one of two ways: either on a per-project basis or on retainer. I used to love the idea of a retainer, but the reality is very different.
A retainer is a monthly set amount paid for services rendered. For that fixed figure, the client has the right to pick up the phone at any time and engage my services. The client benefits because they don’t have to think about how much something is going to cost. I benefit because I can actually plan on having a certain amount of revenue. In a business that can fluctuate wildly month-to-month, that’s a pretty comforting idea.
In practice, however, retainers haven’t worked for me, or my clients. Let’s explore why that is.
It’s worth noting that retainers require a certain amount of risk for both parties. For me, I undertake them with the understanding that some months I’m going to do more work, and other months I’ll do less. The idea is that in the long run things will balance out. The client makes the same risk, of course. But they have more direct control over the reins, since they decide what work they want done!
Here’s an example of how a retainer has played out for me.
About three years ago, I had a couple clients who simply wanted to maintain their existing Web sites. A few times a month they’d provide me with updated content, and I would turn around the changes within hours. For a simple $300 per month, those clients were happy with the service.
But as time went on, these companies started to go through cycles of lower activity. Where early on I was making five or six changes to the site in a month, $300 makes sense. But when you go down to one or two — and sometimes none — the equation changes.
Unfortunately, one client in particular felt that that money could be better spent elsewhere. Every month, when I submitted my invoice, I would have to deal with an argument over how much work I was doing. I tried pointing out that whole risk argument (as above); after all, there were months where, if I was charging hourly, I’d be billing for more than $300. Unsurprisingly, I didn’t get any complaints in those months.
Ultimately, I insisted that we move to a per-hour arrangement, and things have gone much better: I provide an itemized list of changes, attach the time for each and total it up. No more complaints, and better peace of mind.
In the past year, a much larger client asked to engage me on a retainer contract, for $2500 a month. That’s a lot of clams for both me and the client. Fortunately for both of us, we were comfortable with the amount of work that was on the go; we knew that there’d be little trouble filling the time.
But problems cropped up almost immediately. My client’s expectations were that I would not just be doing the work, but also generating the work: gathering the resources around the company, developing the marketing plans and then developing the materials — the part I thought I was there for. In short, I was to be the quasi-full-time marketing department. But my commitments to my other clients precludes that level of engagement.
This misunderstanding became clear after the first month. The client and I had an open, honest conversation which resulted in the scrapping of the retainer. Now, I work on a project basis, and things are much smoother.
With all this history, it was with a practiced eye that I read another client’s request to consider a retainer, rather than pay for an individual job. Ultimately, it seems to me that the client gets better value when they pay by project. And while I don’t get the smooth monthly revenue, I sleep better at night knowing that I’m getting paid for what I do, rather than some average of what I do.
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