Have you ever wished you could have a regular stream of income, sort of like a salary, rather than “Hit and Miss” depending on when your clients decide they need something?
Well here’s an idea: Work with your clients on a retainer!
I will be using Web Designers as an example, and horse businesses as the clients, but think about how you can apply this to your own business model.
When people think of Web Designers, they usually think of them in terms of just building a website. Six months to a year down the road they might want that person to make a few tweaks and updates. And if the client is technologically challenged they might want periodic updates even more often. So for the Web Designer there is no control – no sense of when the client might want updates. In a situation like this, it would tend to be feast or famine.
For example, in the horse world there are times you are more likely to be asked for frequent updates. During foaling and breeding season, and during the show season people want their horses to be seen so they can breed their stallions and sell the horses at the best possible prices.
Likewise these same people see web updates as necessary but expensive, so they gather everything up and dump it on the Web Designer all at once. The reasoning behind this is that most Web Designers (and most service professionals) have a minimum that they charge for whatever they are doing. So from the client’s perspective it just makes sense to do it that way.
However for a Web Designer that specializes in Horses (or any industry, as they ALL have crunch times!) it is far easier to do several 10-minute projects once or twice a week on a regular basis then to have it all dumped on them at the same time!
This is how a retainer works well for that type of client. And this is really easy to figure out if you have several clients already who “dump stuff” in your lap on a periodic basis. You figure out how much they pay you over the year and divide that by 12! Voila! You have your retainer rate! The client gets their updates on a regular basis.
It will take practice and experience to guesstimate what a new client will need. I use retainers in my business and it goes something like this. For the first 3 months we work on a hybrid retainer/Pay-As-You-Go (PAYG) system. We guess the minimum of what is needed and anything over that is billed at the end of the month at the same hourly rate as the retainer. After 3 months (or longer if necessary) we have a good idea how much time is needed and base the retainer on that figure. My retainer contracts usually are good for one year, however we can renegotiate at anytime!
And the beauty of a retainer is you have a regular income. You get paid in advance and it’s not refundable – they use it or lose it. And the clients get work done, usually at a rate slightly lower than your current fees (or RAISE your hourly rate for those not willing to go on a retainer).
Now I know that clients can procrastinate and dump a bunch of stuff on you all at once. To give them the incentive to do it regularly you might say, “you get X-number of hours per month or quarter” to prevent massive dumping. (Of course in your retainer agreement you include your regular hourly fee for anything OVER the allotted hours.) You might also include the price of a yearly web re-design. When it is spread out over 12 months, It’s just NOT as painful.
The secret to making a retainer work, is making it a win-win for all parties involved. It can be based on hours (as mentioned above) or on work packages. It’s all up to you and the type of work you do. But whatever you do, make sure the agreement is in writing — it’s best to have an attorney look it over to make sure it meets all legal requirements in your state/province/country.
How would retainers work in YOUR business?
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