A Freelancer’s Guide To Retainer Agreements

When you work project-to-project, you can experience inconsistencies in your schedule and revenue flow. One way to mitigate those gaps is with retainer agreements. These agreements are being used more and more by independent creatives seeking regular revenue.

A retainer is simply a contractual relationship in which you, the freelancer, guarantee a certain number of hours per month to a client at a specified rate for a predetermined amount of time. Retainers allow you to schedule your work in advance. They provide consistent income as long as the retainer is in effect. They create stability for you in an unstable economy. For me, having a few good clients on retainer means I don’t need to have as many clients. I need only half a dozen or so in order to pay my bills and invest for the future. I have more time for teaching gigs and special projects.

Retainer agreements can be time-based, project based or type-of-work based, and are used when providing creative services for a prolonged period of time. When a project involves months of work, a retainer can be a better option than hourly or progressive (milestone or date-driven) billing.

Retainers are paid in advance of performance. This guarantees that you get paid, but it also means you must follow through with the work. Because retainers are paid in advance and they are paid consistently, you should provide a cost benefit to the client in the form of value and guaranteed availability. Otherwise, why would they agree to a retainer?

Having clients on retainer also means that you don’t need to spend as much time on marketing and promotion. You won’t need to be constantly looking for new clients. Don’t scrap your marketing altogether, however. Doing so would be suicide for your business. You simply change your marketing strategy to pursue better quality clients.

The nature of retainer agreements puts you in more of a consulting role. You will be fully away of your client’s needs and services, and you will provide them with preferential attention. The relationship is clearly and equally reciprocal. You invest in the client’s success and the client invests in yours.

 

 

To make retainer arrangements work, you need to be strategic in who you work with. Not every client is is right for a retainer relationship. They need to be people you want to work with for a long time. You need to choose clients who will not expect you to provide services beyond your normal scope of work (for example, writing press releases or walking their dog), who will pay you up front, and who will provide meaningful work.

Retainer agreements are ideal for the following types of ongoing creative and support services:

Social media marketing
Newsletter design
Email marketing
Web site updates and maintenance
Visual branding programs
Marketing and branding strategy
Content creation
Recurring work
Complex, long-term projects.

Retainers require good stewardship

You will want to keep track of the hours you spend for each client so that you’re not overworking and losing money on the deal. If you are used to hourly billing, that’s not a big leap. But if you normally use a project-based or value-based proving structure, tracking your hours is not something you’re used to doing. With retainers, you will need to guard your time and the client’s investment. Unused hours should be tracked and rolled over into the next month. Hours over the monthly number in your contract scope should be billed in addition to the retainer.

You will need to identify high-budget clients who have an ongoing need for your services. This requires some work on your part. To offer a retainer you’ll need to offer a clearly defined scope of work.

You’ll also want to work with high quality clients who understand your role as strategist and not simply as a technician or personal assistant. Since it’s going to be a long-term relationship (my retainers are for 12 months or more), you should enjoy doing the work and interacting with your client. Don’t take on something that you’re going to regret.

Your Clients benefit from retainer agreements

They enjoy a flat rate and consistent billing. Once you’ve found the high quality clients, offer a retainer proposal that will both benefit their budget and reflect the value of the work that will be performed over the duration of the relationship. If the scope of work increases in a given month, it can be offset by any unused value carried over from previous months, or you can bill for the extra work separately.

Especially if you're a generalist like me, you can customize your services to meet the specific needs of the client. You can provide copywriting with web design and photography with graphic design. The client does not need to find 2-3 different people for one project.

You benefit from retainer agreements

You don’t chase payments. Retainers are paid in advance of service. 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, and you can also charge a late fee if it’s included in your contract.

Your receive regular income. How satisfying to know that the bills you need to pay every month will get paid because you have reliable income each and every month.

You don’t chase clients. You can build solid relationships that are richer and rewarding for both you and the client. You can set the bar high in terms of how your clients interact with you and how they promote you.

You can continue to work with project-based clients. 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 (it’s FREElancing, right?) to pursue and work on project work.

Retainer work has priority

Retainer clients are your scheduling priority each month. This is where time blocking can help. If you’re like me, you’ll schedule projects into your workflow as they come in. With a retainer, you’ll need to establish a consistent schedule for each client, whether it’s every week or a particular day each month, and then schedule individual projects around the retainer work.

There may be a broader scope of services for you to provide to a retainer client. For example, in a project-based assignment, I may be asked to provide one stand-alone design. On a retainer, I may be asked for the design work, variations for different platforms, and to also manage the implementation. So I’ll design an ad and also follow it through to placement and publication on a web site or magazine.

If you keep project records (and you should) you may have to tweak how you keep track of progress, reviews and non-creative aspects of the work. You will probably need to be more detailed in note taking and archiving art and support files. Having a project management or tracking system will help you manage time, assets, and progress.

Retainers are long-term. I am able to turn around some types of work within 10-15 days, and I never see some of those clients again once the project is completed and delivered. When clients are on retainer, I am making a commitment to support their goals with my work, and projects can extend over several years.

Tips for working on retainer

Use a written contract that specifies the duration, the number of hours included, the basic fee, the hourly rate for additional hours, when rights transfer, and the type of work and/or specific deliverables.

Roll unused hours over into the subsequent month, adding them to the standard hour commitment. If you're on a service-based retainer, communicate to your client when the amount of work requested will exceed the value of the retainer and what parts will fall under the

Invoice for additional hours spent each month. For example, if you guarantee 10 hours in a month and a project requires 25, and the client has banked 8 unused hours from the previous 2 months, apply the 8 unused hours to the total and bill for the remaining 7 hours.

Bill for expenses in addition to your creative and project management fees. Whether you mark up or pass through the costs, be sure the client understands that expenses are not included in the retainer fee but are separate. A professional strategy is to provide the client with expense estimates, get their approval and THEN place the order or make the purchase.

Include a trial period. Since some clients will not be ready for a long-term commitment, you can offer a shorter trial period to test the waters. Sixty or 90 days is a good amount of time for both parties to decide if this is a good fit. Another way you can try on a client is to work on a single project and then decide if a retainer is the best option going forward.

Avoid rush work. You are not "on call" and available to retainer clients at all times. Retainers mean you can schedule the work in advance, and you can set a regular schedule for each every month. For one client I dedicate every second Tuesday. For another I schedule 2 half days on the 4th Thursday and Friday.

Build in flexibility, including a way for both parties to terminate the retainer agreement if circumstances change. I’ve experienced that long-term, project-based clients change their policies, personnel and locations. These changes directly affect the working relationship, sometimes to the point of ending it. You need the client to be flexible, and they need you to be flexible. Include a 30-day written notice clause.

Be circumspect in who you set up retainers with. These relationships should be highly collaborative and require more interaction between you and the client. As mentioned earlier, you want to establish comfortable working relationships. If you’re unsure of the client, work on one short-term project to try them on before proposing a retainer.

Include your standard terms and conditions in the contract. The primary difference in retainer contracts and project contracts is the scope of work and the duration. Terms, policies and conditions should be the same as what covers your project work.

Always use written work scopes . If a retainer client asks for a brochure design and related email promotion, provide an itemized list of the deliverables and their related expenses, along with a production schedule. Confirming things in writing is a mark of professionalism.

Focus on providing value, not just deliverables. By using retainers, you become a consultant. You educate and train your client for their success. You can adapt quickly to each client's needs and provide customized services and advice.

Retainer agreements should not be work-for-hire or employment contracts. You should retain your independence and status as an independent creative. Clients cannot tell you how, when or where you do the work. You guarantee that you will do the work and fulfill the number of hours you committed to.

Since I began offering retainers, my income has stabilized and I am generating more revenue than I was when working only project by project. I don't discount my rates with retainers. I simply offer a flat monthly fee in exchange for a set amount of time, rollover unused hours, use change orders for time over the set amount of time, and guarantee my availability to the client. That's the main thing: my retainer clients have priority over other clients, and I am able to dig deep to truly help them grow and thrive.

Alvalyn Lundgren

Alvalyn Lundgren is the founder and design director at Alvalyn Creative, an independent practice near Thousand Oaks, California. She creates visual branding, publications and books for business, entrepreneurs and authors. She is the creator of Freelance Road Trip — a business roadmap program for creative freelancers. Contact her for your visual branding, graphic and digital design needs. Join her on Twitter, Facebook, Instagram, and subscribe to her free monthly newsletter.

This Post Has 2 Comments

  1. Hey ma’am,

    Thank you for writing this article. I had a question regarding retainer contracts. Are these contracts considered “work for hire” and how should I handle the assignment of rights under one of these contracts?

    1. Thanks for commenting, James.

      Retainer agreements are not automatically a work for hire relationship. The client does not become an employer in a retainer agreement.

      Work for hire is very specific (in the USA), and is not automatic. Both parties need to agree to a work for hire in writing, and it has to meet certain criteria.

      https://www.copyright.gov/circs/circ09.pdf

      https://alvalyn.com/freelance-hired-clarifying-designer-client-relationship/

      https://alvalyn.com/3-types-freelance-contracts-avoid/

      According to the US Copyright Office (bolding added): A “work made for hire” is a work prepared by an employee within the scope of his or her employment, or a work specially ordered or commissioned for certain uses (including use as a contribution to a collective work), if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. The employer is the author of a work made for hire.

      It’s my understanding that retainer agreements are not used for a work that’s specially ordered. Retainers are used when a client has ongoing needs for a variety of works to be created. You need to be specific as to when rights transfer to the client, because with a retainer, you’re paid in advance of performing the work.

      Confirm this with an IP attorney.

      Disclaimer: I am not an attorney or CPA. This information is offered in good faith for general information purposes only and is not exhaustive. It is not intended as legal advice or opinion. I do not make any warranty about the completeness, reliability, or accuracy of this information. Any action you take based upon this information is strictly at your own risk. I am not liable for losses and damages in connection with the use of this information. You should seek legal and other professional advice when establishing or conducting a freelance business.

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