Success By Design: The Essential Business Reference for Designers by Sherwin David

Author:Sherwin, David [Sherwin, David]
Language: eng
Format: epub
ISBN: 9781440329791
Publisher: HOW Books
Published: 2012-11-05T22:00:00+00:00

Retainer agreement

A retainer agreement is an agreed-upon weekly or monthly bucket of billable hours associated with ongoing needs you fulfill for your client. You both agree to your hourly rates as part of a long-term contractual agreement.

Retainer agreement: Pros

• The retainer can be structured different ways depending on client need

• Guaranteed income: You’re paid regardless of whether you complete the hours agreed

• Relationship based on trust

• Shows high value to client

• Can connote an agency-of-record status, meaning that you will be the only company helping your client with a specific set of tasks

• Encourages deep knowledge of client’s industry and needs

• Can support hiring the appropriate talent required for the project

• Often associated with large dollar amounts

Retainer agreement: Cons

• Requires complex and mathematically accurate budget reporting

• The client “owns” your time - all that you agree to provide

• Can create boundary issues regarding when you work and how hard you work

• Can cause inflated expectations for work quality

• Often involves noncompete contracts, limiting you from other opportunities in the same field or market

• Requires expertise in negotiating retainer contracts and master service agreements (MSAs) to hold both parties accountable

• Can impact your company’s health if it goes away; downsizing will likely be necessary if revenue is not replaced

Retainer agreement: When to use

• When you have established a position of trust with your client

• To become an effective extension of the company’s business or marketing plan

• To act as a day-to-day consultant affecting company business

• To attain agency-of-record status

• For consistent, sizeable billings

• As a tool to build your agency

• When your client can guarantee long-term work for you but isn’t sure of short-term deliverables (e.g., $500K of business over eighteen months, divided and paid monthly)

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