Retainer Contracts
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- transmission
a client of mine wants to set up a retainer agreement between us. I've been working with them for three years without one, just going project to project and getting paid.
There is a new person in charge and she wants to put her stamp on her role.
Anyway, what types of things should I include in my retainer contract that I might miss?
I was thinking of including a term that allowed xx% of un-used monthly hours to be banked for use up to xx weeks.
Is that a fair and common practice?
She wants to be able to bank every hour for use three or four months later.
- organicgrid0
essentially your fucked.
- monNom0
What are you a time lord? You can't displace an hour in time.
No banking. if they don't use the hours, that's their problem.
- monNom0
A retainer is to ensure availability... IE, you won't book more than 50% of a week if they've got a claim on the other 50%. It means they always "have a guy", and they pay for that availability. Shifting those hours around makes it impossible for you to schedule other work, and basically you're going to be sitting around waiting for them to give you a billable hour.
- Gnash0
There are some good tips in this article I found a while back.
http://www.contractorcalculator.…
- jtb260
For god's sake do not forget to specify how much time their monthly/weekly payment gets them. I only say this because I've seen people accept a retainer contract with out it and it's (obviously) a nightmare.
Agree with all on the do not bank hours deal.
I would be wary of giving them more of 30% of your time Let's just say you gave them 50% of your time, how would it be if they decide to drop your contract and you suddenly have 50% less income. No good.
Speaking of which I'd add an early cancelation fee equal to 1 months work. Also a renewal deadline. If they wait until the last day of your contract to tell you they are not going to renew you're boned. Balls to that.
- formed0
I'd explain to them that the time is used one way or another, that's what they are paying you for - your time. What they choose to do with it is up to them.
How do you bill now? Personally, hourly charges are only a very small amount of the billing (its project based). Just keep things inline with what you have been doing for them.
- doesnotexist0
if you like them and you like the work, do a retainer because it can help build the relationship and give you some predictable income
if you don't, just keep doing hourly billing. it can be a real pain to jump into this if you don't like the work or them.
- freedom0
A retainer buys hours for a certain timeframe and if they don't get used, you still get paid?
- YESmonNom
- shit yesdoesnotexist
- Why would a client want that?freedom
- not all retainers work like thatGnash
- client would want that because that way they know they have your time reserved.randommail
- jtb260
@freedom. Yes. A retainer is a way of having guaranteed time. Let's put it this way:
You work 50 hours a week. That's 200 hours a month of billable time.
The client wants you to put aside 40 hours a month. That's 20% of your billable hours. Knowing that 20% of your billable time is reserved you might limit the amount of work you take on to some degree to maintain that affordance. That 20% represents revenue you would other wise make. If the client wants to reserve it they need to pay for it. If they don't use it you've still essentially agreed not to work during that time because they've purchased it.It's like buying a ticket for a game. That seat is yours. The ball park can't sell it to anyone else. If you decide not to show up you don't get your money back.
- formed0
Freedom - It's just like having a lawyer on retainer (you've seen this a billion times in movies, no?). You pay for access, presumably because you know you will need their services on a moments notice and don't want a "sure, we'll get to you next month" answer.
- lawyer retainers are different. you pay a wad up front. they work until wad done. get new wad...Gnash
- How is it different? You bill, you get paid, you bill, you get paid...serious questionformed
- Say you pay a lawyer for 50 hours upfront, they draw from it for 50 hours. Then they rebill.ETM
- Not always the fixed monthly idea where they'd expect to work 50 hours in the month.ETM
- It's typically put in trust until used.ETM
- First, the lawyer is paid up front. The money can last a week or 3 months. It's not a regular monthly paymentGnash
- "bill get paid, bill get paid" is just a regular relationship, not a retainer.Gnash
- Retainers are typically paid in advance of work, not afterGnash
- microkorg0
Yup, no banking.
The idea of a retainer is that you charge them for an amount of hours each month based on previous months (or years) average of work.
TYou tell the client that the retainer will be reviewed every 3 or 6 months.
They ask you to do work, you do it and record your hours with the understanding they are working to a limit.
If they go wildly over the limit then you obviously let them know and stop unless they pay you more.
But if its just slightly over then you suck it up and work it.When it comes to the 3 or 6 month review time if they have continually worked over the specified hours then you up the monthly retainer.
If they have continually worked under then you take the retainer down.You DONT bank hours! That's just asking for trouble down the line when they hit you with "You owe us 60 hours" and you've got a shitload of other work to get done for other clietns too.
That's the way a retainer works.
- transmission0
I've read online that there are a variety of retainers. Some with no banking and others with it. Of course you all make a good point (jtb26).
My client wants this model supposedly to better handle her budgets.
I can understand that but I agree with you Microkorh that I don't want 60 hours banked for us in one month. It seems archaic.I like the lawyer model that ETM mentions.
Maybe i offer them the opportunity to buy hours like credits and it get's used up until done. if they buy 50 hours then it can be used in a week or 6 months or whatever.
- freedom0
I always thought lawyers have retainers just so you prepay for a bunch of hours and that way they take you seriously and don't have to send a bill every time you call. But you don't get that money back if you don't use it?
- freedom0
If you have a good business relationship now, it seems crazy that your client is the one who wants to establish a retainer without bankable hours. I understand it's helpful to reserve your time, but if everything is working now, why does this new person in charge want to make the change and potentially pay you for time they don't use?
- Gnash0
so transmission, what was the end result?
- BabySnakes0
Anyone know if LegalZoom has a decent contract on their site, before i have to spend the money to see it?