Retainer clients
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- raf
I am pondering offering more of my web clients retainer agreements. I see two kinds:
– Spreading some of the initial website cost throughout a year or a few;
– Offering maintenance work for existing sites on a subscription basis.Do you use this model a lot? Pros/cons/thoughts/advice?
- tOki0
Pros:
- You can plan revenue in advance
- You get to continue improving a project after it has gone live
- It can be very profitable if you minimise the time spent whilst meeting client objectives
- You will have more time to spend taking care of your clients than trying to find new ones
- Often will lead to a closer more partner like approach to work, where if a client leaves one company, they will be much more likely to hire you again at the other (have seen this happen several times myself)Cons:
- Most retained clients expect immediate service and care little for your schedule. Afterall, they belieave they are paying you every month to be on call.
- More time is generally spent managing 10 small tasks worth $10,000 than 1 task large worth $10,000. It's not as efficient.
- Many clients have little concept of scope and that the retainer is a set amount of hours and therefore you cannot act on their every whim.
- Working on the same project for 12 months can be quite boring, and with difficult clients very disheartening. (very important point if you have staff or contractors)
- It''s easy to overspend your monthly retained hours, then be in a difficult position where you have to meet expectations in the coming months
- raf0
Thanks tOki, good insight.
Regarding overspending, not sure I got it right: you try not to charge the client extra if they go over their hour limit?
Are your monthly hours transferable i.e. can they be moved to following months if unused? Likewise, can next month's hours be used this month?
- ephix0
what are the pros and cons from the client's side?
- bmacneill0
I like raf's idea of spreading the cost of a website over a year or two. A 10k website could be developed in a month, but with payments spread out over the year---making it more tolerable for the client. I wonder though, what happens if they don't pay it all? A mechanism in the website to turn it off? What about IP transfer upon full-payment? (something I --- and probably other freelancers --- have in their contracts)
- d_rek0
@bmanceill,
What you're talking about is not so much retainer as it is an incremental payment plan. It's not uncommon for service industries to offer a tiered or flexible approach to pricing to make the offering more lucrative for a client (ie: they don't have to pay lump sums all at once.)
Most retainer agreements i've dealt were more situated towards maintenance of a thing than mid-to-large sized project work. Project work, especially on the level of developing an entire website, should be handled as such and in my experience not treated or encapsulated by a retainer agreement. The cons tOki mentioned would quickly become self-evident in this situation.
As for your question about non-payment... well, if you're working on retainer you probably know a thing or two about setting up legally binding contracts.
IP transfer is a completely different subject, however. And you should really read up on what it means as an author of original works of art to transfer IP to someone.
- tOki0
Well transferring hours back and forth is doable - but you have to manage it tightly, essentially to make sure you don't do more work than you're paid for. At the end of the day you are there to help their business in the way you've been engaged to, but your own interests come first. Truthfully I hate them as an Art Director for all the cons I mentioned, and suits love them for the pros that I mentioned.(see point 2 = covering our asses on original deliverables)
In my experience when you eat up 3 months of retainer in advance, even with due warning beforehand - most clients will not be happy to hear this. We have written scope documents which require a sign off to use retained hours, so its like a kitty of cash/hours that can be accessed. The problem is that most like to think that they can get everything they want every month. This becomes particularly true in a marketing/advertising situation, if you've used up all the hours for the next 2 months but there is another campaign to do - you take the hit or the client does. Depending on your relationship, this can be very difficult, and account service will often want to take the loss to ensure the client stays happy. They NEED the work done, but might not want to pay for it. You have to then be able to prove or convince that you've provided value equal to the advance deficit of hours. Take into potential politics when there are multiple agencies involved who rely on each other and you have a true business clusterfuck.
As noted above by d_rek, retainers are bad news for mid to large size projects. Ideally you build the platform , in as much entirety as you can, then go into a retained situation to maintain, optimise & improve incrementally as you go. Large features should be treated as individual projects (billed and scoped separately) rather than trying to split the hours or cost across a series of months.
That said, if you are doing continuous series of small projects such as adding some products or creating banner campaigns on a regular basis where the scope never really changes, there is definitely a place for retainer agreements.
- tOki0
It's official:
- jon_d0
In my experience, i don't think a subscription model is workable unless it includes complete refreshes of the site at anytime.
I use the mechanic-metaphor approach but let me know how it goes.
- 3030
In my previous company, huge part of the revenue was the SLA - Service Level Agreement - clients were submitting work via ticketing system. Mostly, it was a content editing, imagery replacement - in other words - maintenance work. The most amusing part was that the vast majority of the work was done using CMS that were crafted to suit their needs. Clients were too lazy or did not want to do the work.
You could offer them some sort of SLA, restricted to certain tasks; requested task that are outside of the scope, would be a new billable work for you.