How to Earn a Steady Income With a Retainer Fee
It's important to keep searching for new clients as a consultant, but you should also pursue long-term contracts with a retainer agreement that specifies the fees you'll earn. Many freelancers and consulting professionals go through clients quickly. Limited budgets and a lack of long-term strategies mean that most work will be short-term or one-off projects, but it doesn't have to be this way.
What a Retainer Agreement Is
A retainer agreement is a contract between a company and a consultant or freelancer. Unlike your usual work, which is paid on a per-project basis, a retainer is paid in advance of the work. Having a worker on retainer is great for companies because it means they'll have a dedicated contractor for the period of time they've paid for.
This arrangement is also better for freelancers and consultants because it allows them to have money upfront, making it possible for them to better budget their time and money for the month. Since a retainer agreement is guaranteed income, it is highly sought after by independent contractors.
Getting a Retainer
Getting a retainer is a huge asset to your consulting business, and you can start with your current clients. Choose customers you enjoy working with and whose business has been fairly steady.
Spend some time brainstorming how a retainer would help solve some of your client's problems. Perhaps during your time consulting, you proposed a terrific project, but the client wasn't sure how to implement it. A retainer could keep you working on this project and bring it to life, relieving pressure on your customer.
Offer a retainer agreement as a useful solution. Offer to handle projects for one month for a set fee. Over time, the client will see the value of a long-term partnership and likely will extend the retainer over several months.
Handling Negative Opinions About Retainers
Before pitching a retainer agreement to clients, understand that some people have a negative association with the term. Some clients may have had bad experiences with consultants in the past who did not work the hours agreed upon and cost them money. This is why it is so important to work on long-term agreements exclusively with clients you have worked for before. That helps build a level of trust in your abilities, integrity, and productivity that will make them more likely to approve a retainer agreement with you rather than someone new.
Choosing a Rate
Many clients will assume there will be a discount for signing a retainer agreement upfront, but as a consultant, that isn't fair to you. You still deserve to be compensated for the hours worked, so it's recommended that you don't offer a discount but offer a package of hours at your normal rate. Instead, focus on the benefit to the client.
By having a dedicated chunk of time each month, you can focus completely on their needs and issues and work to solve them. That can streamline procedures for them and result in profits. Delivering high-quality work and return on investments will keep your clients happy and willing to set retainer agreements.
As a freelancer or consultant, it's important to focus on building long-term relationships and retainer agreements rather than strings of one-off clients. With your work, you can position your agreement as a pivotal step in helping your customers achieve their goals.