As a freelance consultant, establishing a steady stream of income can be a tricky affair, especially when starting out - that's why getting a consulting retainer fee agreement in place is essential.
However, businesses and practices need a constant source of revenue to unction correctly. Consultancy sometimes involves going through clients very quickly, hence making billing per hour somehow unreliable - that's exactly why retainer fees for consultants are a gold mine.
However, the solution isn't to have numerous short-term contracts. It's to change the pricing strategy.
Billing through a consultant retainer fee agreement is the better solution. Having a consultant retainer agreement in place means that you will be paid in advance by the client and the client will gain access to your expertise; thus the client will be paying for a dedicated consultant for a particular period, mostly monthly.
In ingenuous terms, a retainer agreement is a legal agreement between a company/client and a service provider to work together over a long period on several projects. The consulting fee agreement, sets details of the retainer arrangement and could include the extent of the engagement, the payment details, or the retainer fees for consultants, and the termination process.
Benefits of working with a retainer agreement:
However, some issues could cause the client to have negative views on agreeing to a professional services retainer agreement.
For some clients, they may have had negative experiences in the past, making them wary of working with a consultant retainer fee.
This issue is why consultant professionals fare better when they sell retainer agreements with already established clients. First impressions are vital if you are to successfully market the idea of consulting fee agreement to clients later on.
For some others, they could be new to the idea, and thus want to establish if it's a good step before committing to a long-term retainer fee for consultant arrangement.
This issue can be handled by making sure that your solutions are articulated well during the pitching and signing stages of the business relationship. Also, make sure to include the fact that you charge retainers instead of hourly consulting fees.
Having a detailed consultant fee agreement will help you avoid issues that could arise between you and your client. An underestimated retainer fees for consultants can lead to unexpected delays in the work and affect overall performance. Consequently, an overestimate from the client, could also cause frustration in the work, especially from the client.
However, you can offer to cover part of the contract on hourly fees and agree on the services that will require a consulting fee agreement signed. Either way, you need to earn the client's trust before a consultant retainer fee agreement can be signed.
At times clients request huge discounts from consultants in exchange for the retainer offer. This could lead to the freelancer getting less than what they rightly deserve. Never allow yourself to work for way less than what you deserve just so that you can secure a contract. Always have in mind that your professionalism should be compensated in the fairest manner possible.
For most consultants, retainer fees are calculated by multiplying the estimated number of hours (hours the consultant expects to work on the client's project) by the amount they charge per hour.
For example, when the consultant charges $50 per hour and plans to spend 40 hours per month working for the client, the final consultant retainer fee can be estimated at $2,000. The consultant should make sure that the professional services retainer agreement allows them to earn a profit; otherwise there will be a need to renegotiate the deal.
For example, the client could agree to pay more fees, or allow the consultant to spend fewer hours per day on the said project.
Some clients will expect a discount when they agree to sign the consulting retainer fee agreement beforehand. This action is unfair to you as the consultant, and thus you should seek to ensure you make a profit from the first stage of the contract. You can opt to offer some package hours at the standard rate.
The discount that you grant your client, shouldn’t be too low as it might get challenging to reserve after the job has started. To get a reasonable rate that will work out for both the consultant and the client, you need to do a lot of research to find out average rates in the industry on[retainer fees for consultants and the paid average rates by the client. This will work as a blueprint you can use to choose a rate that will see the work run smoothly without any glitches.
This way, you can guarantee the clients that their needs will have your primary focus throughout the contract. Clients respond more positively to quality service over shoddy work over many free hours. This reason is why consultants are encouraged to focus more on selling quality results instead of hours worked.
The amount of money the client will accept to pay you will be determined by how much return on investment you can bring. To prove that you worth every penny you are requesting on the retainer fee agreement, you can offer to have some extra services to go with the consulting. Talk to the client about services like training that you can bring into their company.
Freelancing work is most certainly not a walk in the park, especially when it gets to securing jobs. The constant cycles of applying for jobs and ending contracts, fluctuating retainer fees for consultants, is not the most interesting part of working as a freelancer. That is why you read to show the clients that you are worth their money. Make sure your services offer a positive return on investment for your client. This will not only help secure future jobs with your client but will definitely help you land other retainer contract agreements.
Maintaining enthusiasm over a long period requires grace. However, it is essential to make sure you remain enthusiastic long after the first month. While new projects are exciting, disagreements and boredom may crop up; the temptation to take your clients for granted should be resisted at all costs.
Essential factors to help you keep focused is to always remind yourself why you are doing the job in the first place. Set timetables to help you beat deadlines and work with your milestones. Keep good communication with the client all through, and remember that time is money. If things are not working out and you feel like walking out of the job, remember to follow the process that is laid out in the retainer fee agreement to terminate the contract.
Strive to always offer beyond bare minimum regarding quality services. If you were enthusiastic about providing technical support during the first months, maintain the same enthusiasm regardless of how many months you will have worked hitherto. If the client feels like your enthusiasm wanes after a while, they may feel side-lined and will be less likely to recommend you to other clients in the future.
To write an effective consulting fee agreement that will ensure a smooth run of freelance consulting services, there are some key aspects that you need to include. Here is a look at the few things that you have to put in the retainer fee agreement to ensure a successful working relationship with your client:
The consulting fee agreement should elaborate in detail what you and your agency are willing to offer as services to your client. If well articulated, the retainer will act as the reference in case of any dispute.
This is the fee that you will request to be paid upfront by the client. Retainer fees for consultants in the contract need to give the breakdown and basis of the payment in detail. This is especially important to avoid any misunderstandings as you will have the retainer to reference.
The retainer should have details of payments that the client should foot other than the consulting fees. These expenses could include travel, accommodation, communication expenses among others.
The consultant should give the hours that they will be available to provide their services. The hours to be provided by the consultant should be discussed in detail with the client. Articulate properly the timelines for both you and your client set goals, milestones and deadlines. This will help curb any future conflicts with your client.
The retainer agreement should provide details of circumstances that should lead to the termination of the consulting fee agreement. The factors that lead to the close could be unfulfilled promises from either party. In such cases, the retainer agreement should detail the means and duration of notice for terminating the contract. Discuss with your client how the process will be carried out in case of need.
There are two types of retainer agreements that you can choose to work with depending on your relationship with your client. The other determinant of the type of retainer your client can accept to work on with you is what he/she thinks of your services. The more they feel that you are a guru and they can easily lose your services, the quicker they will be ready to lock you down with a retainer. Here are the two types of retainer agreements:
A retainer fee agreement helps you create a professional working relationship with your client. The process is made formal and you can avoid the many hiccups that freelance consultants face in their work. It is good to give the best when jotting down the consulting fee agreement, as it will set the tempo for many of your prospects.
The primary key to successful business relationships is to ensure that trust remains a key pillar. Once the client believes that you can deliver real solutions for the business, they are more inclined to agree to the professional services retainer agreement.
At times it may be crucial to seek the help of an attorney to help you draft the retainer fee agreement to help make it legally binding. However, there are available templates to help consultants to draft the required retainer agreements. The template can be downloaded and edited to suit the current terms of service you are offering the client.
It is important that after having the final draft, you meet with your client. This would help you go over the details put in the consulting fee agreement and make any necessary adjustments. If both parties are satisfied, you can sign the retainer agreement and set off to begin work.