One of the downsides of being a freelance consultant is the irregular cash flow that comes with the cycles - here's how a retainer contract can help. Your bills, on the other hand, will continue coming regularly, making it very difficult to cope. However, you still need to ensure that you receive at least a steady sum to keep the practice running. Stable financial flow will not only ensure your business moves forward, but it will help you avoid unnecessary expenses.
This issue can pose a nightmare since you may have thousands of dollars in unpaid receivables which you still can't collect for one reason or another. Thus, having a retainer agreement with your clients will act as the ultimate shield against the cyclic flow of consultancy fees. The retainer contract provides you as a freelancer, a secure flow of monthly income. Once a client agrees to the terms and signs it, you can be sure of payment monthly even when work was not availed.
Having a monthly retainer agreement will take you from being reactive to being proactive while providing the retainer invoices to keep your business afloat. But it's not just a matter of drafting one; you have to ensure that the client accepts the deal. Remember, you are not trying to cause the client to end the contract. Therefore ensure that you focus on highlighting your value and the importance of your services.
Thus, how do you go about selling a sample retainer contract to your clients?
For most consultants, selling the idea of a monthly retainer can be affected by the inability to communicate their value to the clients. Understand the value you bring to the table, and why your client needs your services. For many others, the task of asking the client to sign a retainer agreement is riddled with the fear that the client may reject the entire deal. But remember, the client needs service from you, so ensure that need is what you use as the foundation to sell the retainer agreement.
Ensure you understand what benefits the retainer agreement brings to both you and the client. Once the client sees and understands the value attached to the retainer contract, then it will be much easier to pitch it to them. Hence, they will see the need to commit to a retainer agreement.
However, to ease off the pressure of asking the client to sign a monthly retainer agreement, you can make the monthly retainer a product by unbundling the services they find valuable each month. It could be a monitoring service, marketing campaign or any service the client will discover valuable each month.
Essentially what you will be doing is reminding the client of your dependability and value. By focusing the client on what benefit it is to have you on board, it is easier to have them commit.
It is even better if you have been in a working relationship with this client. Remind the client of the value you have brought to them consistently. Ut your track record to the front and make it obvious that you desire to have the relationship become more consistent.
This arrangement allows the client to see the value in your continued services for their business instead of viewing your services from a single one-time package. This also removes the image that the clients will pay a monthly fee "just in case" they need your services at one point or another. Thus, the client will have a thorough understanding of the value they will be getting every month. Remember to be calm and confident in your capability to deliver consistent value for as long as possible.
Once the client is on board with your services having tried your products, it is better to sell on the value of the product you had sold rather than opting to bill the client hourly consultancy fees. Hourly retainer contract pricing limits your profitability. Negotiating a monthly deal puts you at a better position to not only earn what you deserve, but it ensures that your work relationship is for the long term. The better the services you provide are, the less you subsequently get paid.
What you want is to ensure that the client sees value for their money. This is the point at which you think of yourself and the opportunity to increase profitability. Hourly billing is not as reliable as having a monthly retainer. The agreement is more of a way to secure your source of income.
The subsequent services will require less time to execute. However, if you sell to the client what you will do for them every month concerning long-term facilities, you are guaranteed to make the same amount of money each consecutive month regardless of whether the clients "feel" they need you or not. For example, a website maintenance retainer could include services like bug fixes, technical support, keeping CMSs and plug-ins to date and so on.
Therefore think of how you can deliver ongoing value to the client, instead of selling a block of hours.
A vague contract encourages "scope creep" which occurs when tasks mutate into sub-tasks that require more time and resources to handle. Thus, the monthly retainer agreement should keep the boundaries clear. For example, the retainer contract should define what a minor fix or revision is, otherwise how would the review be classified as overtime.
Essentially the retainer agreement is meant to ensure you are not taken advantage of by the client. You, therefore, have to ensure that everything is clearly defined and every loophole addressed.
A retainer agreement allows your clients to know what services to expect for the agreed sum, and if they would require additional support beyond the primary service provided, these extra services are clearly outlined. With everything defined, both you and the client can expect to have a professional working relationship. Meaning if there be any additional requirements along the way, the client will communicate it with the understanding that it means additional pay.
For example, you can describe the difference between a bug fix (which is when the system doesn't perform as required) and a feature (when the system performs as expected, but the client wants an additional function that wasn't in the original design). You can then explain when bug fixes applied, and how much extra the clients would need to pay to access the new feature.
When you understand what the retainer agreement is, it is easier to also itch it to the client. Being well informed of the benefits of the agreement to both you and the client is an advantage.
A retainer agreement is a contract signed between the client and freelancer in which the former commits to paying the latter a certain amount of money each month. The two parties can agree on a retainer based on the project scope or a specific amount of hours. The terms of the agreement vary depending on many factors. For the most part, however, the contract runs for 6-12 months.
For a freelancer, a retainer agreement means you get to have a fixed monthly fee by establishing a structure with the client where you are selling future availability to the client at a discount.
Now that you understand what it can do, it should be pretty obvious to you what the retainer agreement sample is. The sample shows you the type of agreement you should prepare or expect to sign, especially if you are unfamiliar with such contracts. It ensures that you professionally draft an agreement with all the features that will appeal to the client. It also works to ensure that you don't leave any loopholes that allow you to be taken advantage of. It helps to study the agreement closely so you know its most important segments, as that could be the difference between profitability and losses for your business.
When followed religiously, the retainer agreement sample can bring in more efficiency and accuracy to your business. The accuracy will be more evident in your monthly income projections. Meaning you get to work on a figure you are sure of receiving regardless of how much work is there.
Financial projections are important to a business in many ways. They are essential for proper planning, proper budgeting and growth. In freelancing, you can't run your business without any planning. You are better placed when you know the limits regarding monthly expenses and monthly savings.
You have to put measures in place to help the business grow in size, number of clients and revenue. This means that you have to think professionally and plan towards establishing a chain of reliable clients. Efficiency and accuracy guarantees growth in any business and growth mean stability.
On top of that, the agreement is also essential for controlling workflow. It also helps the business owner to manage their work schedule better. Better management is one sure way to see an increase in profitability in any business. The retainer agreement ensures that you can better manage your availability for every project, better understand your monthly expenses and even savings.
The fact you know that a specific amount of work is available and payment shall come in religiously like clockwork, you can organize the schedule and roster of the individuals working for you. It helps you to manage your time more efficiently too. Poor time management can cause businesses to collapse because you might find yourself taken more than you can handle. As a result, you will keep having negative feedback from clients and eventually collapse in business.
Poor time management can lead to tons of conflicts for your business. If left unresolved, it can also eventually kill your business. It causes distractions and loss of work. Missed deadlines and massive financial losses become the norm as you continue mismanaging time. And despite being a professional with vast skills, you will have a problem delivering to expectation.
The relationships with your clients – coupled with the ones you have within the business – also suffer deeply. A retainer contract can help you to avoid all these business-crippling behaviours. This is major because it helps you clearly define the project and your responsibilities.
You will get to know how much work you can commit to and whether there is time to take up more. When you have a retainer agreement with a client you can give it attention and plan your time both financially and depending on availability.
Consistent flow of cash into your business can also increase your profits. In some cases, it can be more important than profits. Yes, the retainer agreement sample guarantees you a monthly income for several months – usually 6-12 as previously stated. You can then plan your work properly fully assured that money to cater for any forthcoming expenses will come in. You can also recruit new members of your workforce in case the project demands more hands. And the agreement will make it possible to know whether or not you can afford to pay each individual.
However, it's important to note that the benefits do not just happen automatically without your input. You have to know how to use the retainer agreement sample properly. You have to know how to prepare it too. Essentially following the format as required and knowing what should and what shouldn't be included will go a long way in boosting you. What information is most important and what information can better paint you in the eyes of the client. More importantly, restrict you to what the agreement says. Use it to determine the course of action you should be taking.
When clients see how serious you take the agreements you have between you, they too will be loyal to it. This means you have to deliver as expected without allowing any complaints to arise. With this, you will be able to keep the client committed to the retainer agreement and they will also feel more confident in you as a freelancer. Use it to manage your business more professionally so that customers learn to be loyal and depend on it more. Memorize all that's on the retainer agreement sample. Refer to it in case of conflicts too.
A retainer agreement is an important piece in every freelancer's journey to success. It is one way to portray yourself as a professional who is aware of what they are doing. Securing just a few monthly retainer agreements with clients allows you breathing room during the low seasons where cash flow is expected to dwindle. Retainers help avoid end-month panic, as well as allowing you to schedule projects and growth plans.
Meaning even as a freelancer, you can use this document to give yourself a guaranteed source of monthly income for the period of the project. Moreover, having a retainer agreement boosts your relationship with your clients over a more extended period. And because one successful relationship with one client can lead to many more with others, it is important to be at the top of your game.