How to Set Up Monthly Retainer Contracts for Steady Income

Freelancing or working as a contractor offers tons of perks, like flexibility and autonomy. However, it can be challenging to build a steady stream of income. That’s why setting up monthly retainer contracts is a great way to combat the issue.

What Is a Monthly Retainer?

A monthly retainer is an agreement for long-term projects ensuring steady collaboration between a client and a contractor for extended tasks. It assures the contractor of regular monthly earnings and offers the client a reliable team for the project’s duration.

How Do Monthly Retainers Work

A monthly retainer occurs when a client pays an advance payment to access your current and future services for a specified period of time. It’s similar to working on a contractual basis, with the payment covering the number of hours you work for the client each month.

What Services Work Well for Monthly Retainer Agreements?

Monthly retainers can work well within many industries. However, it’s a popular pricing model for agencies and freelancers. Here are some services that might benefit from implementing retainer fees:

Website development
Website design
Digital marketing
Search engine optimization (SEO)
Content creation

How to Set Up a Monthly Retainer

Now that you know the basics about monthly retainers, let’s take a look at how to properly set up an agreement for retainer work.

1. Determine the Scope of Work

In order to produce a fair monthly retainer agreement, it’s important to be as clear as possible from the beginning with any potential client. For this, outline the scope of work that you and your team will undertake.

2. Agree on Deliverables

Next, you need to consider the structure of the agreement and decide how you’ll organize the services that you’re offering. Therefore, it’s important to agree on the project deliverables.

3. Calculate the Monthly Retainer Fee

Once you’ve outlined the scope of work and determined the deliverables, you’re ready to calculate your retainer fees. Of course, this will only be an estimation, but it gives you a good idea of where to start.

4. Decide on the Payment Terms

One of the most important parts of setting up a monthly retainer agreement is to clearly define the payment terms. While most retainer payments are made in advance, you’ll need to discuss the fee structure with your client.

5. Create a Communication Plan

While monthly retainers are a great way to stabilize your income, they also enable you to build a strong retainer relationship with each of your clients. As such, it’s crucial to maintain transparency during all client communications.

6. Determine the Contract Duration

Going into business with a new client is always a risk. You don’t know whether you’ll enjoy the work, whether you’ll develop a good working relationship, or how much the project will change over time. Although a good retainer agreement can alleviate these issues, it’s also important to determine an end date for it, even in long-term contracts.

7. Specify Non-Disclosure and Confidentiality

Depending on the industry, working with clients on retainer may bring you into contact with classified information. Therefore, to protect yourself, the client, and the information shared between you, consider having a Non-Disclosure Agreement (NDA) or confidentiality agreement.

Monthly Retainer Success Tips

Now, let’s look at some tips to help you create a successful retainer agreement.

Make Plans for Unexpected Work or More Services

Include provisions in your monthly retainer agreement to better prepare for unexpected or future projects when working with a new client.

Provide Clients With Different Service Tiers

When selling retainers, service tiers enable you to cater to clients with different budgets and needs. As such, you can attract new clients, upsell existing ones, and increase your predictable revenue.

Send Monthly Reports to Your Clients

Monthly reports are an excellent way to make your services more valuable. By compiling a comprehensive report, you can include details about the work you’ve done and show the client the return on their investment.

Evaluate and Adjust the Monthly Retainer

While a monthly retainer sets the scope of work and payment terms, it shouldn’t be set in stone. In fact, it’s a good idea to regularly review the agreement and make any necessary adjustments.

Conclusion

Working with clients on a retainer basis is an excellent way to guarantee work and set up a steady stream of income. Plus, it’s beneficial for the companies you partner with since they can enjoy better rates for long-term work.

Fortunately, setting up a monthly retainer agreement isn’t as challenging as it may seem. First, you’ll need to determine the scope of work and outline plans for unexpected events. Then, decide on your retainer fee, define clear payment terms, determine the end of the contract, and review the agreement regularly.

By following the tips in this article, you can build a trusting, productive relationship with the client. At the same time, ensure that you’re meeting the client’s needs as best you can. Remember to also maintain good communication so you can continue to deliver a high-quality service for existing and future clients.

Monthly Retainers FAQ

In this section, we’ll answer some of the most common questions about monthly retainers and retainer fees.

How Do You Negotiate a Retainer Fee With a New Client?

When you are communicating with a new client during the sales process, it’s important to negotiate the right retainer fee. Demonstrate your services’ value with a detailed project plan. If you think the client will benefit from it, pitch a higher service tier at a special discount. It’s a great chance to upsell your services to maximize revenue.

What Is the Difference Between a Monthly Retainer and Project-Based Work?

Project work involves an agreement for a specific job or task with a defined scope, timeline, and cost. Once the project is complete, the contract usually comes to an end. Meanwhile, flat-fee retainers occur when a client pays you monthly to conduct a certain amount of work. This arrangement implies an ongoing and continuous working relationship.

What Are the Advantages of a Monthly Retainer as a Freelancer or Agency?

As a freelancer or agency, a monthly retainer enables you to guarantee future work. As such, it’s a great way to stabilize your income and upsell services. It’s also beneficial for the client, as they can access your services at a discounted rate. Plus, it enables you to build trust and improve customer retention.

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