How to Improve a Retainer Relationship (With Benefits)

By Indeed Editorial Team

Published July 24, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Freelancers and service providers often have several projects to track, so they predict their cash flow by issuing contracts. A retainer agreement generally helps them receive advance payment for their services. Learning how this type of agreement works can help you ensure a reliable revenue source and determine your pricing model. In this article, we define a retainer agreement, explain how to improve a retainer relationship, and discuss some of the benefits of these contracts.

What is a retainer agreement?

Knowing how to improve a retainer relationship helps you set clear expectations about your services. A retainer agreement is a long-term, work-for-hire contract between a client and freelancer. It allows customers to pay in advance to retain an individual's ongoing professional services. With it, a client pays a specific fee to a service provider and, in return, receives services during a fixed period.

Some customers make this payment as a lump sum, while others pay it monthly. The retainer agreement lets clients access an individual's services regularly or for a long-term project. These agreements are common in the legal industry, where customers may retain a lawyer's services until they require legal help. This agreement varies from other pricing models because the client pays in advance for work they might receive later.

Related: A Beginner's Guide to Freelance Jobs

How to improve a retainer relationship

Here are seven steps you can follow to help you improve a retainer relationship:

1. Develop a business case

A business case is a project management document that evaluates a project's costs, benefits, and risks. To define and limit a customer's request regarding your work, determine the value you can offer to clients regularly. Depending on your freelance business, examples of services you could define include e-mail marketing, website updates, and marketing campaigns. Clearly establish the amount a customer may pay and your type of work.

In addition, outline the period of your services, such as by week, month, or year. In the retainer agreement, for example, you could write one blog post up to 4,000 words per month rather than one blog post per month. Doing this can help you select an accurate retainer fee, which is a client's upfront payment for the services of a freelancer or service provider.

2. Know the client

Before finalizing a retainer agreement, try to understand the customer better. This could help you identify their needs and use your skills to advance their business interests. Make sure the agreement includes improved, affordable services for the client. For example, evaluate their status to see how a content creation retainer agreement may work with them. Discover whether they post regularly on their website and social media pages. You can also check their content creation style and language use.

Consider following their social profiles to learn more about them. This could help you suggest improvements for their business. It may also increase the likelihood of creating a retainer contract that benefits you and the client.

Related: How to Become a Digital Marketing Freelancer in 9 Steps

3. Sell your services

You can more easily pitch your retainer agreement after you determine the customer's needs and have a solution. To become invaluable, prove you can deliver quality services whenever they need you. Showing a company that you can solve its problems may encourage the management to willingly pay your retainer fee. This could also help you sell your skills before you start and finish the project.

If you're working with a new client, offering them a free trial of your services lets them experience your value for their business. You can explain how a retainer agreement works to the customer during one of the following opportunities:

  • When offering to work at the beginning of the agreement

  • When a project is closing, and you're offboarding the client

Related: Comparing Partnership vs. Sole Proprietorship (With Tips)

4. Choose the retainer agreement type

The two types of retainers you can choose from when determining how you want to work with a client are the pay-for-work and pay-for-access agreements. When using the pay-for-work retainer, you may receive a monthly payment from the customer. They base their fee on the amount of work you deliver. For example, you could provide a particular amount of work each month, such as 15 social media content posts. By using this method, you're receiving the retainer fee for the actual work you complete, not the time you spend doing it.

The pay-for-access retainer agreement means customers pay you for continual access to your knowledge and expertise. For example, they can pay you hourly when they require your services. This type of retainer agreement often requires you to explain every detail, such as what happens when the client doesn't use all their allotted time. Using the pay-for-work retainer agreement is usually advisable because you can perform work routinely.

5. Create a contract

When creating a contract, work with the client to outline how you can deliver your services each month. A standard retainer contract often includes:

  • Work description: Describe the work you may perform, its legal fees, and the invoicing process so the customer knows what services they might cover. Discuss how often they might receive the bill and when you expect an update on their invoice.

  • Expectations: Consider explaining your expectations for when they exhaust the retainer fee or require additional work.

  • Additional expenses: Mention how the client can handle payments outside your scope of work.

  • Timelines: Include deadlines for your services so you satisfy the customer's expectations. This can also help you work with several clients simultaneously.

Related: What Is a Retainer Fee? With Definition, Types, and Benefits

6. Structure your fees

A retainer helps ensure you have a constant cash flow for your freelance business. Structuring your retainer fee usually helps you streamline your billing. It also makes it easy for you to send your invoice and receive payment promptly. Depending on your relationship with the customer and the freelance business' nature, the structure of your retainer fee may vary. Some methods you can use for structuring your fees include:

  • A single monthly payment

  • A fee with additional costs for extra work

  • A lump sum for six months or a year

  • An adjustable monthly payment that depends on your amount of delivered work

  • An expertise fee with extra costs for additional work

Related: What Is Target Pricing? (Advantages and Disadvantages)

7. Review and adjust the agreement

Review the agreement to ensure it covers your scope of work. Make sure it helps you track your work, so you only do what you offer. This is particularly important if you're estimating your work by the hour. Consider whether your services are profitable to you and the client. If otherwise, you can renegotiate the agreement. It's usually advisable to regularly adjust the agreement, such as by conducting monthly or annual reviews. This allows for a flexible agreement that's open to amendments.

Related: Guide to Managing Clients (With Definition and Strategies)

Retainer agreement benefits

Here are some of the benefits of a retainer agreement:

  • Estimates cash flow: A retainer agreement can help you estimate your monthly income if you work with several customers. It creates a stable, consistent income for you even if your client base fluctuates.

  • Provides better customers: A retainer lets you focus on delivering quality work to current clients and spend less time searching for new ones. It also creates a comfortable professional relationship because customers already know your rates.

  • Saves time on marketing: A retainer agreement can help you spend less time selling your services. It shows you have a specific skill and outlines how you could improve a client's business.

  • Improves professional relationships: A retainer agreement generally improves your long-term relationship with a customer. It assures them that your services are available whenever necessary, strengthening your partnership with their business.

Explore more articles