A big problem with freelancing is that most work is transactional.
What I mean by this is that you get a new client, sell them on working with you, do the work, deliver it, and get paid.
It’s nice to get referrals and repeat consulting projects from happy clients, but there’s no guarantee if that will happen.
In the quest for recurring, consistent, and “safe” revenue, most freelancers eventually turn to retainer agreements.
My goal with this guide is to not only convince you why the traditional idea of retainers is flawed but to also provide you with a formula you can use to sell your current, future, and past clients on hiring you on an ongoing basis.
Quick note before we start… If you’re currently getting underpaid for your work, I’d recommend you pair the retainer knowledge from today’s post with this free course that teaches you how to massively raise your rates without losing clients.
What is a retainer?
The definition of a retainer is, not surprisingly, an agreement where one party (the client) retains the accessibility and use of another party (you, the freelancer) on an ongoing basis.
Lawyers often work off retainers — you never know when you’re going to need your attorney, so by paying them monthly they have an ongoing commitment to working with you.
When freelancers set up retainer agreements with their clients, the usual structure has them selling future availability at a discount for a fixed monthly fee.
Let’s say you complete a project for a client. Savvy clients will understand that you have a lot of knowledge about their business and their project and that there’s a lot of risk in losing you. Additionally, they might need you to tweak things along the way for them.
So you think…
“Ah ha! I’ll give them 10 hours a month of my time. And though I’ve been charging them $100 an hour, I’ll only charge them $80 for that time. So for $800 a month guaranteed, I’ll do up to 10 hours of work a month.”
Pretty simple and straightforward, right?
Why I don’t like the traditional model of retainers
So let’s say the client goes along with your $800/month retainer.
But then they start thinking, “Well, that’s $80 an hour. $800 divided by 10 hours is $80. Can’t I just pay you $80 an hour when I need you?”
This rebuttal happens all the time, and many freelancers often go along with it, especially if the client ends up needing more than 10 hours of work a month.
Sure, you’re more-or-less guaranteed to bring in $800 a month without the need to find, sell, and pitch new clients, but what about when they only have 5 hours of work available in some future month and they’re now price-anchored to your 20% discounted rate? ($80/hr vs. $100/hr)
Here’s another problem: What happens when all of your time is booked with retainer clients? You now have an income ceiling. If you work 40 hours a week, you’re limited to $3,200 a week in revenue.
And another problem: Businesses generally don’t like getting dinged each month with monthly expenses. When they’re just getting your availability, the whoever’s-in-charge-of-budgeting might start wondering what this $800 a month expense is for.
“Do we need it?”
“Is it something we can cut?”
My belief: sell a monthly subscription to a productized service instead
Instead of selling future availability, you should instead sell your client on a monthly product.
What I mean by this will soon be a lot clearer, but let’s recap a few things:
- Clients want and need ongoing access to somebody with inside knowledge of their business and project, but don’t want to be stuck paying you each month without an explicit benefit.
- You want to spend less time selling by having many of your clients on retainer — and you also want the guaranteed income that comes with that, but you don’t want to limit your earning potential.
So instead of just selling a block of hours, I instead try to think about how I can deliver ongoing value to the clients I’ve already worked with.
There are three ways that you can provide value to clients on an ongoing, monthly basis:
Take the work you’ve already done for them and continuously improve it.
If you develop a website for a client, and the purpose of that client is to sell widgets, how can you help them improve and optimize the number of widgets they sell each month?
We all know that the first cut of any website isn’t perfect — there’s always room for improvement.
And while you do your best to leverage your skills, experience, and industry best-practices to develop the best website possible, once actual people start interacting with the website you’ll end up with data that can help you make that website even better.
In practical terms, this might mean running A/B tests on behalf of your client, using tools like Optimizely or Visual Website Optimizer. You look at their existing conversion funnels and test changes to the content and the design that might increase conversions.
I’d also group writing monthly blog articles, managing a newsletter, performance-optimizing SQL queries, and anything that makes the underlying project better and more valuable under optimization.
The project you end up delivering to your clients is valuable — it’s a piece of intellectual property that plays a role in the overall business of your clients.
If the project you deliver were to hiccup it would hurt your client.
- If the website goes down, they could lose sales.
- If their database is compromised, they’ll lose customers and take a hit to their reputation.
- If their underlying WordPress installation and associated plugins aren’t kept up to date, they miss out on updated functionality or expose their website to exploits.
I realize insurance doesn’t apply to everyone — a videographer isn’t worried that the video they produced is going to end up self-imploding.
But for many freelancers, especially those who work on the web, there’s room to help insure your clients against failure.
Sometimes, clients just want the peace of mind of knowing that there’s a smart person with administrative access to their server who can step in and fix problems quickly.
The cost of not being insured, and not having ongoing access and support from someone like you, can be crippling.
If their website were to go down and they had to rush out to fix things in a hurry, more things are likely to break and the client is most likely going to suffer from a migraine or two.
Give your clients the peace of mind that you’re taking care of the project they spent so much time and money on commissioning.
Your clients seek you out not just because of your ability, but because you live and breathe whatever it is you do.
You know your industry.
You know what advances are being made and what direction things are going.
Why not provide ongoing advisory and consulting services to your clients?
Let’s say you help eCommerce companies increase conversion rates. As you work on more projects, read more articles on conversion rate optimization, and collect more data about best-practices, you’re becoming a better conversion rate optimization specialist.
And, most likely, your clients aren’t.
They’re focused on their business and don’t have the time or mental bandwidth to read the articles you’re reading or attend the conferences you attend.
Here are a few ongoing training services you could provide:
- Monthly advisory calls with your client. If you’re a marketer and they hired you, there’s a good chance they don’t have an in-house CMO. How could you serve as their part-time Chief Marketing Officer?
- A private newsletter. One perk of hiring you monthly could include a weekly, bi-weekly, or monthly newsletter that you send your clients. Highlight some of the articles you’ve been reading, briefly overview the highlights from the article, and send it to all of your retainer clients.
- On-site or virtual training. Is there an opportunity for you to help train their team? Can you help their newest intern learn how to manage their site? Can you deliver monthly video training that allows your clients to do some basic tasks themselves? (This serves as a great way to build up both up experience and content for ultimately creating your own training product or course.)
Include a “CEO-Ready” monthly report
Remember how I mentioned that companies don’t like spending money each month, especially when they don’t know what they’re getting for it?
Consider creating a monthly report that you can send your client (who can then send it to their boss, if applicable) that showcases exactly what you did, what effect it had, and really reiterates why they’re paying you.
This report will need to be tailored based on exactly what you’re doing for your client, but a few ideas:
- Monthly traffic growth
- Monthly sales / lead growth
- Monthly sales growth
- Support ticket volume
- Website uptime (as a percentage)
- Readers of your blog posts
- Lead magnet opt-ins
- Social media followers
- Social media engagement
- Ad spend vs. return
I like to show these figures on a chart, and explicitly compare each statistic to last month and 12-months ago (if you have that data.) This way, they’re able to see how paying you monthly is gradually increasing the metrics that matter to them and their business.
You should also include what work you accomplished:
- A/B tests you ran, and their results
- New articles written
- Framework or security patches applied
- Number of tweets or FB posts
- New ad campaigns
This report should make it always obvious why they’re continuing to pay you — even though you assume that they already know why. Don’t assume.
If you’re looking for a tool that can help you churn these out fairly easily, I recommend Remarq.
💡 Key Takeaway!
The core goal with these reports (which you can learn more about how to speak to in this free pricing course) is to make it abundantly clear to your client that you’re making/saving them more money than they’re spending on you each month as a direct result of your retainer service.
If it’s clear to the client that this $800 they spent on you put an extra $1,500 in their pocket, they’ll never dream of canceling their retainer with you.
Click here to learn more about pricing and illustrating value to your clients.
In cases where the value you provide is non-monetary (like with the security/insurance example), you want to aim to illustrate, as best you can & in hard numbers, how the value you provided was worth more than what they paid.
The best retainers mix a number of the 3 things I listed above.
You might end up selling your client on something like the following:
- Ongoing A/B testing of your call-to-actions and other elements of your website
- 2 new blog articles a month
- Daily backups of the website
- Automatic updates of WordPress and any plugins used
- A monthly call with the CEO to discuss the company’s content strategy
- Up to 10 hours a month of a la carte work on the website
- = $4,000 a month
(Some of these might just have you signing the client up for services that handle the above — like setting them up with an Optimizely account and getting them on a host that handles backups seamlessly.)
Notice that there’s no way for the client to reverse-engineer the price and figure out an hourly rate.
How much of the $4,000 covers the 10 hours of work? Who knows. And it really doesn’t matter. Because the client is paying $4,000 a month for a list of clear benefits that will optimize, insure, and train— all for one simple price.
Over time, their website will become more valuable and you’ll make it clear to them exactly who to thank for that.
I’ve talked before about how packaging can help you win more proposals.
The same rules apply for retainers. Give the client the option to choose exactly how much optimization, insurance, and training they want to buy when committing to a retainer agreement.
For example, imagine offering the following:
- A low-end package that just offers backups and WordPress updates.
- A mid-tier package that offers everything I listed above.
- A high-end premium package that offers everything listed above, along with you coming onboard as their part-time CMO/CTO. You could anchor the price of this service against what it would cost to bring onboard a full-time CMO and CTO, along with the personnel to handle writing the blog articles, running A/B tests, managing the server, and so on.
This allows your clients to choose from between A, B, or C instead of just “hire or don’t hire.”
Incorporate retainers into both your sales process *and* when offboarding clients
When you pitch a client on a project, hint that you maintain long-term relationships with your clients and, upon delivery of the project, will recommend a few options that can help them optimize, insure, and grow their business.
But a few weeks away from delivering the final project to your client, start the discussion about how, if at all, it makes sense for you to continue working with them.
I’ve found that very few freelancers have an actual offboarding process for their clients. We often just hand over the deliverables, fire off our final invoice, and move on. But we don’t always ask our clients the question that must be asked:
“What’s next? How do you plan on growing this? Supporting this?”
By kickstarting this conversation, you end up presenting a natural next step for your client.
After all, you know that they spent a lot of money on the project you helped them with. There’s a lot riding on its success, so it only makes sense that they continue to improve its value over time.
Rather than framing your monthly retainer offering as an upsell or another attempt to squeeze more money out of your client, you can educate your client about why they should care about security, optimization, and bolstering their knowledge of the industry you work in. Click here to learn more about how to effectively position value in this way.
I hope this in-depth guide has been helpful in understanding why the traditional model of selling retainers is broken, and how this new formula can help you deliver a better ongoing service to your clients.
Next steps: From here, I recommend you pair the retainer knowledge from today’s post with the pricing knowledge from this free course that teaches you how to massively raise your rates without losing clients. (It’ll help you best determine how to price your retainer projects)