Your ultimate guide to freelance retainers

by Steve Colquhoun
07 September 2018

Let’s get one thing straight from the get-go: retainers suck.

Why? Because you’ll likely take a haircut on your normal hourly/daily rate, the client ‘owns’ a portion of your week, and your cherished work-life choices could be blown out of the water at a moment’s notice by a client whim. Wasn’t the reason you went freelance in the first place so that YOU call the shots?

And yet, retainers are also some kind of wonderful. The bane of the jobbing freelancer (sorry, the ‘gig economy’) is to keep money flowing through the door with any regularity. Retainers are the duck’s guts in that very crucial respect. You don’t truly appreciate security until you haven’t got any, as a lot of freelancing newbies are quick to discover.

Hello, solid cash flow

It’s true that a retainer saves a lot of faffing about compared to hourly or piecemeal work where you’re constantly on the clock, or billing against your output. Sure, the piecemeal stuff attracts your super-dooper best rate, but onerous timekeeping and billing duties can quickly take a chunk out of that lovely premium.

On the flip side, you’re at the behest of a client who might load you up one month, and the next it’s tumbleweeds; and you’re not always going to know what’s coming down the pipeline so that you can manage your own workload and personal commitments. But that’s just freelancing in a nutshell, isn’t it?

The tricky part

Before taking on a retainer, it’s important to be aware of a few things.

Firstly, there’s no union award for retainers, no standard terms and conditions, and very little information around, outside of whispered conversations in freelance enclaves like this one. So how do you know what’s right, fair and proper when it comes to structuring your own deal?

A scan of the hive mind reveals not only that the topic of retainers comes up very regularly, but that there are some consistent themes emerging from those with experience. Here are 13 of the most discussed recommendations:

1.      Communicate, communicate, communicate

Before you start, spend some time understanding who your client is, what are their ongoing needs – not just right now, but also what will their workflow look like in six months – and how you can add value to their operations. Draft up a well-considered retainer agreement that strives to protect the interests of both parties. It won’t take long for things to fall apart if either party isn’t getting value.

2.      Set realistic and achievable targets

Having got the measure of your client, make sure they understand who you are, what you do, and what you can deliver. And by that, we also mean what you CAN’T deliver. Honesty is the best policy on both sides of the deal to ensure that expectations can be met (and, if you’ve done it right, you’ll leave a bit of leeway so you can occasionally exceed them). Nothing brings a retainer agreement tumbling down faster than poorly aligned expectations.

3.      Set agreed deliverables

Firstly, never enter a retainer agreement without capping your output – otherwise, you’ll end up a defacto full-time employee, catching every job that the client can’t be bothered to finish. There are two key ways to do this – either set a weekly or monthly time limit on your services, or, by joint consent, work out a list of deliverables. Which method you choose will depend on the type and style of work the client does, and how you prefer to work. If you’re setting maximum hours, make sure the client understands that after this point, extra charges apply at a higher rate, and give them a warning when they’re approaching your cap. This method requires some admin work to keep track of everything, and stingier clients may dispute the value they are getting from your time. Alternately, if the workflow is likely to be formulaic and predictable, you can agree to stipulate a set number of jobs per month that are inclusive, with extra charges applicable on a per-job basis.

retainer template
Need a retainer agreement you can modify and send to clients? This one’s available in the Toolkit.

4.      Set a sensible rate

Common wisdom is to offer a discount for retainer work in the order of 10-25 per cent, making it attractive to clients who also don’t want the uncertainty of paying hourly rates ongoingly that can blow their budget. As previously mentioned, the reason you agree to take a cut on your top rate is a trade-off for the certainty of income that a retainer provides. But don’t undervalue yourself, either. Make sure the rate you strike recognises the value of your skill and time, because you’ll be locking it in for a defined period. Be prepared to walk away if the client won’t pony up a fair rate.

5.      Add value

The client is employing you for certain skills you possess, but if you really want to form an ongoing arrangement, don’t stop there. The occasional extra value-add that’s not in the contract – tossing in a few of your own ideas, using your contact book to solve a problem of theirs – leaves the client wondering how they would ever get by without you. And that makes a contract extension more likely, as well as increasing your bargaining power for a better rate.

6.      Know your scope

Your retainer agreement should set out explicitly what’s included in your deal, including feedback or revision rounds if relevant, regular meetings required to attend, and any travel or functions. It should also include the cost of providing time or services outside the scope – an $xx/hour charge for piecemeal work, or a half-day charge to attend an onsite meeting, for example. Also …

7.      Have a disaster contingency

Depending on the type of service you provide and the nature of the client’s business, things can go wrong in their world and you might be called upon to help fix it. For example, you’re a public relations specialist or social media manager, and the client has a sudden and unforeseeable reputational crisis. Your contract should clearly state what’s inside the scope, but you may want to have a clause that sets out the value of your time should you get an 11pm phone call to assemble a media response with a one-hour turnaround.

8.      Avoid the overflow valve

Some clients think of contractors as an overflow valve – you only get the rush jobs that under-the-pump staff didn’t have time to do, or that were left until the last minute because they’re too difficult or inane. If you get a sense in your pre-contract discussions that this is what awaits you, think twice.

9.      Review clause

Even with all the due diligence boxers ticked, things can still go wrong. Expectations can be misaligned, the nature of the work can change, or the client might be a classic PITA (that’s freelance speak for ‘pain in the arse’). Either kick off with a short contract period (three or six months) or, if you’re keen to try to lock down all that lovely income certainty, put in a review clause after three months that gives both you and client the ability to communicate any difficulties and make running alterations to the contract. And make sure you have an ‘out’ clause, too – an agreed notice period flagging early termination that can be served by either party.

10.    Get paid in advance

This is a big discussion point in many forum discussions and campaigners with bitter experience are adamant – you should get paid in full, at the start of each month before you begin work. Never be in the position of having provided a month’s worth of work for a client who hasn’t yet paid a brass razoo. If the client unexpectedly shuts up shop, or just stops returning emails and phone calls, chances are you’ll never see a cent. This is probably the closest thing there is to a ‘standard practice’ in this largely unregulated field.

11.    Set a penalty for early termination

As well as an agreed contract period with your client, you should also have an early termination clause. This stops an unscrupulous or cash-strapped client from walking away at short notice, leaving you with a big hole in your roster and no income.

12.    Include a leave provision

Unless you’re a robot, you probably don’t want to work for 52 weeks of the year. Ensure your agreement allows for some leave at a mutually agreed time, and that you give the client advance notice as your time-off approaches.

13.    Don’t put all your eggs in one basket

Another tip from seasoned campaigners is to avoid the temptation to pull in a single retainer client who accounts for the majority of your workflow. Even with a contract in place and an early termination clause, you could be left painfully exposed if the client bails on you. It’s recommended that any single retainer client (and you may have several) should not contribute more than 30 per cent to your income.

Happy retaining!

Listers – have you got any retainers in place? Are they a blessing or a curse?

Steve Colquhoun

5 responses on "Your ultimate guide to freelance retainers"

  1. Nigel says:

    Wise advice, Steve! Especially about the dangers of blurry boundaries. Having failed to do most of the things you recommend, I had to let go of a lucrative client providing regular work when he began treating me like a de facto employee and expecting me to be available to take his calls and emails 24/7.

  2. Rachel Smith says:

    Yes I found that super helpful too – you think a retainer will be an easy thing to lock in but you can get yourself in such hot water if you don’t have all these clauses in place to protect yourself.

  3. Steve Colquhoun says:

    Thanks Nigel. Yes, we have to move past the mindset where we are so grateful to have someone paying us regularly that we are willing to cop whatever they dish out. It feels awkward at the outset to be so prescriptive about the agreement, and we worry that the client will walk away if we protect our rights too zealously. The reality is that any client who is not willing to respect your need for boundaries and rights is not a client you want to work for anyway! They are actually doing you a favour and showing a red flag that you should heed.

  4. Nic Makim says:

    Thanks so much, that’s a really helpful post packed full of help. Big appreciation for sharing 🙂

  5. Marcus Watt says:

    Great article, a big help for a new freelancer like me. Any ideas or suggestions on how to manage multiple retained clients? Mainly when their requirements overlap?
    For example, I work in the events field and one of my services is on-site work at said events. I have the opportunity to secure two retainers but how do I cover the scenario where they both want me on the same dates at different events? I see my on site availability as a (or the) major drawcard and am worried that the retainers will not come to fruition if I cannot guarantee this!

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