retainer agreement

How to Get and Keep a Good Retainer Agreement

Retainer agreements are frequently mentioned in the context of large firm lawyer-client or accountant-client relationships. Nonetheless, these lucrative contracts apply to almost any service business, particularly consultants and freelancers.

What exactly is a retainer agreement? And how exactly does a retainer work?

A retainer is a form of payment made in advance by a client to ensure that your services covered in the work template scope are available to them for an extended period. A client can pay a one-time lump sum or make recurring monthly payments. This could be in exchange for a long-term project or regular access to services.

Retainer agreements are a freelancer’s or business owners dream come true. The ability to say, ‘I work on retainer,’ demonstrates that you’ve gotten some freelance work and that you can expect at least one source of income each month to balance out your wages.”

A retainer’s consistent cash flow ensures that you can cover expenses that don’t change from month to month.

  • Retainers can benefit you and your company by:
  • Providing stability.
  • Reducing the constant pressure to win new projects.
  • Enabling you to form a relationship with a client.

Providing some consistency to your work rather than working with different clients each month.

But what distinguishes a retainer agreement from any other contract? When you sign a retainer agreement with a client, your services are literally “retained” or booked for a set period, usually a set number of hours per month or quarter. As a result, retainers are a great cash flow asset because the client pays a pre-agreed-upon amount each month for your services.

Retainers also offer several advantages to anxious business owners, such as clear definition (i.e., you can plan your time better around specific clients), a consistent source of income, and stability – all of which can help you sleep better at night!

That isn’t to say that retainer agreements aren’t risky. We’ve all had clients who go off the rails halfway through a regular contract or begin introducing scope creep. This can also be said about retainers.

Unearned retainer fee vs. Earned retainer fee

The sum of money deposited in a retainer account before the start of work is referred to as an unearned retainer fee. The sum serves as the client’s guarantee to pay the attorney upon completion of the agreed-upon work. The attorney can’t claim the retainer fee until the work is completed and invoiced to the client. After paying the hourly attorney fees, any remaining retainer fee should be returned to the client.

The amount transferred from the special account to the attorney’s operating account after completing an agreed-upon task is referred to as the earned retainer fee. The amount the lawyer will be paid per hour is usually agreed upon before starting the work and specified in the retainer fee agreement.

The received retainer fee is paid monthly until the case is resolved. Sometimes the lawyer is paid based on the milestones he has reached, such as 25% after the pre-trial process, 60% after the hearing, and 100% when the case is resolved and closed. 

Services that are effective for retainer agreements

  • Handling routine maintenance work that may not be completed without your assistance
  • Being on call for emergencies (clearly define what constitutes an “emergency”)
  • Providing extremely quick turnaround for routine tasks
  • Consulting on company strategy or planning
  • Handling recurring work (as a set number of articles per week, as mentioned above)
  • Consistent reporting and monitoring

One must-do is to outline: 1 specifically) what work you will be doing, and 2) how much time you’ll be able to devote to the arrangement.

Here are some pointers for securing a retainer contract and making it work for both you and your client.

retainer agreement

What kind of work should you do?

One of the first steps in making a retainer work for you is determining what services you can realistically provide. Some of your typical work will probably not be a good fit for a retainer agreement.

A marketing agreement might cover a retainer option, such as “deliver one article per week and two guest posts per month.”

But what about someone who creates websites or manages them? If a retainer arrangement is left ambiguous, it can result in far too many calls, emails, and requests. All of the minor details consume far too much time to make it worthwhile.

Concentrate on your most important clients.

The best place to begin looking for retainer clients is with your most important clients. This takes time, so don’t expect to quit your job and walk into a relationship like this right away. It can take years to establish your company, its worth, and its reputation. However, once you’ve established a solid base of one or two notable clients for whom you’re doing more and more work (and hitting it out of the park every time), it might be time to consider having a retainer discussion.

Establish yourself as priceless.

Another target for a retainer is the client for whom you are proving invaluable – these clients are frequently overburdened, under-resourced, and desperate for assistance. As a result, they frequently seek your assistance.

As the projects pile up, so will the billable hours. Now is an excellent time to discuss how switching to a retainer model could save them some money and convince them that you can provide them with dedicated bandwidth as and when they require it.

This brings us to our next point.

Consider lowering your rate.

Retainers are worth a sacrifice, and lowering your rate could be one of them. Consider this:

You’re getting a set amount of work.

You could earn a salary (minus the benefits).

You don’t have to spend time marketing yourself.

In exchange, it is customary to offer your services at a reduced rate – anywhere from 65 to 85 percent off your normal rate is expected. This isn’t always what happens, but you be the judge, and if necessary, keep this incentive in the back of your mind if your client begins to balk at such a commitment.

Do the calculations for them.

If a client has just closed two $2,500 contracts with you in the last two months, and over $4000 monthly retainer sounds like a good deal if they intend to have more projects in the future.

You get to stop chasing clients and instead work with the best while saving money and having you available for regular work. They save the time they would have spent scouring freelance brokering websites for assistance from someone else.

Don’t skimp on the proposal.

Retainers are important. Consider it as such by pitching your services with a well-thought-out proposal that focuses on your client’s goals and challenges, as well as how you can make their lives so much easier. 

Make an effort to secure a time-limited retainer.

Retainers work best when spread out over a longer period, such as 12 months. This allows you and your client to establish a routine and track progress. Include goals and milestones in your contract to track deliverables and progress. For instance, if you’re a freelance writer and your client wants you to create a series of case studies, set a quarterly goal of delivering 2-3 case studies. A web designer given an ongoing re-branding project, on the other hand, may offer a staged approach with several phases.

As with any time-bound contract, including an exit strategy in your contract – 30-days’ notice is usually sufficient. If things do not go as planned, you may require it, and your client will appreciate the option.

Make it clear what work you do under the retainer.

Being specific about the work scope you do can help reduce scope creep, but it isn’t always easy. If you anticipate being pulled in several directions, use your retainer agreement to define and limit what these requests may be, and use your experience to estimate how much of your time they will take. For example, if you work as a freelance accountant, there’s a good chance you’ll get calls, emails, and requests that go beyond what you thought you’d agreed to. Use your contract to define what is and isn’t included in the retainer, as well as your fees for anything outside the scope (usually, your normal hourly rate should suffice).

Compile benchmark reports

If your work directly contributes to closely monitored metrics (for example, more conversions, a better customer experience, or more leads/traffic if you’re a content creator), offer to compile short reports on how your work has improved their business.

This is especially useful if you’re looking for a long-term agreement (six months or more) because this will put many business owners at ease to see that you’re interested in delivering measurable results.

Include the specifics.

Your invoice date, monthly fee, and payment due date, as well as how any expenses will be handled, are all important details to include in your agreement.

It’s also a good idea to include information about how you’ll collaborate with the client. Who is the primary point of contact for you? Will there be a weekly or monthly meeting to discuss the work you’ve been assigned? All of these details can assist you in staying on track and delivering value.

Keep track of the time.

Track your time once you begin working on the retainer. This will ensure that you are not doing more work than you anticipated and will help you determine your hourly rate. If either of these two indicators becomes problematic, it’s time to renegotiate your contract.

Make certain that you are paid.

What and how you get paid is an essential component of the retainer agreement structure – especially for you! That consistent cash flow we mentioned as a benefit of a retainer? It’s important to ensure that it’s flowing to your company!

What is a retainer fee, and how does it work to influence the payment plan? There are many ways to structure the fees you charge for services on retainer:

  1. A one-time fee, perhaps for a full year of work.
  2. A single payment is made once a month.
  3. A flat fee plus clearly defined additional fees for extra work.
  4. A fee for simply being available, plus additional fees for completing unfinished business.
  5. A fee is adjusted monthly based on the amount of work completed.

Again, the retainer fee, how the retainer fee works, and the payment structure will vary depending on the kind of your business, your client’s business, and your relationship. Bonsai has some excellent advice on invoicing clients.

How and when you are paid can also vary depending on your needs and your client’s preferences. Perhaps you prefer to pay for an entire fiscal year in advance. Alternatively, you may prefer regular monthly payments. Bonsai can assist you in setting up recurring auto-payments for your retainer agreements as a freelancer.

It’s also critical for your business that you get paid on time. Some ways to make that happen are as follows:

  • Charge upfront.
  • Make it simple for customers to pay you.
  • Submit invoices on time (Bonsai can help you get your freelance invoices paid faster.)
  • Don’t do any work until you’ve been paid and get it in writing.

The final touches

If you’re ready to start putting clients on retainer, one final word of caution: you must get certain things in writing, or you’ll end up in hot water.

It’s also not rocket science; just a few basic, rock-solid parameters that will keep you safe from shady clients. Any reputable client will recognize the need for it and will not object.

Make certain that all of the following details are included in your retainer agreement:

  • The amount you’ll be paid each month
  • The date you’ll be paid
  • Any invoicing procedures you’ll be expected to follow
  • How much work you’ll be doing and what kind of work you’ll be doing
  • When your client needs to inform you of the month’s work by
  • What notice is required before the retainer relationship can be terminated?
  • Anything else that is necessary to ensure that work is completed on time

How to put together a retainer agreement

retainer agreement

The following thing to think about is how you’ll structure the agreement, specifically how you’ll structure your work offering.

There are three main approaches to this:

  • On an hourly basis. Provide the client with a set number of hours of work per month. It would be preferable if you also established what happens to unutilized hours. For example, you could offer ten hours of work per month and be willing to carry over up to two unused hours to the following month.
  • As a deliverable. Commit to delivering a certain number of “products” or “services” per month. The contract also specifies whether or not additional work will be accepted and, if so, how that work will be priced.
  • To gain access. In some cases, a client may pay a monthly fee to use your services. This is the starting pay, and hourly fees are added on top. This is standard practice for law firms, but most freelancers cannot charge in this manner.

To increase your chances of getting a retainer, base the scope of work on what you’re already doing for the client.

The majority of retainer agreements are monthly in nature, with payments made on each month’s first or last day. Some clients may be willing to work with you on a different payment plan.

Advantages for clients who agree to pay a retainer fee

If you want to persuade a client to sign a retainer agreement, you must be able to articulate the benefits to them.

So, what are some of the advantages of hiring you?

Consider the retainer contract to be a deposit for future services. The retainer guarantees both your services and your loyalty. As I previously stated, this is advantageous if your skills are in high demand.

When you think about it, the advantages for your clients who retain your services are obvious. I want you to imagine yourself as a successful alarm and security service

What should a potential client do if they know they’ll frequently use your services because they frequently need cloud storage, monitoring, security services, and etc?

Put you on retainer is the obvious answer.

You’re on a retainer, so you’ll get right to work as soon as they need something. It’s more convenient for you, and it’s also more convenient for the client.

You can position your monthly retainer as a required recurring payment to ensure that the client receives your time, easy access to your services, dedication, and ongoing loyalty.

If one of their competitors wants to hire you, for example, you’re less likely to be persuaded if you’re already on retainer with your client.

Clients are more likely to sign a formal agreement if they can avoid talent poaching. If your client pays you a monthly retainer fee, you are much less likely to be poached by one of their competitors.

Your clients also get the most value from your services if they use them every month, which monthly retainer agreements encourage.

Retainers are also beneficial to you!

While retainers are beneficial to your clients, they are also beneficial to you. When done correctly, they truly are a win-win situation.

Retainer agreements, for example, can provide the following benefits:

  • Predictability of income. You already know how much you’ll be paid each month for your efforts.
  • Loyalty – is a word that has many different meanings depending on who you enter an agreement with. These agreements, in a sense, “bind” you to clients. They will be reluctant to let you go (even when the agreement expires or needs to be renegotiated). They won’t be able to afford you!
  • Increased internal hourly income. When the work is repetitive, you will become more efficient at completing it, increasing your internal hourly income.
  • More in-depth expertise. These agreements pave the way for long-term working relationships. This enables you to understand and experience specific industries and technologies within your target market.

Give it a shot if you’ve never pitched a retainer agreement to a client before.

Under the right conditions, they can result in a profitable, beneficial, and long-term arrangement for both parties.

Don’t forget to bring new ideas!

Now that you’ve figured out what a retainer agreement is and how to get one, it’s critical not to become complacent. Adhering to the agreement and not bringing new ideas to the client is one of the drawbacks of a retainer agreement. Sticking to an agreed-upon list of tasks can harm your relationship by preventing the creation of new tasks.

According to, the scope of work is established at the start of a retainer agreement: ” “His to-do list is generated at a single point in time…on the one hand, there is pressure to adhere to the ‘Scope Of Work’ because no one wants to undo the agreement. On the other hand, the marketplace is pressuring for ‘new thinking,’ which may or may not include the items on the list.”

One solution is to include the phrase “or equivalent” in the retainer agreement. While different work must be discussed with the client, the “or equivalent” clause allows you to present creative ideas without being perceived as selling additional work. Because business is fluid, a retainer agreement must be fluid as well.

During your regular reviews with your client, be sure to suggest any new and creative initiatives that you can implement to add value to the agreement, perhaps as a replacement for work that has decreased in value since the agreement’s inception.

Who should a retainer agreement be targeted at?

A retainer agreement requires a significant time commitment. You’re unlikely to persuade a small business with a volatile budget to sign one. Similarly, a company working with you for the first time is likely to be hesitant to agree to a retainer.

Clients who will agree to a retainer are those who are already your “bread and butter.” They already know you do excellent work. They’ve demonstrated that they have the financial means to pay for your services regularly. They’re also likely to be the most pleasant clients to work with.

How to persuade clients to sign a retainer agreement

retainer agreement

How do you persuade a client to accept the payment model of a retainer agreement?

Should you suggest a retainer fee by email, in person, or over the phone?

Closing clients in person isn’t always possible, especially if they live in another city. But don’t worry about it.

The best way to persuade clients to pay you on a retainer is to pitch the idea over the phone. Then you’ll send an email to follow up.

The following is a step-by-step guide for closing a retainer agreement with your client:

Step 1: Make an appointment to speak with the decision-maker. (There is no point in even discussing the idea of a retainer agreement with anyone other than the decision-maker.)

Step 2: Prepare an answer to the question, “How does a retainer agreement work?” before speaking with the decision-maker.

Step 3: Once on the phone with the decision-maker. You’ll ask how much work they expect to do in the next 3-6 months.

Inquire about their plans for the next 3-6 months. Assist them in estimating the amount of work required to achieve these objectives. 

Final thoughts

Suppose you can secure one or more retainers for your company. In that case, you will have some breathing room to ensure expenses are covered, some of your work is guaranteed, and the possibility of additional work exists.

Hopefully, we’ve answered all of your questions about what a retainer agreement is and how it works. The ability to work on a retainer basis will foster long-term business relationships and help your freelance business profit and grow.